Analyst: Price of existing Las Vegas homes won’t increase for 5 years

By Buck Wargo

Thursday, Jan. 20, 2011 | 12:36 p.m.

A Las Vegas housing analyst said today the new home industry should expect a tepid recovery over the next five years and predicted existing home prices won’t improve for about five to six years.

Larry Murphy, the president of research firm SalesTraq, gave the gloomy forecast at the quarterly Crystal Ball seminar he co-sponsors. More than 100 Realtors and housing industry executives attended the conference at the Alexis Park Resort.

Las Vegas recorded 5,244 new home closings in 2010, and Murphy predicted it would stay around that number in 2011 and 2012 before edging up to about 7,500 closings in 2013, 10,000 in 2014 and between 12,000 and 13,000 closings in 2015.

The Las Vegas housing market had 40,000 sales in 2005, but Murphy said those days are gone.

“New home sales are a direct function of job formation,” Murphy said. “If the population of your community goes flat, how many new homes do you need to build? The answer is almost zero.”

As for the existing home market, Murphy said that will continue to be dominated by distressed sales that include foreclosures and short sales, in which owners sell their properties for less than is owed on the mortgage.

Of the more than 52,000 sales of existing homes in Las Vegas in 2010, 40,000 of those were distressed sales, Murphy said. He said he expects a similar number of distressed sales through 2013.

“Twenty percent of the mortgages are delinquent 90 days or more. That tells me ultimately those homes will be foreclosed and that should keep prices depressed for the next couple of years. We are not going to see them get better for a long time.”

Murphy had the median price of homes sold in December at $114,500. He predicts the prices won’t start to improve until 2015 and 2016.

Investors are driving many sales, but Murphy said the affordable prices will attract seniors to Nevada.