Economist: Vegas housing market to recover in 2010

By Buck Wargo

Monday, Feb. 23, 2009 | 5:09 p.m.

The steep drop in home prices and newly approved $8,000 tax credit for first-time homebuyers will help pave the way for a recovery of the Las Vegas housing market in 2010, according to the chief economist with the National Association of Realtors.

Lawrence Yun said Monday he expects that foreclosures will continue at their elevated levels in 2009, but is optimistic that inventory will be whittled down given the increase in existing home sales in Las Vegas over the past several months. Only Nevada, California and Arizona have seen big jumps in sales. There were 38 percent more sales in Las Vegas in 2008 compared with 2007.

“You have gone through some very tough times, but any further decline, if any, would be minimal,” Yun said of median prices that have fallen $138,000 over the past two years to a price of $150,000 in January. “Given $150,000 is very affordable for such a dynamic metropolitan region, once the economy recovers, you are in good shape. But it is just getting over the short term.”

During an interview, Yun said he sees Las Vegas prices stabilizing in the second half of the year and by the fourth quarter they could be higher than the end of 2008. The median price at the end of 2008 was $157,250, according to SalesTraq.

Yun said he wouldn’t be surprised if prices appreciate more than 5 percent in 2010 but adds one caveat to his prediction – that while the long-term outlook for the Las Vegas housing market looks good, it is hard to make short-term forecasts.

If prices continue to decline in Las Vegas and the rest of the country by another 10 percent, that will further weaken the balance sheets of banks and further delay the recovery of the economy. The housing market troubles have been a driving force behind the economic woes and financial meltdown.

“Home prices are key to the economy turning around,” said Yun, who fears any further drops and their impact. If that happens, he said he doesn’t believe Americans have the will to spend another $700 billion on a bank bailout and that could lead to a deepening of the recession or a double-dip recession.

Yun spoke Monday to the NAR’s Rocky Mountain Regional Conference at Green Valley Ranch Resort.