Prices in CA are so out of whack, that at this point low interest rates cannot provide further impetus to the expansion of the bubble.
Las Vegas is still bubbling...
reviewjournal.com
Median home prices expected to keep climbing
Demand for new homes outpacing supply, statistics show
By JENNIFER ROBISON
REVIEW-JOURNAL
Despite a cooling housing market, a local real estate consulting firm is predicting sizable increases in median home prices in the Las Vegas Valley through the end of the year.
Numbers released earlier this week by Salestraq show that the demand for new homes is outpacing supply. In the last 12 months, new-home sales exceeded new-home permits by nearly 1,500 units, and current monthly demand for new homes is about 900 units ahead of what builders are delivering.
The mismatch between supply and demand isn't likely to abate in coming months: Salestraq also reported that permits for new homes are down 29 percent in the first five months of 2005 when compared with the same period in 2004 -- from 17,074 permits a year ago to 12,104 permits this year -- a lagging indicator that could mean dwindling supply in coming months.
"For the last few months, builders have been closing more new homes than they're permitting," Salestraq President Larry Murphy said. "We're in a period of declining inventory, and that could be the reason prices will continue to increase through December."
Salestraq's statistics showed a median new-home price in the Las Vegas Valley of $293,829 in May, a 22.9 percent increase when compared with $239,047 in the same month a year ago. However, if condominium conversions, which weren't a factor in last year's market, are removed from the calculation, the median price in May becomes $311,525.
Murphy said that median, excluding condominium conversions, will reach $340,000 by the end of 2005.
Despite rising prices, Salestraq data said new-home closings rose to 13,468 units in the first five months of the year, up from 11,245 units a year ago -- an increase of 19.8 percent compared with the same period a year ago.
Murphy attributed the demand to local job growth -- a 7.4 percent increase from April 2004 to April 2005, according to numbers from the state's Department of Employment, Training and Rehabilitation -- and low mortgage rates. And with prices increasing, "people would rather be invested in housing than the stock market," he said.
Jim Widner, Las Vegas division president of KB Home, the valley's No. 1 builder in number of units closed each year, said Salestraq's numbers resemble the builder's expectations for the year.
Widner said KB Home, which sold 3,825 homes last year for 15 percent of the total new-home market, maintains waiting lists of 25 or more interested buyers at about 25 percent of its communities in the valley, and is experiencing demand in the rest of its communities as well.
"I would say (Salestraq's) numbers will be really close," Widner said. "Builders can't react fast enough to the increase in demand that happened in the last couple of years. There's not that much land out there, and trying to acquire the land, get it entitled (permitted and zoned) and bring it on line to build houses is a challenge. Also, the amount of labor available on the subcontractor side puts some constraints on the amount of homes that can be built.
"There's strong demand, supply isn't keeping up and costs for land, lumber, cement and labor are all increasing. Those factors work their way down through home costs."
Salestraq's data offer a mixed picture of Southern Nevada's existing-home market.
The median resale price in May reached a record $270,000, up 16.9 percent from $231,000 in the same month a year ago. Yet, sales of existing homes were off 17.3 percent in the first five months of the year, recording a drop from 24,942 sales through May 2004 to 20,631 closings through May of this year.
The culprit: a glut of inventory. Salestraq's statistics show a 231.8 percent increase in the number of resale listings in May compared with the same month a year ago, with 10,645 homes listed through the Greater Las Vegas Association of Realtors' Multiple Listing Service.
Mike West, president of residential brokerage Century 21 MoneyWorld, said though the market is "off" from last year, the sales pace and appreciation rate are "like a normal, good year for us."
"Houses are still appreciating," West said. "The market is still very strong."
Murphy said the number of resales on the market, though up from a year ago, has remained stable over the last nine months.
"Listing inventory is fairly normal and steady -- it's neither a flood nor a shortage," he said. "It's not at all a problem. A year ago, we were in a housing crisis, with no inventory. I think our supply-and-demand equation is much better balanced this year."
He added that the median resale price should rise another $20,000 through the end of the year.
Murphy said balance should also come to the new-home market in coming years.
Numbers from Salestraq reveal that local home builders bought and subdivided 24,794 home sites in the first five months of 2005. And though that's a 21.9 percent decrease when compared with 31,751 lots in the same period in 2004, Murphy said the figures suggest builders will have a solid supply of homes in two years.
"It appears we will have sufficient supply to meet demand," Murphy said. "Builders have been forward-thinking, and we will not have a housing shortage like we did last year, when we ran out of inventory." |
