Home values rise but concerns remain in Las Vegas

Home values in Las Vegas are rising from the depths, though concerns linger about the shadow inventory of foreclosures, underwater homes and a stubbornly high unemployment rate.

Home Builders Research Friday reported 438 new-home sales in June at a median price of $194,490, a 3 percent decrease from a year ago.

The slight drop is nothing to worry about, said Dennis Smith, president of Home Builders Research.

Year-over-year comparisons have been bouncing up and down for some time, he said.

“I was a little surprised at the price drop,” the housing analyst said Friday. “I think the number of new-home sales and prices are actually lagging demand. Looking at permits, I think we’ll probably see 600 to 650 new-home sales in the next few months.”

Smith counted 648 new-home building permits in June, compared with 459 in the same month a year ago. Permits are up 43 percent through the first half of the year at 2,894, and could reach 6,000 by the end of the year, he said.

“It looks like we’ve settled into a level of activity on new homes that we’ll see throughout the summer and fall,” he said.

Existing-home sales continue to post big monthly numbers with 4,297 recorded resales in June, bringing the six-month total to 25,626, a 12 percent increase from a year ago. The median price is up $10,000, or 9.1 percent, at $120,000.

The Greater Las Vegas Association of Realtors is showing higher prices for new listings, an indication the median price will continue to climb through the rest of the year, Smith said.

“It’s just that people have to be patient,” he said. “Housing prices are inching up, but it’s just a change of direction. You’re not going to run down to the bank for a home equity line of credit.”

The analyst questions what appears to be an “artificially induced” recovery. The biggest factor driving the recovery is a shrinking inventory of homes available for sale, which nobody saw coming a year ago, Smith said.

Things changed after Assembly Bill 284, known as the robo-signing law, took effect in October, requiring more extensive documentation of lenders’ authority to foreclose. Notice of default filings dropped dramatically, and the inventory of real estate-owned, or bank-owned, homes has fallen to 1,706, with half of them under contract.

Traditional home sales topped REOs and short sales for the second straight month in June, said Frank Nason, president of Residential Resources in Las Vegas. He broke down 3,155 closings in June to 1,162 traditional sales (36.8 percent), 1,111 short sales (35.2 percent) and 882 REOs (28 percent).

“Is that a sign the market is returning to normal? Hard to say with all the manipulation that is going on,” Nason said. “There are a lot of moving parts in this mess with AB284, the national robo-signing settlement, lack of condominium financing, tightening of credit in general, and all against a backdrop of zero interest rates and the soap opera in Europe.”

The big story for Las Vegas, besides the inventory level, is positive movement in the new-home market, Smith said. Last year he was getting calls from people wanting to know where they could find a foreclosure home. Now they’re looking for new homes, he said.

“Builders are taking longer to build because things picked up,” he said. “This is great news for subcontractors. They now have work. New homes create jobs and we need jobs.”

According to CoreLogic, there are still 55,600 homeowners in Clark County delinquent on their mortgages by 90 days or more, and 61 percent have negative equity in their home. And that doesn’t include those who have yet to receive a notice of default and are living in their homes without making payments.

That means Las Vegas could see another 75,000 homes in the so-called “shadow inventory” of homes that have yet to make their way through the foreclosure process, Smith estimated.

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