Las Vegas home prices tumble to 1995 levels
Builders forced to lower prices while competing with sales of existing homes
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A “for sale” sign is displayed outside a foreclosed home near Hacienda Avenue and Jones Boulevard on Saturday, Feb. 5, 2011.
Thursday
14 April 2011
2:25 p.m.
The price of new and existing homes will continue to decline the remainder of 2011 and one analyst said existing home prices are likely to remain depressed for several years, in part because of investors.
During a housing conference today at Springs Preserve sponsored in part by the Southern Nevada Home Builders Association, Dennis Smith, the president of Home Builders Research, said builders are continuing to lower prices to boost tepid sales.
Smith reported the median price for new homes in March was $199,956, a 5.3 percent drop from March 2010. In the existing home market, the median price was $113,000, a year-over-year drop of 9.3 percent. In February, the median price was $115,000.
The last time the monthly median price was this low was November 1995.
Smith revised his projection from January that Las Vegas would have 4,900 sales of single-family homes in 2010, about 150 more than 2010. He said 2011 is likely to be the weakest sales year for builders since the housing market started its collapse in 2007 -- somewhere between 4,200 and 4,500. The numbers should increase by 250 to 500 in 2012, which would still be less than 2010, he said.
“We have to expect this level of activity for the next couple of years with gradual improvement,” Smith said.
Builders have faced strong competition from the existing home market, after a slide in prices of nearly 60 percent since the market peaked in 2006 has forced them to respond.
The difference between the new and resale median price is $87,000, Smith said.
Panelists at the conference talked about the large number of foreclosures and weak economy continuing to depress prices of existing homes as well.
Frank Nason, president and corporate broker of Residential Resources, which provides sales and marketing services to residential developers, said many investors who are buying foreclosure homes are likely to try and sell them within the next two to three years.
That will flood the market with properties along with existing homeowners who also are looking to put their homes up for sale at some point, Nason said.
“To expect prices to bump up in the new-home segment is wishful thinking for a number of years because we will continue to have an influx of inventory from investors,” Smith added. “We have to get away from the fact of people thinking when is it going to get back to the way it was five years ago. That’s not going to happen.”
In the new-home market in 2011, sales dropped 31 percent during the first quarter, but Smith said it should pick up in the second quarter based on more potential buyers going through subdivisions than a year ago.
Smith reported 927 sales in the first quarter, down from 1,351 in January to March 2010.
The biggest decline in sales was in the southwest valley, where sales dropped from 612 in the first quarter of 2010 to 348 this year, a fall of 43 percent.
Sales fell nearly 20 percent in Henderson, 17 percent in North Las Vegas and nearly 14 percent in the northwest valley, Smith said. He said the federal tax credit for first-time homebuyers that expired in April 2010 helped boost sales a year ago.
But Smith said he’s optimistic the second quarter sales will improve because the number of potential buyers in Henderson rose 60 percent in the first quarter. It was up 48 percent in the northwest valley and 25 percent in North Las Vegas.
KB Home emerged as the top seller in the first quarter with 162 sales or nearly 17 percent of the market share. That’s up from 11 percent of the market share it had for all of 2010, Smith said.
Large builders continue to drop their prices just to make sales, even if they aren’t making a profit, Smith said. KB has some homes that sell for $64 to $73 a square foot.
“That makes competition really low for other builders,” he said.
Existing homes sell for about $78 per square foot versus $98 per square foot for new homes.
The jump in market share of KB comes at the expense of such builders as D.R. Horton, which lost its top spot from 2010. It had a 9.7 percent market share in the first quarter with 95 sales compared to 15 percent for all of 2010.
Among the other home builders:
• Pulte/Del Webb – 94 sales and 9.6 percent market share, up from 7 percent in 2010.
• Richmond American – 93 sales and 9.5 percent market share, down from 12 percent.
• Lennar Homes – 82 sales and 8.4 percent market share, up from 6.5 percent.
• Harmony Homes – 64 sales and 6.5 percent market share, down from 9.5 percent.
• Dunhill Homes – 56 sales and 5.7 percent market share, up from 3 percent.
• American West – 54 sales and 5.5 percent market share, down from 5.6 percent.
• Pardee – 51 sales and 5.2 percent market share, down from 6 percent.
• Beazer Homes – 49 sales and 4.9 percent market share, down from 4.4 percent.
• Ryland Homes – 43 sales and 4.4 percent market share, down from 4.4 percent.
In the resale market, Smith projects Las Vegas will have 43,250 existing homes sold in 2011, about 540 more than 2010. That number should increase to 44,500 in 2012, but well below the high of more than 64,000 sales in 2004, he said.
Smith Las Vegas had 19,250 finished lots and 10,528 partially finished lots. About 83 percent are either owned or controlled by builders.
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How's that Hope and Change working for you all??
Why is the SNWA handing out water hook ups when we are in a depressed market? Not only because of the water crises but because building 3,000 new homes is keeping the supply high while the demand is low.... and all the homeowners are now paying the price. Thank you SNWA
The SNWA stopped the home builders for 29 days when they first took charge of the water in Clark County, in order to show the builder who ran the show... but know they claim that they can't do it. Does this make sense to anyone?
why would anybody waste tens of thousands on a new home when the market is flooded with thousands of used homes? these builders should just bulldoze what they have and take a 5 year vacation.
That is about $50-60 a sq ft for a 2 story. The homowners fee for condos will be bigger than a payment. If the market recovers in 10 years, the homes will need somuch work they won't be worth fixing up. This is a point of no-return. Detroit is here. The only hope is a State program ...
Sensationalistic journalism at its finest. If the homes for sale in my Summerlin neighborhood is at 1995 levels, they would be selling around the $110,000 range. Yeah right. For shame Sun, for shame.
I remember four years ago many posters complaining about the high price of homes in our valley. Now the prices are down to the 1995 levels and seems people now complain about that.
Don't use your home as a bank, pay it off and enjoy your life. It works.
If someone wants to buy a new home, good for them, that is their right.
SNWA has not power to not hook up a new home, that is not allowing a property owner the right to use their property.
If you are not buying or selling, none of this means anything so no need to get excited.
In the RJ dated 11/8/2009, Dennis Smith was quoted as saying, "If you are looking for a better deal in 2009 than you can find today, I don't think that's going to happen". How many lives (financially) in Las Vegas have been lost since Smith made that statement. Yet, the Sun keeps quoting him. I quess if Bernie Madoff weren't in jail, the Sun would be quoting him as well. Shame, Shame...on the Sun. And Shame, Shame on Dennis Smith.
Correction...Dennis Smith made this statement in the RJ a year earlier, Saturday, November 8, 2008. I'm beginning to understand why Vegas is the dumbest city in America. Sun, keep up the good work.
Triple whammy: 1) high unemployment and the jobs that there are won't allow a person to own a home, 2) the people that have good jobs and own homes are underwater and have no mobility, and 3) the foreclosure pool has not reached bottom. All factors applying downward pressure on prices. No end in sight for this mess. Sorry.
It is time for builders to think out of the box to compete with resales. LEED certified gold, more contemporary, they built the same thing over and over. The Y and Z generation prefer new homes but they also like high tech and energy efficient.
it's a dead city. most of the homes that were built from 2001 - 2005 were nothing more than temporary dorms for people that came here to build the new mandalay bay tower, new palms tower, city center, etc.
those projects are done and so are the jobs and so are the need for all those homes.
Great point Stevem. Those people just wanted a home so they could live their dream. Unfortunately that dream turned into a nightmare. We have found over the years that when jobs are plentiful people just need somewhere to live until the next better job oppurtunity comes along. Jobs are now few and far between. Completely different attitude.