Wednesday, April 01, 2009

Las Vegas Housing Price Update - April 09 Post

Case-Shiller (CS) Home Price information was released yesterday (for Jan 09) and the data suggests the housing market has yet to find a bottom.

Extracts from yesterday's CS Press release:

New York, March 31, 2009 – Data through January 2009, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008.

The three worst performing cities, in terms of annual declines, continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.0%, Las Vegas declined 32.5% and San Francisco fell 32.4%. Dallas, Denver and Cleveland faired the best in terms of annual declines down 4.9%, 5.1% and 5.2%, respectively.

The rates of decline from the individual heights of each market are evidence of how much each market has taken back in terms of the gains earned in the past 10-15 years. All of the 20 metro areas are in double digit declines from their peaks, with nine of the MSA’s posting declines of greater than 30% and five of those (Las Vegas, Miami, Phoenix, San Francisco and San Diego) in excess of 40%.
The following chart was extracted from the same release and depicts the annual returns of their 10 and 20-City Composite Home Price Indices. Note: the 20-City Composite wasn't started/tracked until the year 2000.

Click chart for sharper image

Moving on to Las Vegas

I created the following two charts using this newly released CS data. The first chart depicts Las Vegas home price history vs. the CS 10-City Composite (all the way back to 1987) and the second chart compares all three - starting in 2000. (Note LV's early lag, followed by a quicker run up and sharper decline)

Click charts for sharper image

Another source I like to use for tracking home price data is

Their recent release (which includes SF homes AND condos) suggests that Las Vegas home inventories are increasing (nearing 30,000) and prices (when including condos) are falling even faster than the CS data/depictions above - A whopping 41% YoY decline - LV Housingtracker data.

And to think... There were 2,800 NOD's in my zip code ALONE last month - soon to add to these massive inventories...

Why all the new NOD's? Well, do you remember the Holiday foreclosure moratorium? It's over now and the notices are flying!

Anyway, I have many more LV Housing Charts (AND information regarding the 58% of upside-down mortgage holders in the Valley) - at this link

Additionally, in Febuary I wrote (LV housing crash continues) that the median home price in LV was down 53% from April 2006.

That number however has now increased to a 54.2% price drop since the peak (April 2006 Median=$344,900; Today's Median=$157,990)

Bottom Line:

New data from both Case-Shiller and Housing Tracker illustrate that we are no where near a bottom for Las Vegas home prices... Though mortgage rates are quite low and home sales seem to be picking up steam, the economy is still in a deep funk and local unemployment is rising swiftly/significantly (LV Unemployment currently at 10.1%).

These issues above coupled with increasing foreclosures, tighter lending standards and a huge new wave of Alt-A Mortgage resets - in the Hundreds of Billions nationwide; used largly in the bubble states - will prevent us from finding a floor for quite some time.




Anonymous said...

As someone over 50 who has always been a renter, I view this as sweet comeuppance.

Housing shouldn't be a speculators market. Houses shouldn't get tax deductions that renters don't get
(in fact, let's get rid of ALL deductions).

I hope houses fall 200%. It just might too because WHO is going to have the income going forward to buy a house at anywhere near there current prices.

Mark said...

Though mortgage rates are quite low and home sales seem to be picking up steam
Jim Sinclair had a note the other day to remind everyone that foreclosures are included in raw home sales data. If it is an uncompleted project that is shut down, it actually goes into the "new home" sales data.

Regular Reader said...

Nice charts, Randy. There is a lot you can do with this data and a good chart program. Incredible that buying Vegas property continues to be an exercise in catching a falling knife. How many times has Dennis Smith, a local real estate shill there, told the RJ readers a bottom was in.

Anonymous said...

Hey anonymous...Why so angry?? So you are a renter and could never afford a house..We deserve the deductions because we help keep the economy going..not you...

You are an idiot and need to realize it is not everyone elses fault you could never get your life together enough to buy a house

BxCapricorn said...

We are in fact very close. I know it's fun to think we can get the home of our dreams for a rock bottom price, but most of these homes for sale, are not one that I would personally live in. Many are in disrepair and require a great deal of investment that will not show up in the sales price. With the mortgage rate so low (under 5%, if you qualify), the better homes are being taken off market at an incredible rate. As for gold and silver, that market is DEAD. Randy, it's time to realize that you nailed the trend, but that deflation is your current friend, and inflation is a few months away. Good luck, and great blog.

The Real Deal said...

The fact that US tax code permits tax deduction on mortgage interest means the government encourage people to buy house/condo and treat them as both home and capital investment. Therefore people must act rationally and responsibly as investors. But, as of around 1995 people didn't. They acted as speculators. Worst, they acted as gamblers - by frequent refinancing to extract value that simply not there, and by flipping. They got what they deserve - by way of being kicked out in foreclosures, by way of under-water mortgages, by way of highly depressed prices. Let this be the lesson of a lifetime.

BxCapricorn said...

I keep asking myself, what's the point of this blog, and as someone who developed a similar blog, I realized that it was simply becoming an ego trip, seeped in "pessimism porn". I had to delete it and I did. I feel better now that I have, and it cleared my mind enough to realize that there are no answers found here (except the ridiculous notion that gold and silver purchases will protect your "wealth", because they haven't so far and certainly won't in a month or so). The government has reshuffled the deck and re-written the rules because it had to. Yes, the well-healed benefited first, they always do. Each faction fought for the spoils (unions, politicians, corporations, etc), big news there. How does knowing any of this, help the average person now? Low financing rates now make homes more affordable based on median income, than ever before. WE should be rejoicing. IF you protected your retirement savings, you have more purchasing power than EVER in the coming deflation (get over inflation already people). This once-in-a-generation opportunity should be focused on here, instead of the self-defeating pessimism.