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John Vanhara Existing-home sales rocket
Housing expert estimates 50,000 transactions possible for 2003
Sales of existing homes in Las Vegas have increased by nearly 22 percent through August, pointing to a sixth straight year of double-digit increases in that category, a local housing expert said Tuesday.
There were 4,697 recorded resales in August, bringing the year-to-date total to 31,328, up 5,618 from a year ago, said Dennis Smith, president of Home Builders Research.
“It’s just so astonishing to me to see how large those increases are,” he said. “It’s not just 22 percent. Yeah, 22 percent up from the previous year, which was up 18 percent from the previous year, which was up 15 percent from the year before.”
It also speaks to the demise of the entry-level new home market, Smith said. Five years ago it accounted for 70 percent of new home sales; today it’s down to about 30 percent.
The median price of a new home in August was $206,167, up 12.4 percent from the same month a year ago. The median price of an existing home was $172,000, up 13.2 percent.
Smith counted 2,183 new home sales in August, bringing the yearly total to 15,289, 4.2 percent ahead of last year.
New home building permits continue to be pulled at a record pace. There were 1,906 permits reported in Las Vegas, Henderson, North Las Vegas and Clark County. Through August, permits are up 15 percent to 16,435.
“The current thing is still land prices,” Smith said. “We don’t expect them to reverse and they haven’t. They keep going up. Yeah, the BLM will release land, but are they releasing enough of it to bring the price down? No. If supply wasn’t an issue, land prices wouldn’t be what they are.”
If the resale market continues at its current pace, there would be almost 50,000 transactions this year, which would translate to a 29 percent increase from 2002.
“There is probably no other major housing market in the United States that can match this activity,” Smith said. “If a Realtor can’t make money selling houses here, he should probably find another line of work.”
An active resale segment is necessary for the vitality of the new home industry, he said, as homeowners invest their equity into a new home and keep capital flowing into a vital part of the area’s economy.
Dale Puhl, president and chief executive officer of Southwest Title Co., said activity in the Las Vegas housing market will slow through the second half of the year, but the valley will continue to see heavy activity in both new construction and the resale markets.
“The mortgage rates below 6 percent that we have been enjoying are an exception to the norm,” Puhl said. “They meant huge increases in home sales and refinances at the beginning of the year. We won’t see that kind of activity through the rest of this year, but the market is still very healthy.”
Smith expressed concern about investors and speculators who not only help drive up sales prices, but also present a somewhat inflated picture of true consumer demand.
“It’s good for the present numbers, but could result in some problems down the road,” he said.
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Jeff Smith
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