Buyers... "Snatching up houses!"

Home buyers capitalize on falling prices, rates

By Brian Wargo / Staff Writer

As home prices and interest rates keep falling in the Las Vegas Valley, more and more buyers are snatching up houses.

The Greater Las Vegas Association of Realtors reported May 6 that 1,794 homes were sold in April, a 21 percent jump over March's 1,478 home sales. The sales are 30 percent higher than April 2007.

In addition, 7 percent more condos and town houses on the Multiple Listing Service were sold in April, compared with March.

"We continue to see this as a good sign for the local housing market," the Realtor group's president, Patty Kelley, said. "With four months in a row of month-over-month gains in homes sold, we see this as a positive trend."

Properties owned by banks and other lenders accounted for more than half of the homes sold in April and that has created bargains since those homes are being sold below market prices, Kelley said.

The increase in sales comes as prices continue to fall. The median price of single-family homes sold in April was $235,875, down 3 percent from $243,169 in March. Prices are down 23 percent from April 2007.

Las Vegas housing analyst Steve Bottfeld said the valley will have to deal with thousands of foreclosures in 2008, but the increase in sales is a good sign. The Federal Reserve's reduction in interest rates has been the difference, he added.

"It is not about price, not about floor plan and not about design or location," Bottfeld said. "It is about the monthly payment, and that's why the interest rate change has been so important."

In the condo and town house market, the median price fell 5 percent to $155,000 in April. That's down 23 percent from April 2007.

The increase in sales, however, has prompted an increase in the housing inventory, which had been dropping in previous months. There were 22,942 homes listed for sales in April, up 179 from March, the Realtors' group reported. The inventory is 3 percent higher than it was in April 2007. Of those new listings, the median price was 3.6 percent lower than March and 23 percent below April 2007.

The number of condos and town houses for sale increased 1.7 percent in April to 5,373. That's 11.5 percent below a year ago. The April list price is 3 percent lower than March.

In April 53 percent of homes were sold within 60 days of their listing. That's up from 47 percent in March.

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 Wargo@lasvegassun.com.

IBLV Homepage

Interesting...

Real Estate and Development

Condo project developer in rift with foreign partner

By Brian Wargo / Staff Writer

IBLV Homepage

The Las Vegas-based co-developer of an upscale condominium project in the southwest valley filed a lawsuit accusing its Irish partner of hijacking the development from its control.

Glen, Smith & Glen Development closed the sales office of Sullivan Square on May 2, but Kenneth Smith, the firm's managing partner and president, says Irish-based Harcourt Developments will apparently open a new sales office and start construction on the 16.5-acre project this summer. He said he's uncertain of Harcourt's plans since company officials are no longer communicating with him about the plans.

On April 30, Smith revealed his company's legal strategy to In Business after a reporter made inquiries about speculation the project was canceled.

The lawsuit alleges that Glen, Smith & Glen has been financially exploited and defrauded by Harcourt, which had committed to finance the project's $800 million construction costs. Harcourt had been paying Glen, Smith & Glen to oversee the project, but quit doing so at the end of last year and owes millions of dollars, the local company's officials say.

"(Harcourt officials) were engaged in a classic force-out," Glen, Smith & Glen attorney John Manly says. "They are trying to steal this project. Essentially, they stopped paying, not because of market conditions ... all of the indications are they plan to build the project. They are forcing (Glen, Smith & Glen) out and taking the profits."

Pat Doherty, one of Ireland's most successful and wealthy developers, heads Harcourt. Andrew Parker Bowles, the former husband of Camilla, wife of Prince Charles, is a director of the firm.

Harcourt responded to In Business inquiries, but has declined to comment.

Glen, Smith & Glen, a commercial and residential developer, acquired the site in the southwest valley near Interstate 215. It sought out Harcourt as a partner, and the Irish firm secured financing from the Anglo-Irish Bank, Smith says. Under the terms, Glen, Smith & Glen retained a 40 percent interest and Harcourt would cover the expenses, he says.

"We were doing all the work, and they would bring in the money," Smith says.

Although Smith says he didn't realize it at the time, he now believes this form of economic bullying may be a normal course of business for Harcourt. The Irish firm started changing terms of the deal and putting financial responsibility on Glen, Smith & Glen, Smith says. In the end, it has hurt his company's reputation.

"I would like to think I was a better judge of character," Smith says. "We thought they would be a good partner, and they were excited about Las Vegas. It was my mistake. I thought everybody does business like me, but I was stupid."

One market observer suggests the turmoil will make local developers leery of partnering with foreign companies. It appears to be a move simply of greed.

"That may have been their plan all along," the observer says.

Given the slowdown in the housing market, the project had been considered successful up until this point, but what happens now is anybody's guess. If the two companies settle their differences, the project could still work.

The question that remains is whether the sales that have already been made will go through. If not, projects such as Manhattan West and others under construction stand to benefit.

Glen, Smith & Glen has proposed a similar project in Henderson, but that project is still in the planning stages.

Nancy Rapoport, a law professor at UNLV, says the dynamics of the case will take shape in the upcoming weeks when Harcourt files its answer to the complaint. It will be curious to see if they blame the worldwide credit crunch for the problems, she says.

"The ripple effect, if the project doesn't get completed, will be a bevy of lawsuits from the folks who put down deposits for condos, and those lawsuits may try to argue that the condo depositors shouldn't only get their deposits back plus perhaps interest but also some portion of market appreciation had the project been completed," Rapoport says. "On the other hand, in today's market, that's a dangerous argument to make, because real estate prices are going down, not up, and the condo depositors don't want to put themselves in the position of admitting that they entered into losing contracts."

The problems started last fall when Harcourt made only partial payments to consultants or didn't pay them at all, Smith says. Excavation and utility work started last summer, and Harcourt started pushing the construction timetable back last fall, Smith says.

Eight liens and two lawsuits totaling more than $2 million have been filed by firms against Sullivan Square, and back payments owed to consultants and vendors total another $2 million, Smith says.

He says he met with Doherty two months ago and received assurances the project would be funded and back on track, but nothing happened. That inaction forced him to pursue legal action.

Smith says it appears Harcourt is going forward with the project because he heard from a broker calling his firm about its plans to open a sales center. In addition, there was apparently a letter sent to its contractor, Martin Harris, that construction would begin in July.

"I got a letter from (Harcourt) last week threatening us not to contact the lender about what was going on with the liens and lawsuit," Smith says.

Sullivan Square had 95 signed contracts in escrow and 30 pending, Smith says. The first block is to have 485 of the 1,300 units built. The development was expected to feature offices and retail space.

Manly said he will seek lost profits and punitive damages, but didn't know what the amounts would be.

"Foreign developers are welcome to come here and make money, but they have to live within the law and not exploit the local community for monetary gain," Manly says. "I am hoping for a large award to send a message to others that we don't tolerate this type of conduct here."

Smith says it's disappointing to no longer be a part of a project that offered something new to Las Vegas with a mixture of lofts, high-rise towers, brownstones and live-work space geared for local buyers who don't want to live in a single-family home. A letter will be sent to buyers letting them know what's happening and that the project is in flux.

"It is sad for the community because it needs alternative projects like Sullivan Square," Smith says.

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 (702) 259-4011 or by e-mail at wargo@lasvegassun.com.

At last, positive signs in housing. April data show inventory steady, sales up for LV!

May. 07, 2008
Copyright © Las Vegas Review-Journal

At last, positive signs in housing

April data show inventory steady, sales up for LV

By HUBBLE SMITH REVIEW-JOURNAL              

Housing in Southern Nevada

For the first time since September 2005, sales of single-family homes in Las Vegas rose from the same month of the previous year, the Greater Las Vegas Association of Realtors reported Tuesday.

Home sales jumped to 1,794 in April, up nearly 30 percent from April 2007 and the fourth consecutive monthly increase.

The inventory of homes available for sale on the Multiple Listing Service has stabilized at 22,942, a 3.1 percent increase from a year ago.

These are good signs for the local housing market, said Patty Kelley, president of the local Realtors association.

"Things are really improving as far as the number of sales, up 20 percent (from March) and the fourth month of steady increases," she said.

The median price of a single-family home continued to decline in April, dropping 3 percent from March to $235,875, according to GLVAR statistics. The price is down 22.7 percent from a year ago.

As in past months, Kelley attributes the slight decline to the number of short sales and foreclosures selling for prices below market value. Properties owned by banks and other lenders still account for more than half of all homes sold each month, she said.

"Every month we've got to work through those foreclosures until we get through 2009," she said. "All those (adjustable rate) loans from 2006 come due in 2009, so we're going to have the problem of foreclosures with us for a while. What it means for buyers is, there are tremendous buys out there right now."

Jeremy Aguero, principal of Las Vegas-based Applied Analysis, said he's encouraged by the declining inventory, which is near a 12-month low, though the number of vacant units on the market is higher than he'd like to see.

"More important than that, the number of pending and contingent sales are at their highest number in the past 12 months," he said. "So not only are people taking units off the market, but houses are selling."

Las Vegas still has to get past some hurdles, primarily working through the oversupply of homes for sale, but the numbers are encouraging, Aguero said.

GLVAR statistics are based on data collected through the MLS and do not necessarily account for new homes sold by local builders and other transactions not involving a Realtor.

For condos and townhomes, sales increased to 212 in April, up 7.1 percent from March and down 28.4 percent from April 2007. The median price fell to $155,000, down 4.9 percent from March and down 22.3 percent from a year ago.

Condo and townhome listings increased 1.7 percent to 5,466 in April. That's down 11.5 percent from last April.

Local real estate transactions tracked through the MLS during April totaled more than $510 million of sales volume, up 13.1 percent from last month.

Kelley said homes are coming onto the market priced much lower than in the past. She's listing a home in Queensridge for around $300,000 that sold for $525,000 in 2005. Anything under $350,000 is receiving multiple offers, she said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

It ~was~ a Housing Crisis?

The Housing Crisis Is Over


By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A23

The dire headlines coming fast and furious in the financial and popular
press suggest that the housing crisis is intensifying. Yet it is very
likely that April 2008 will mark the bottom of the U.S. housing market.
Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are
about to return to the heady days of 2005. That probably won't happen
for another 15 years. It just means that the trend is no longer getting
worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years
old. Home sales peaked in July 2005. New home sales are down a
staggering 63% from peak levels of 1.4 million. Housing starts have
fallen more than 50% and, adjusted for population growth, are back to
the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8%
of GDP; by the fourth quarter of this year, it will probably hit the
lowest level ever. So what's going to stop the housing decline? Very
simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families,
especially first-time home buyers. During the 1990s and early 2000s, it
took 19% of average monthly income to service a conforming mortgage on
the average home purchased. By 2005 and 2006, it was absorbing 25% of
monthly income. For first time buyers, it went from 29% of income to
37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the
houses they purchased (as opposed to speculators) stopped buying. This
caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept
growing (albeit more slowly recently) and mortgage rates have come down
70 basis points from their highs. As a result, it now takes 19% of
monthly income for the average home buyer, and 31% of monthly income for
the first-time home buyer, to purchase a house. In other words, homes on
average are back to being as affordable as during the best of times in
the 1990s. Numerous households that had been priced out of the market
can now afford to get in.

The next question is: Even if home sales pick up, how can home prices
stop falling with so many houses vacant and unsold? The flip but true
answer: because they always do.

In the past five major housing market corrections (and there were some
big ones, such as in the early 1980s when home sales also fell by
50%-60% and prices fell 12%-15% in real terms), every time home sales
bottomed, the pace of house-price declines halved within one or two
months.

The explanation is that by the time home sales stop declining,
inventories of unsold homes have usually already started falling in
absolute terms and begin to peak out in "months of supply" terms. That's
the case right now: New home inventories peaked at 598,000 homes in July
2006, and stand at 482,000 homes as of the end of March. This inventory
is equivalent to 11 months of supply, a 25-year high - but it is similar
to 1974, 1982 and 1991 levels, which saw a subsequent slowing in
home-price declines within the next six months.

Inventories are declining because construction activity has been falling
for such a long time that home completions are now just about
undershooting new home sales. In a few months, completions of new homes
for sale could be undershooting new home sales by 50,000-100,000
annually.

Inventories will drop even faster to 400,000 - or seven months of supply
- by the end of 2008. This shift in inventories will have a significant
impact on prices, although house prices won't stop falling entirely
until inventories reach five months of supply sometime in 2009. A
five-month supply has historically signaled tightness in the housing
market.

Many pundits claim that house prices need to fall another 30% to bring
them back in line with where they've been historically. This is usually
based on an analysis of house prices adjusted for inflation: Real house
prices are 30% above their 40-year, inflation-adjusted average, so they
must fall 30%. This simplistic analysis is appealing on the surface, but
is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of
Americans buy their houses with mortgages. And if one buys a house with
a mortgage, the most important factor in deciding what to pay for the
house is how much of one's income is required to be able to make the
mortgage payments on the house. Today the rate on a 30-year, fixed-rate
mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's
house prices to the 1970s or 1980s, when mortgage rates were
stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been
subtracting a full percentage point from GDP for almost two years now,
which is very large for a sector that represents less than 5% of
economic activity.

When the rate of house-price declines halves, there will be a wholesale
shift in markets' perceptions. All of a sudden, the expected value of
the collateral (i.e. houses) for much of the lending that went on for
the past decade will change. Right now, when valuing the collateral,
market participants including banks are extrapolating the current pace
of house price declines for another two to three years; this has a
significant impact on the amount of delinquencies, foreclosures and
credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will
be underwater on their mortgages. They will thus have less incentive to
walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the
market value of a lot of the securitized mortgages that have been
responsible for $300 billion of write-downs in the past year. Even if
write-backs do not occur, stabilizing collateral values will have a huge
impact on the markets' perception of risk related to housing, the
financial system, and the economy.

We are of course experiencing a serious housing bust, with serious
economic consequences that are still unfolding. The odds are that the
reverberations will lead to subtrend growth for a couple of years.
Nonetheless, housing led us into this credit crisis and this recession.
It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge
fund firm based in New York.

Realty World Luxury Homes... Sharpening the Cutting Edge

Scott Moses came and talked to us about some of the unique initiatives Indymac is putting in place.  They are forging new partnerships and developing entirely new ways to approach short sales.

Over the past few weeks it has become abundantly clear that a significant portion of our business should and will continue to be short sale business.  From First American Title, to the leadership at Realty World, the industry seems to be recognizing the opportunities inherent in the niche of the market.

Let's recap some of the material from the past couple weeks.
*  Short Sale offers being accepted by banks continue to increase: Banks are beginning to realize how much more costly the alternatives to Short Sales are.. this is motivating them to consider Short Sales like never before.

*  Taci Granlund, FATCO VP- Senior Escrow Officer, had glowing words to share regarding Indymac:  Taci swaers that Indymac is the ~best~ bank to work with, especially when it comes to short sales.

*  Banks are now approving Short Sales before home owners have "lates"!  Anyone who you know who might be considering "letting their house go" is an slam dunk Short Sale prospect.... save them the negative impact of foreclosure by helping to negotiate their Short Sale.

*  Be careful which clients you work with!  Clients need to be cooperative and motivated to complete the short sale process...they will have to produce financial documents and share a lot information with the bank.

*  If you call and get a customer service rep that isn't very responsive... then hang up and call back.... often you will get different responses from different reps.

*  Fed-ex your Short Sale packages overnight!  Send them directly to the asset managers/loss mitigators and include a gift card to Starbucks to make an impression on them about how motivated you are to represent your Short Sale.

*  Include a brightly colored summary sheet detailing the content of the short sales package.

*  Include a sheet with contact information for all interested parties.

*  The best way to find out EXACTLY what is owed on a property is to request a "Reinstatement Letter"  this document should get you the exact figure owed on the property

*  Have our friends at FATCO prepare us an estimated HUD, and include that in the package as well.

*  One website resource is:  www.shortsalecenter.com

*  For our investor clients remember that investment properties in financial duress can qualify for 1031 exchanges... a strategy that can help your investors buy time and save potential equity.

*  As always, this is a numbers game!  We need to be prospecting this business to make the resources we have available to us work!

*  200 piece farm once a month = <$100 = Thousands in commissions!! Easy math!

*  Call Phil Hanna!  Go to www.postcardsplus.com
GET YOUR FARM STARED!!!

*  Be sure you are using Indymac!  Send them your business!  Not only are they the best in the business... but they will be giving us business too!  When we start getting pre-approved Short Sales and REO assets distributed to us they will be given to the agents that have established relationships with Indymac and are giving them the business.  Use HBM!  Use Indymac!

*  We are about to see a wave of Short Sales released that have been pre-negotiated with banks as never before.  It is time we ALL change the way we think and feel about short sales... this is going to be a huge chunk of our business for at least the next few years.

*  VERY GOOD website resource: www.shortsaleplan.com
This site is literally writing the rulebook on how to do short sales, and guess what, they are partnering with Indymac!

*  In June we will be getting invited to a Short Sale Disposition Expert class that will train us all how to be top-level Short Sale professionals

*  Banks are getting very very highly motivated to work with Short Sales... the main reason for their motivation:  money!  On a $250k house the bank saves over $80k by shortsaleing rather than foreclosing!!!

Remember everyone... the Monday Morning Meeting may be voluntary... but it is ~the~ place where we share the most cutting edge information with you.

If you want to make money, if you want to keep up on the latest information, if you want to ~make it~ in this market, you have to take it to the next level!

Good Signs in the Market

Local housing statistics for April 2008

GLVAR reports fourth straight month of increased local home sales

Local housing statistics released today by the Greater Las Vegas Association of REALTORS® (GLVAR) show that the number of homes sold in Southern Nevada increased for the fourth straight month, while local home prices decreased slightly April.

“We continue to see this as a good sign for the local housing market,” GLVAR President Patty Kelley said. “With four months in a row of month-over-month gains in homes sold, we see this as a positive trend.”

GLVAR statistics for the month show a slight decline in the median price of homes, condos and townhomes sold in April. As in past months, Kelley said GLVAR experts continue to attribute this slight price decline to the number of short sales and bank-owned properties selling for prices below market value.

“Properties owned by banks and other lenders are still accounting for more than half of all the homes sold each month. Until recent months, this sort of thing was unprecedented,” Kelley said. “Of course, if you’re in the market and qualified to buy a home here in Southern Nevada, this situation works in your favor. Bargains abound.”

This month’s GLVAR statistics include activity through the end of April. The association distributes such statistics each month based on data collected through its Multiple Listing Service (MLS), which does not necessarily account for newly constructed homes sold by local builders. This month’s highlights include:

 

The total number of local single-family homes sold in April was 1,794. That’s up 21.4 percent from 1,478 homes sold in March. For condos and townhomes, 212 were sold in April, up 7.1 percent from 198 sales in March and down 28.4 percent from last April.

 

The median price of a single-family home sold in the Las Vegas area decreased by 3.0 percent from $243,169 in March to $235,875 in April. That’s down 22.7 percent from last April.

 

For condos and townhomes, the median sales price decreased 4.9 percent from $163,000 in March to $155,000 in April. That’s down 23.3 percent from last April.

 

 The number of local homes listed for sale through April increased 0.8 percent for single-family homes, with 22,942 homes listed for sale, compared to 22,763 homes listed for sale in March. That’s up 3.1 percent from last April.

 

The number of condos and townhomes listed for sale increased 1.7 percent from 5,373 in March to 5,466 in April. That’s a decrease of 11.5 percent from last April.

 

Kelley said that all local real estate transactions tracked through the MLS during April totaled more than $510 million of sales volume, up 13.1 percent from last month.

 

Through April, 53 percent of all single-family homes and 49.1 percent of all condos and townhomes sold within 60 days. In March, 47.3 percent of all single-family homes and 52.0 percent of all condos and townhomes sold within 60 days.

To arrange interviews with GLVAR experts, please call George McCabe or Elizabeth Holzhauer at (702) 967-2222. 

 

GLVAR was founded in 1947 and provides its nearly 15,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.  Each GLVAR member receives the highest level of professional training and must abide by a strict code of ethics. For more information, visit www.lasvegasrealtor.com.

 

Press On

Nothing in the world can take the place of persistence.  Talent will not; nothing is more common than unsuccessful people with talent.  Genius will not; unrewarded genius is almost a proverb.  Education will not; the world is full of educated derelicts.  Persistence and determination alone are omnipotent.  The slogan "press on" has solved and always will solve the problems of the human race.
- Calvin Coolidge

 

Thanks Steve! 

Top 10 Worst? ~NOT~ Las Vegas!!!

Miami-area home sellers looking to unload their properties might want to make sure they have comfortable couches.

It looks like they're going to be there a while.

That's because Miami tops our list of the nation's most sedentary housing markets. These 10 spots feature a potent mix of dropping prices and sluggish sales rates. Also on the list: Denver, San Diego, Baltimore and Chicago.

Slideshow: America’s Worst-Selling Housing Markets

In compiling our list, we looked at price growth and sales rates in the country's 40 largest metropolitan statistical areas. We took the cities in the midst of year-over-year price declines, based on National Association of Realtors data, then calculated how quickly these cities are shedding inventory from their peaks, which occurred between four and six months ago, based on data from ZipRealty, an aggregator of multiple listing service data. Atlanta, a likely contender for the top ten, was not considered due to irregularities in inventory reporting.

By using sales rate, instead of the months remaining of inventory, we wind up with a figure that shows how quickly homes have been leaving the market from its most saturated point, the most straightforward indicator for measuring sedentary vs. active sales.

In Chicago, for example, where the median home sale price in the fourth quarter of 2007 was $261,000, a 2.6% drop from the previous year, there were 72,842 homes on the market, with 2.2% of them selling each month.

While this sales rate alone isn't extraordinary, it matters because Chicago's housing supply is overstocked, with 50% more houses on the market than two years ago. Prices, as a result, are continuing to sink.

Behind The Numbers

It's important to note that housing markets never contract to zero inventory. Their inventory cushions also differ. From 2002 to 2006, New York had an average unsold inventory rate of 1.7%. But another healthy market during that time, Charlotte, N.C., maintained a 2.9% unsold housing inventory rate.

"Every market is a little bit different," says Jonathan Miller, president of Miller Samuel, a Manhattan-based real estate appraisal company. "But while faster sales don't necessarily mean a bottom is around the corner, it is a significant reversal." That's because prices typically go up after inventory goes down.

Another important point is that the country's most sedentary housing markets are not the ones with free-falling prices.

Some of the country's more active markets are Las Vegas and Sacramento, Calif., where houses are moving off the listing pages at monthly rates of 3.4% and 4.2%, respectively, from their peak inventory gluts.

But both those markets were dramatically overbuilt during the boom, and sales are largely a result of homeowners slashing prices. In Sacramento, 50% of area homes have been marked down from their original listing prices; it’s 48% in Las Vegas, according to ZipRealty.

Chicago-area sales are more sluggish, but even though prices have declined (they are down 2.6% for the year), they're nowhere near the double-digit falls seen in Las Vegas and Sacramento.

The markets that are really in trouble are those in Florida, which have experienced all the overbuilding and lending problems of Las Vegas and Sacramento but are experiencing flat sales. In September 2007 in Orlando, No. 2 on our list, there were 35,365 homes on the market. Since then, available inventory has shrunk at the excruciatingly slow monthly rate of 0.6% per month. It's the same story in Miami, where homes have been selling at an underwhelming rate of 0.2% per month.

Miller says there's generally a three to six month lag between when a city starts putting a serious dent into its inventory and when prices start to improve.

For these 10 markets, that moment can't come soon enough.

Reasons for Optimism

First hint of housing turnaround

By Brian Wargo / Staff Writer

It may only be a small boost driven by warmer weather, but after two months of some of the weakest new-home sales in Las Vegas since the mid-1990s, surpassing 1,000 sales in March felt like a thaw after a frigid winter for some builders.

Many aren't expecting a quick recovery for the Las Vegas housing market, but traffic is up and so are sales per subdivision. That sparks hope that the new-home market has seen its bottom and only has one direction to go - up, albeit slowly.

Astoria Homes reported its March sales were better than January and February combined. The last week of March was probably the best month the builder has had in more than a year, company President Tom McCormick said. The builder is launching a luxury home division and hiring staff despite the housing slowdown.

"Through 2006 and 2007 it felt like head winds, but now it feels like tail winds," McCormick said. "It is hard for me not to think that the new-home market isn't improving by the second half of the year."

Credit remains tight but people with jobs, a down payment and good credit are able to get loans. The cancellation rate of 28 percent in March was the lowest since February 2007, according to Home Builders Research.

Some analysts and builders have suggested that the best time to buy a new home may have already passed. Builders had been offering both discounted prices and incentives, but with inventories whittled to next to nothing, some builders are dropping incentives such as paying for closing costs and upgrades and focusing on low prices.

SalesTraq reported the median price of single-family homes fell to $266,135 in March, about $5,500 lower than February and 16 percent below March 2007. Home Builders Research pegged the March price at $259,940, down 18 percent.

"I think this is the bottom, and if you don't go out and buy now, you can't expect it to get any better," Home Builders Research President Dennis Smith said.

Brian Plaster, president of Signature Custom Homes, said incentives were a more popular tool last year when builders had more standing inventory. Home Builders Research estimates the unsold inventory of new homes in March was 1,400 to 1,500 and as low as 1,000 when excluding age-restricted homes.

"Incentives are used more when you have a lot of standing inventory," Plaster said. "I think the whole market now is driven by price. If you look at all the tracts that have the most sales, it is in the $150,000 to $200,000 price range."

Las Vegas housing analyst Steve Bottfeld said builders aren't including swimming pools, landscaping and other upgrades because prices are valued more by buyers these days. The usually optimistic Bottfeld said if the best new-home deals aren't over, they will be soon because sales could improve by the second half of 2008. Prices have held steady since November after falling sharply in 2007, he said.

McCormick, who says his company still offers closing costs to buyers, says builders' rock-bottom prices will start to disappear when sales improve.

"Some of the people who I trust and respect a lot say ... that is a sign everything is going to come to an end," McCormick said. "We know of builders who have gone to straight price and no incentive, but the price is really low. What it looks like they are doing is setting a floor to start building back up again."

It's not known when builders will start ramping up construction again. Some analysts suggest the dwindling inventory of new homes will push more buyers to consider existing homes and help cut into that supply, which is estimated at seven months, according to SalesTraq. Reducing the existing-home inventory is considered crucial to the housing market's recovery and it will open the door for builders to start a new wave of construction.

During the first three months of this year, 1,151 permits were issued, according to SalesTraq. More than 3,500 permits were issued during the same period in 2007.

Smith says not everyone wants an existing home and with many foreclosure properties requiring extensive repair, he says he foresees a bump in new-home construction, although builders will be cautious.

"If they don't start pulling more permits in the next two to three months, you will see a shortage of new homes," Smith said. "But I think they are going to be slow because they were wounded so bad. Some who were building 2,000 to 3,000 a year during the boom are doing closer to 500 now."

Tim Sullivan, president of Sullivan Real Estate Advisors, said builders will wait until the existing-home inventory is reduced before they start constructing homes in larger numbers. That may not be until 2009, he said.

McCormick is more optimistic.

With 440 neighborhoods in Las Vegas that sell suburban-style housing, about 85 of those have fewer than 10 homes left in them, McCormick said. Even at two or three a month, they will be gone in six months, and nobody is opening anything new, he said.

"There is no new land in the marketplace, and so the supply is going to go down, which again demand should start to improve as we get closer toward the end of the year," McCormick said. "I can't find anything beyond a broad-based recession or really high interest rates - which just don't look likely - to say why this market doesn't improve."

KB Home, which is still building about 30 homes a week in Las Vegas, has seen sales rise. It's all about price, said Don Del Giorno, division president, who says with little inventory on hand the builder isn't offering incentives like it had. Instead, KB is focusing are guaranteeing buyers a lower price at closing if prices drop further.

"It has picked up, but whether that is seasonal or the market is changing, I have trouble making that call, he said. "But I am optimistic going into next year. The local market has never been through anything like this since I have been here, but I think we are going to be quicker to recover with the job creation we have here."

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 wargo@lasvegassun.com.

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In Business Las Vegas April Economy At A Glance

Greenspun Media Group recently acquired Recruiting Nevada, a local Internet company that publishes Nevada's largest network of employment Web sites.  For the past two years, Home News Community Newspapers of Nevada has partnered with Recruiting Nevada on a quarterly basis through the Opportunity Boulevard Career Fair.  This strategic acquisition will immediately introduce new career opportunities to a significantly larger audience of job seekers while also offering employers increased response rates as Recruiting Nevada's online presence extends to Greenspun Media Group's local, regional and national group of award-winning publications.  Recruiting Nevada delivers the most cost-effective, results-oriented recruitment advertising solution for Nevada employers and is working to solve the state's critical workforce shortages from a supply-demand perspective. RecruitingNevada.com is a nucleus job board attracting the largest audience of local and relocating jobseekers to Nevada.  This new addition uniquely positions GMG to take advantage of the two growing areas of online employment classifieds including niche job boards and regional or local job boards.       Las Vegas welcomed just over 3.1 million visitors in February, up 3.1% from last year, according to the Las Vegas Convention and Visitors Authority.  The year-to-date visitor count is at more than 6.2 million, a 1.2% increase over the same period last year.  Convention attendance increased 15.8% for the month.      The LVCVA recently released its 2007 Visitor Profile Study, which noted that 81% of last year's visitors were repeat visitors to Las Vegas.  The average number of nights stayed was 3.5, and 84% of visitors gambled while in town.  The average trip gambling budget was nearly $556.  54% of last year's visitors traveled here via ground transportation and 46% traveled by air.      Nearly 3.6 million passengers came through McCarran International Airport in February, a 3.4% increase over last year.  According to the Clark County Department of Aviation, more than 7.1 million passengers have been processed through McCarran so far this year.      The Nevada Gaming Control Board reported a state gaming win of nearly $1.015 billion in February.  Gaming taxes collected by the state on casino revenues reached more than $53 million, up about 3% from last year.  Clark County gaming revenues reached $866 million for the month.      Nearly 5,400 new movers came to Clark County in March, according to the Nevada Department of Motor Vehicles.  The year-to-date count is now at more than 16,300.      As a result of our continued influx of newcomers, 97% of our estimated 2 million Southern Nevada residents were not born here, according to the 2008 Las Vegas Perspective.  The retiree population increased 5.2% in the past year to more than 300,000.  Hispanics and Latinos now represent 26% of Clark County's population and 40% of the School District's total enrollment.  The report also mentioned that the median household income for the area now stands at $53,704, with 69% of households owning their home.      Nevada's seasonally adjusted unemployment rate held steady at 5.5% in February.  According to the Nevada Department of Employment, Training and Rehabilitation, the Las Vegas area experienced an unadjusted unemployment rate of 5.4% for the month, down from 5.7% in January.  Current statistics show the national rate at 4.8% and California's rate at 5.9% (January), both seasonally adjusted.                  The Nevada Film Office reported $103.3 million in revenue from film production in 2007, marking the eighth consecutive year the state has exceeded $100 million in film-production revenue.  Revenue from feature films increased from $14.3 million in 2006 to $25 million in 2007.  Television was responsible for more than half of the revenue, including series, reality programs and specials.      The latest numbers from SalesTraq show 867 new home closings for February, bringing the year-to-date total to 1,709.  The median price of a new home was $283,315, more than $10,000 higher than January.  There were 901 existing home closings in February, for a total of 1,874 for the year.  The median price of a resale home was $250,000, also $10,000 higher than last month.  Total listings on the MLS continued to decline in February to 22,837, the lowest level in twelve months.      According to Robert Charles Lesser & Co., an independent real estate advisory firm, Las Vegas is home to three of the top ten best-selling master-planned communities in the country.  Last year Mountain's Edge, a 3,500-acre development in the southwestern part of the valley, sold 1,740 new homes, enough for a number one ranking.  Providence, located in the Lone Mountain area, came in at number five with 726 homes sold.  Summerlin ranked number eight with 583 net units sold.      According to the Nevada Department of Taxation, the state's taxable sales reached $3.52 billion in January, with collections from sales and use taxes at $264 million.  Sales in Clark County totaled $2.67 billion for the month.  Clark County posted increases in rental and leasing services, telecommunications, health and personal care stores, and eating and drinking places.