Friday, Jan. 30, 2009 | 2 a.m.
How much further do Las Vegas home prices have to fall?
It’s the pressing question on the minds of homeowners concerned about the value they are losing on their properties and potential buyers, who are waiting on the sidelines before they purchase.
Well, Moody’s Economy.com projects the total decline in the market will reach 52 percent by the end of the first quarter of 2010, says Mike Helmar, director of industry services and an economist who oversees Nevada forecasts.
“We don’t have much good news for you,” Helmar says. “We do have them continuing to go down.”
The firm listed the median price of Las Vegas homes reaching its peak of $320,000 in 2006’s first quarter and dropping to $153,000 by 2010. In its most recent data, Economy.com had home prices falling 35 percent from the peak through the end of the third quarter and projects another 25 percent to 27 percent after that. Its fourth-quarter numbers weren’t available to see how far they have fallen.
Every firm calculates existing home prices using different methods. SalesTraq, for example, already has the median price of existing homes falling 45 percent to $157,250 from a peak of $288,000.
Helmar said most of the remaining decline will occur in 2009, with 2010 being relatively flat. The reason is foreclosures show no sign of slowing and will continue to press down prices. Many adjustable rate mortgages have yet to reset, he says.
Many buyers who got cheap loans during the housing boom have lost homes and aren’t in the market to buy another one despite the lower prices, he says. The recession is causing job and income cuts, and people are unwilling to buy. Speculation has ceased as well as have second-home purchases, he adds.
“Everyone talks about affordability and interest rates being low,” Helmar says. “That’s all well and good that people might be able to afford homes, but the banks aren’t lending whether they can afford it or not. It is very hard to qualify for a loan. Until the financial crisis is over, lenders won’t be willing to lend again.”
Las Vegas has counted on jobs and population growth to fuel the housing market, but the weak economy has put a damper on that, Helmar says. Casinos are cutting jobs and construction jobs have been eliminated and even with the opening of CityCenter, jobs will be cannibalized among properties in town, he says.
“If you have a weak economy, you will not be getting the visitors,” Helmar says. “They may got to the new place, but they are not going to the old one.”
Hanley Wood housing report
The best-selling single-family home in November was the Greens by Rhodes Homes in Rhodes Ranch in southwest Las Vegas. It had seven sales, well above the valley average of one-half sale per month. The Greens has averaged 11 sales a month since it opened in July. Next, with six sales each, were Palm Vistas by Pulte Homes, Sterling Ridge by KB Home and Solera at Stallion Mountain by Del Webb.
The cancellation rate — the number of preliminary new-home sales that were canceled — fell 25 percent in November to 41 percent for single-family homes. It was 32 percent a year ago. In the condominium market, the cancellation rate fell from 55 percent in October to 24 percent in November. It was 23 percent in November 2007.
Marcus & Millicap apartment report
The firm reports the Las Vegas apartment market will stay in flux in 2009 because of the economy, but suggests signs of a recovery are starting to appear. Even though several casino projects are at a standstill, the research firm says the opening of Encore is helping spur demand for apartments. Henderson and North Las Vegas will have some of the highest vacancy rates because single-family homes are competing against rentals. Rents will decrease slightly.
In addition, those areas will be hurt by people doubling up in lower-end apartments. As for high-end apartments, more people are wary of renting homes because it may go into foreclosure, the firm says. It predicts investors on the sidelines may jump in to buy apartments next to master-planned communities, especially near the Interstate 215 corridor. It predicts apartment construction will slow to 280 units in 2009.
In other news:
• Las Vegas-based D&K Landscape Inc. won the 2008 merit award for superior professional accomplishment within the commercial, retail and mixed-use category given by the local chapter of the American Society of Landscape Architects. D&K won the award for its landscape design for the Arroyo Corporate Center in southwest Las Vegas.
• Prudential Americana Group says its 6,457 home closings are more than double the closings of any other real estate brokerage. The firm, which emerged from bankruptcy protection in 2008, had 41 percent more closings than 2007. The firm had 11 percent of all home sales among Realtors, it says.
• Gov. Jim Gibbons has appointed Kevin Burke, Nathaniel Hodgson III and John Ellison to the Nevada State Contractors Board and reappointed Bruce King. Burke is president and chief executive of Burke & Associates, a Las Vegas general contractor. Hodgson is vice president of construction at Pulte Homes. Ellison is owner of Ellison Electric, and King is president of Pete King Nevada Corp., a North Las Vegas-based painting and drywall company.
• Kevin Higgins of Voit Commercial will serve as president of the 2009 executive committee of the Nevada chapter of the Society of Industrial and Office Realtors. Chuck Witters of Lee & Associates is president-elect. Soozi Jones Walker of Commercial Executives is secretary-treasurer, Donna Alderson and Randy Broadhead of CB Richard Ellis are business development, marketing and retention co-chairmen. Dan Doherty of Colliers International is admissions chairman. Tom Naseef of Coldwell Banker Commercial Distinct Realty is education chairman. Pat Marsh of Colliers International is programs chairman. Mike DeLew of Colliers is golf tournament chairman and Dean Willmore of Prudential CRES will serve as sponsorship chairman.
• Panattoni Development Co. was awarded the 2008 People’s Choice Developer of the Year award.
• Four Las Vegas projects were recognized as part of the Mayor’s 2008 Urban Design Awards. They are the Molasky Corporate Center for buildings and their environment; the Freemont East streetscape improvements for public places; the Ancestral Gateway for public art; and the historic Fifth Street school for historic preservation.
• Gateway Realty & Management has named Tom O’Neill as its vice president of marketing. Before joining gateway, O’Neill worked as vice president of land acquisitions for a Southwest land developer.
• The Nevada Contractors Association recently named Stewart & Sundell Concrete as its 2008 Contractor of the Year. Olson Precast Co. won subcontractor of the year. Las Vegas Paving Co. won for civil project of the year for the $48.2 million Russell Road realignment. Perini Building Co. won building project of the year for the 64-story Trump Tower. McCarthy Building Cos. Was named safest contractor of the year. Peterbilt of Las Vegas was associate of the year and Kenworth Sales Co. was supplier of the year.
Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at [email protected]