Strong appreciation is on a back burner right now in Las Vegas. Many are trying to stay just even with the board in selling their home after our whirlwind market a couple years ago, when  we dealt with multiple offers and many homes selling for tens of thousands of dollars over list price.

The good news is if you are in this for the long term, purchasing and not just flipping, then the market is good for you.  Sellers are being forced to sell for much less than they would like and prices have even dropped a bit.

There are currently 25,000 + or minus residential listings in the MLS, 9,000 to 10,000 of which are pre-foreclosures or foreclosures.  There are currently 549 new home subdivisions in Las Vegas, many of them offer great incentives and reduced prices.

You can e-mail me further details at MaryWarren@KW.com.

Most people don't know that there was a recession in the middle of the Great Depression (1936-1937).  The years 1936 and 1937 experienced both record cold winters and record hot summers as well.   Those two curious facts give you some perspective on Las Vegas' January housing statistics.

January's weather was among the coldest in recent memory. That certainly had a negative impact on sales.  What hurts sales tends to depress prices as well.  But, there's more than weather at work here.

Let's look at the details:

----->Sales were off significantly in both the new home and the existing home markets.

New home sales were off 26.2% at 2,135.  Existing home closings dropped 14.3% from last January to 2,770, and were essentially the same as the prior month of December, perhaps signaling the bottoming out of the downturn we’ve witnessed since last August.

------> Not surprisingly, home prices remained relatively stable.

We predicted last year that home prices would remain relatively stable over the first six months of the year, although we felt the first quarter might see some decline. 

The median price of ALL new homes rose 10.7% over last January to $336,309.  The median price of just single family residential and traditional condominiums slipped 3.3% from last January to $328,667.  Both were below December numbers.

The price of a resale home dipped 0.7% from last January to $278,000, also below December's figure.

----->Inventory rose ... and fell. 

RISE: As predicted last year, resale inventory rose to 21.458 -- just about 2,000 units above the December figure.  Look for the MLS inventory to continue to rise through the first quarter before leveling off around 24,000 in March, and then declining to end up the year around 16,000.  The disturbing aspect of the still swelling MLS inventory is that 44% of those listings are vacant, and a significant number of them may fall into foreclosure.  This will serve as a dampening force on existing home prices, which may decrease in the first half of the year before climbing back up in the second half.

FALL: But, perhaps much more importantly, new home permits fell in January by 53.9% from last year to 1,002.  That's barely above December's level.  In fact, from September through January, only 4,422 new homes have been permitted. More than 13,000 new homes were sold during the same period.

If we continue to see new home permits decline, will that impact the size of our existing home inventory?  The answer to that question is how much demand will there be in the second quarter.  The measure of 2007 will be taken early ... and it will be new home statistics.

A note of caution here.  Las Vegas has 542 active new home subdivisions, the highest number per capita in the nation.  The average sale per subdivision was 3.94 in January, about 1/3 under the level of last January. 

So, watch three numbers very carefully in the first quarter:

(1)  The number of new home sales
(2)  The number of new home permits
(3)  The average sale per subdivision.

Those numbers will tell you if the recovery begins in the second half of this year or the beginning of next year.

Remember, real estate runs in cycles.  We are at or near the bottom of a cycle

Larry Murphy, Salestraq

No matter how you look at it, 2006 was a year in which you just could not compare apples to apples.  It wasn't a question of whether the glass was half full or half empty.  Ultimately, analysts were left trying to guess where the glass actually was.

In our opinion, the Las Vegas real estate market began a major transition in 2006, the beginning of a new era.  That means that some traditional numbers fail to identify what is really happening inside the market.

In fact, our analysis of final housing numbers for 2006 suggest the year was much better than some analysts have indicated.

----->And, like every other analyst in the market, we are reviewing  definitions and even the methods by which median prices are computed.

In a moment, we'll give you an example.  But, first, let's look at some housing data that nearly everyone expected.

The number of new home sales ended the year 2006 at 35,484, an 8.5% decline from 2005.  December's drop was more powerful: 2,970 or 29.4% from last year's all-time record high.

The number of existing homes sold dropped to 41,771, a 24.1% decrease from last year.  December saw a drop of 31% to 2,907.

On January 1, Existing home inventory was at 19,482 -- the lowest level since June of last year.  (We don't expect that downward trend to hold in February). The number of active new subdivisions climbed to 530 in December, the second highest in history and a 13.5% gain over last December.  The number of new home permits finished at  905 for December, 64.7% less than last December and down 30.3% for the year.

----->That's all traditional.  But, here's one area of analystical change that is not: Housing prices.

If you look at housing prices traditionally, they continue to defy the laws of gravity and economics.  December 2006 median new and resale home prices were up.  Median prices of a new home ended the year at $336,641 up 7.9% from last December and 14.8% for the year.  The median price of an existing home in December was $284,000, a scant .2% up from last December, but 3.6% up for the year.

But, let's take a look at new home prices more closely.  The figures we cited include apartment-conversions, traditional single family residential and attached and both Mid-Rise and High-Rise.  Last year, we came to believe that the lower prices of conversion product offset the higher prices of Hi-Rise and Mid-Rise.

But, this year, conversion sales were considerably less than last year -- while Hi-Rise and Mid-Rise continue to grow in importance.  If we look at ONLY at Single Family Residential and Traditional attached product, the last two months of the year would have been negative, but the overall year was still up 6.6%.

Larry Murphy, Sales Traq