New housing market off to strong start this year
22 February 2013
The Las Vegas Valley’s new homes market roared out of the gate last month with rising sales and construction plans, though activity is still weak compared to the boom years.
There were 513 new home sales in January, up from just 217 a year earlier and the highest January total since 2008, according to a report out this week from Las Vegas-based Home Builders Research.
Local builders also pulled 610 permits last month, up from 222 a year ago.
“These are indeed amazing changes,” research firm President Dennis Smith said in the report.
Prices are rising, as well. The median sale price of a new home last month was $220,700, up 6.7 percent from a year earlier.
Despite the uptick in activity, the housing market still has a long way to go before it fully recovers from the recession, Smith said.
From 2001 to 2006, with the construction market booming, January new home sales ranged roughly between 1,500 and 2,500.
Meanwhile, Smith also reported that most condo sales are now “at or above” the listing price, and about 94 percent of sales are cash transactions. If prices keep rising, Smith said, he wonders if Las Vegas will again see apartment-rental buildings transformed into for-sale condos.
“After 35 years tracking the housing market, we have learned never say never or always when it comes to housing,” he wrote.
The strong start to 2013 comes after the new homes sector showed signs of improvement last year.
There were 5,544 new home sales in the region in 2012, up 42 percent from a record low in 2011, according to Smith. Local builders pulled 5,908 permits last year, up 58 percent from 2011.
In the boom years, new home sales peaked at almost 39,000 in 2005, while new home permits reached nearly 33,000 in 2004.
But overall, the valley’s housing market is still plagued with problems.
About 59 percent of local homeowners with mortgages were underwater — meaning their debt exceeded their home’s value — at the end of 2012, according to Zillow. That’s down from 70 percent a year earlier but still highest among the country’s 30 largest metro areas.
The rate of underwater borrowers is expected to dip by year’s end to 56.7 percent, though Las Vegas would remain worst in the nation.
“Wow,” Smith wrote of the Zilllow report, “let’s digest that for a minute. An ‘improvement’ from 59 to 57 percent during 2013. That sure doesn’t sound like much, right?”