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June 15, 2019

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Tax credit’s end fails to help Las Vegas home sales

Home Prices

Steve Marcus / File photo

Home prices appear to have stabilized in the Las Vegas Valley in recent months.

Updated Monday, May 10, 2010 | 4:55 p.m.

The federal tax credit designed to spur home sales appears to have ended on a whimper in Las Vegas and may foretell a downturn in the housing market in the coming months, analysts said.

The Greater Las Vegas Association of Realtors reported Monday that sales in April fell 7 percent compared to March and dropped nearly 8 percent compared to April 2009.

The drop off in the year-over-year sales is the first since March 2008. The decline was unexpected since April was the last month for buyers to sign contracts for new and existing homes.

Dennis Smith, president of Home Builders Research, who monitors the Southern Nevada housing market, said he believes the drop off in sales is a reflection of the declining amount of foreclosure properties in the market.

Those properties have lured both investors and first-time homebuyers who are looking for affordable homes, Smith said.

“You would think it would be strong with the tax credit in effect,” Smith said. “That’s just a reflection of the decline in inventory."

Neil Schwartz, a broker with Coldwell Banker Premier and member of the GLVAR board, said the Multiple Listing Service had only 1,600 foreclosed-upon properties available last week.

Of the 20,875 homes listed at the end of April, only 7,207 didn’t have offers, the GLVAR reported.

“It is a direct reflection of the inventory, and with the tax credit expiring, we are going to be slower,” Schwartz said.

The lack of foreclosure homes has prompted some first-time buyers to turn to new homes, which should bolster those sales numbers in April, Smith said.

Both investors and first-time buyers have turned to short sale properties in greater numbers, but those deals take time to complete, Smith said. Short sales are those instances in which banks allow the homeowner to sell the property for less than is owed on the mortgage.

The GLVAR reported 27 percent of the sales in April were short sales, up from 22 percent in February. Bank-owned homes in contrast made up 43 percent of the sales in April, down from 53 percent in February.

The decline in foreclosure inventory is the reason the median price of homes sold in April at $142,000 rose for the first time on a year-over-year basis since February 2007, Smith said in handicapping the GLVAR numbers.

That’s up 4.4 percent from $136,000 in March and 0.2 percent from $141,720 in April 2009, the GLVAR reported.

Foreclosures tend to pull down prices compared to homes sold by owners, Smith said.

GLVAR President Rick Shelton said he believes prices rose because the tax credit stirred demand before it expired. That’s good news for homeowners who want to see prices appreciate, he said.

In the condominium and town home market, the 787 sales were down 3.3 percent from March but up 8.3 percent in April 2009.

The median price of those units sold was $70,000, up 2.6 percent from March and up 8.5 percent from April 2009.

Of the 2,951 homes sold in April, nearly 52 percent were sold within 30 days. That’s above the nearly 44 percent mark in April 2009.

The percentage of homes purchased with cash was 43.3 percent in April, down from 43.8 percent in March.

The Wall Street Journal reported Monday that home builder Lennar is slashing its prices by more than 15 percent in some cases in its Las Vegas subdivisions.

The article questioned whether builders such as Lennar overbuilt, expecting a wave of sales from the $8,000 tax credit for first-time homebuyers that didn’t materialize. It also raised the point of whether home prices would decline further.

Smith questioned the premise of the article because new home sales have risen in Las Vegas. His numbers show 708 sales in March and 707 in April, up from 400 in February.

Smith said Lennar has an inventory of about 50 homes but that is more pertaining to the builder than market conditions. Other builders in Las Vegas such as KB Home and Richmond American have no remaining inventory and Richmond American has even raised prices.

Lennar tends to have a higher base price than other builders because it includes upgrades such as countertops or covered patios into it, Smith said. That may have kept some buyers from acquiring the homes, but Smith said if prices drop as reported, those homes will be sold within two weeks.

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