Las Vegas Sun

March 28, 2024

Real estate column:

Resale home market making a comeback so far this year

Everyone talks about the local economy — housing, commercial real estate and other sectors that hit bottom. But there are signs of recovery.

The resale home market is up, and the delinquency rate is down. However, sales of new homes are declining, and foreclosures are nudging higher.

Resale housing hit bottom in 2007 when 23,956 sales took place, but that sector has averaged more than 50,000 the last two years.

The new-home market might not bottom out until this year. That’s certainly shaping up to be the case through the first two months. SalesTraq reported 502 home closings through February, a 19 percent decline from the same period in 2010.

From a high of more than 38,000 sales in 2005, the new-home market appeared to bottom out in 2009 with 5,244 sales. The number rose to 5,438 in 2010.

Dennis Smith, president of Home Builders Research, said there’s no doubt the end of the federal tax credit for first-time homebuyers hurt the new-home market since it effectively ended in April 2010.

“The federal tax credit acted as a crutch for the industry,” he said. “I think it accounted for 700 sales last year. Now that we don’t have it, I think we’re going to come up short.”

There might be fewer than 5,000 new single-family homes closings in 2011, Smith said, but he cautioned it’s still too early to predict because more people looked at homes in the past month and that may translate to more sales ahead.

“But if we don’t do anything to put people back to work, it could be a worse year,” Smith said. “It’s shaping up that way.”

Smith said what’s happening in Las Vegas is also happening in Phoenix with the new-home market.

Besides the price differential, economy and difficulty in buyers obtaining loans, the problem with appraisals hasn’t gone away, either.

Appraisers are blamed when homes are valued for less than the buyer and seller agree and deals are scuttled. It’s tough enough for buyers to obtain loans, but if appraisers say the home’s value is less, buyers won’t be able to get a loan big enough to cover the gap.

The issue developed as a reaction to the housing boom and accusations that some appraisers overvalued properties as part of scams to defraud lenders.

New federal rules require lenders to use an appraisal management company or another third-party appraisal to prevent any direct influence over the appraisal.

Amelia Hyden, president and CEO of Appraisal Management Co. of Southern Nevada, said appraisers have a responsibility to protect the lender and consumers.

“It’s not the appraiser’s job to appraise a property at the contracted sales price,” Hyden said. “The misconception that a sales price is equivalent to value is incorrect.”

Smith said appraisals are a factor in home sales falling through. There are plenty of appraisers who do their job well, but others even have other appraisers scratching their heads, Smith said.

“Good appraisers are valuing properties based on existing sales in the subdivision. But unfortunately, they are using (comparisons) outside the subdivision that in many instances tend to lower the value,” Smith said.

Many appraisers use short sales and foreclosure sales to compare with new homes, and that can’t be done, Smith said.

“That’s not an apples-to-apples basis,” he said.

Hyden said it’s the appraiser’s duty to complete data analysis, and review market history, absorption rates, supply and demand and other things to arrive at value. Whether that means the value reflects the contracted sales price is not the appraiser’s concern, she said.

“The appraiser is protecting the bank’s investment, the well being of the general public and sometimes even protecting the consumer from himself. Anyone can put a price on a house and find someone willing to buy the house at that price. A willing buyer doesn’t make that property worth more or value it at the selling price.”

Delinquency rate improves

In a good sign for the future of foreclosures in Las Vegas, the 90-day delinquency rate improved nine over the past 10 months it has been tracked, according to California-based CoreLogic.

The 90-day delinquency rate was 19.54 percent in December, down from 19.65 percent in November. Its high was 21 percent in February 2010. The only time it increased from one month to the next since then was in May.

The research firm said the rate of foreclosures among outstanding mortgage loans was 9.67 percent in December, an increase of 1.74 percent in December 2009.

As of December, 1.53 percent of homes with a mortgage in Las Vegas were owned by the lender. That’s an increase over December 2009 when 1.46 percent of homes were owned by lenders.

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