Holy $hit! Might be time to dump my cardboard box-down-by-the-desert in Vegas!<G?>
lasvegassun.com
Today: April 20, 2004 at 11:18:39 PDT
Valley home prices going through roof
New, existing housing sales soar in March
By Richard N. Velotta
<velotta@lasvegassun.com>
LAS VEGAS SUN
Home prices continued to rise at unprecedented rates, and the number of resales and permits for new housing hit record levels in Southern Nevada in March.
Analysts on Monday said the number of sales and the median price of homes, new and resold, rose at double-digit rates over the same month the previous year with what is traditionally one of the busiest sales periods of the year still on the horizon.
Dennis Smith, president of Home Builders Research, Las Vegas, said 2,769 new homes were sold in March compared with 1,996 in March 2003, a 38.7 percent increase.
The number of resales hit a record 6,251 units for the month -- a 77.5 percent increase over the 3,521 sold in March 2003. There also were a record number of permits for new homes issued in March -- 3,792 compared with 2,009 in March 2003, an 88.7 percent jump from the previous year.
The median price of a new home climbed to $225,813 from $187,535 a year ago, a 20.4 percent increase. Meanwhile, the median price of a resold home jumped to $208,500 from $161,000 a year ago, a 29.5 percent increase.
March figures were considerably higher than February's. Home Builders Research said the March numbers for new homes compared with 2,256 in February, the resale figure compared with 4,445 and the permits issued compared with 2,709 in February. The new home median price was up from $210,795 in February while the median price on resales was up from $195,000 in February.
Two other companies that track home sales and prices, SalesTraq and Marketing Solutions, Las Vegas, said March new home closings were up 41.5 percent over February to 2,802 and March resale closings were up 75.3 percent over February to 5,676. Those companies, which measure results differently than Home Builders Research, said the March median new home price climbed 22.8 percent from February to $232,270 and the median resale home price was up 24.6 percent over February to $200,000.
Smith attributed the rapid climb in resale prices to the simple rules of supply and demand.
"It's because there is no supply of new homes available," Smith said in his Las Vegas Housing Market Letter research report. "Many people don't want to wait 12 months for a new home. Strong demand (from inmigration) plus no supply of new homes equals rising prices ... It all starts with the supply and price of land. We don't have enough of it, so it costs a lot more than it should."
Larry Murphy of SalesTraq and Steve Bottfeld of Marketing Solutions said there's more behind the rapid rise than low interest rates and Las Vegas growth.
In their own report, Murphy and Bottfeld cited the Las Vegas real estate market being undervalued for 15 years, local real estate still being a value compared with other cities, Las Vegas builders being among the best in the nation and a changing consumer in Southern Nevada.
"The confluence of the Echo Boom generation (people born between 1977 and 1997) and Gen X (people born between 1965 and 1977) combined with immigration -- particularly retirees -- has changed the Las Vegas home buying consumer," the report said. "Yes, those who have sold a home in California have money in their pockets to buy what they want. Yes, those who work here have built up equity to use in purchasing a new home.
"But Las Vegas is a marketplace where young singles have incredible disposable personal income, where young marrieds are delaying having children until after they purchase a home," they said.
Jeremy Aguero, principal analyst for Applied Analysis, Las Vegas, said the residential real estate market is superheating a few months earlier than normal.
"We're now just getting into a strong time of year," Aguero said, explaining that the market normally picks up as the school year comes to a close when parents move their children out of their current school zones.
Aguero said there are a number of factors contributing to existing trends, including continued low interest rates and a shortage of homes for sale in the Las Vegas Valley pushing up the price of previously owned homes.
"We're at the top of a wave," added Tim Sullivan, an analyst for the California-based Meyers Group, a real estate research company.
"There's a feeling that this thing may not last forever, creating a frenzy in the market," Sullivan said.
He added that the retirement market is continuing to grow and buyers are seeking both primary and secondary homes while the market is good.
Investors and speculators also are participating heavily in the market, but Sullivan said there are some new faces getting in -- and they aren't those of California investors.
"There's probably a stronger (investor) segment than ever before that's local," Sullivan said. "It's two neighbors going at buying a unit as an investment."
Sullivan said the speculative buyers offer a double-edge sword for the economy. On one side, they put money into the market; on the other, they're not a segment that is in for the long haul, and when the market falters, they'll be the first to bail out.
"But I think the market has got some juice left in it," Sullivan said. "There are a lot of moving parts to this -- speculative buying, interest rates, Las Vegas land use, the Southern California economy. If the price of real estate in California stays high, the pressure on Las Vegas continues."
He said Las Vegas isn't the only market experiencing similar pressures from California. Phoenix, Dallas and Houston are experiencing the same boom.
Sullivan and Aguero agreed that the current market could be sustained for two to three more years, but that interest rates will have a major impact on market conditions and how quickly it changes.
The Southern Nevada residential market is operating at a better clip than the rest of the nation and the nation's March performance was higher than what most analysts were anticipating.
The advance in U.S. housing construction, the strongest since May, came after two straight months in which building declined, primarily because of bad weather. U.S. housing starts were up 6.4 percent from February to a seasonally adjusted rate of 2 million new units.
Increases in job creation, retail sales and consumer prices have led analysts to speculate that the Federal Reserve would raise short-term rates in future months, another reason why buyers flew into the market, hoping to beat the rush. |
