We have a wonderful company here in Las Vegas called "Salestraq" which supplies local Realtors with quarterly market data summaries for both new homes sales and MLS resales. Below is the report for the first quarter of 2014, and we decided to post the report here so that you can see the price differential between new homes and resale homes, and the reasons why there can be such a difference.
Evaluating the Differences Between New and Resale Home Prices
Courtesy of Salestraq
THE BOTTOM LINE...Stability has been a recurring theme in the Las Vegas housing market over the better part of the past year. Through the first quarter of 2014, the supply-demand dynamics are more reflective of sustainability than those seen during either the boom-time run-up or the recessionary crash.
Pricing trends have moderated in recent months as closings have shifted away from deeply-discounted investor purchases toward non-distressed sales to end users. The share of homes being acquired by cash buyers has remained below 50 percent of activity since July 2013, and resale inventory levels have remained in check.
In the new home segment, pricing has also moderated in recent months. While there has been much discussion about the disconnect between median resale and median new home prices, a deeper dive would suggest the gap is less dramatic.
It is true...the median new home price is nearly $125,000 greater than the median resale price valley-wide, which represents a 76-percent premium. However, the difference between the two figures is not necessarily an apples-to-apples comparison. For example, the average age of Las Vegas resale homes closed in March was 22 years, suggesting one half were constructed prior to 1992 and one half were built after 1992. There are a number of differences between a 22-year-old home and a new construction unit, including technology, compliance with current building codes, required maintenance and refurbishments, size and other factors.
Importantly, the average sized resale closing in March was 1,834 square feet, while the average of Las Vegas new homes for sale was 2,369 square feet. The 535 square foot differential could account for $50,000 or more of the pricing gap. Also, a closer look at resale homes built in 2010 or later that resold in March 2014 would suggest the median price of those transaction was $210,000, a 28-percent premium to the broader median of $164,000.
While new homes typically carry a premium to resales, it is important that buyers, sellers and REALTORS® understand the interplay between not only new and resale prices, but also the product itself, when evaluating alternatives.
NEW HOME HIGHLIGHTS
New Home Closings: The number of new home closings has moderated in recent months. In March 2014, a total of 454 new homes sold, representing a 21.9-percent decline from the same month of the prior year. Year-to-date closings are down 15.9 percent, and they remain 18.3 percent off the prior year during the past 12 months.
New Home Pricing: The median price dipped month-to-month in March, reaching $288,674 (down from $292,225 in February). Compared to one year ago, prices are up 29.9 percent. Per-square-foot pricing edged up to $127.87 (+12.1 percent on a year-over-year basis). Home sizes appear to be trending larger overall.
New Home Supply: The number of new homes permitted for construction has been a bit of a rollercoaster ride. In March, a total of 531 permits were issued (-21.9 percent from the prior year), yet they were up from a total of 377 in February. On a year-to-date basis, permitting is down 18.2 percent. During the past 12 months, they are down 23.1 percent.
EXISTING HOME HIGHLIGHTS
Existing (Resale) Home Closings: The number of resale closings in March jumped from levels reported in January and February. A total of 3,837 resales closed (-0.6 percent from the prior year). For the first three months of 2014, closings are off 9.0 percent, and they are down by the same rate for the past 12 months.
Existing (Resale) Home Pricing: The median resale price pressed north to $164,000 (+18.7 year-over-year). The most recent pricing level is the highest since November 2008. The average price per square foot also rose to $106.27, the highest in the post-recession environment.
Resale Availability (MLS Listings for Sale in Las Vegas): The number of resale units listed in the Multiple Listing Service (MLS) has remained within a relatively tight range during the better part of the past 8 months (at 8,377 in March). On an effective inventory basis (MLS listings-to-sales), availability dipped to 2.8 months.
Bank Foreclosures in Las Vegas (Repossessions): Foreclosure volumes have remained relatively modest (331 in March 2014).
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Berkshire Hathaway HomeServices, Nevada
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