The Las Vegas Echo Boom
from Larry Murphy with Las Vegas Salestraq
July's housing statistics tell us that real estate in Las Vegas has entered the "Echo Boom."
For the first time since the end of last year's historic real estate boom -- exactly one year ago -- sales in the Las Vegas market are now diminishing available inventory in the new home sector. In fact, over the last 12 months, there have been 1,970 more homes purchased than permitted.
To arrive at the 1,970 number, we subtracted the number of new home permits, 27,834, from the number of new home closings 33,100 AND also subtracted the number of apartment conversions, 3,396 because they are not included in the permit numbers. In short, demand is now exceeding supply even with conversions on the market.
- In the last month or so, we have had at least one lottery and one campout as people wait for new homes.
- The number of Las Vegas new home subdivisions peaked last month and declined in July for the first time in 15 months.
- For the second consecutive month, new home sales topped the 3,000 mark. (Remember: the first time this market ever topped 3,000 units in a month was last December.)
- The resale market was even more vibrant. July's 5,404 sales were 2.8% above last July's numbers and the first time this year that the resale market beat any of last year's totals.
- The median price of an existing home reached a record $275,000.
- The median price of a new home was $292,250, a 20.8% increase over last year. However, if you eliminate the 550 apartment conversions in the total sales, the median price jumps to a record $317,375.
- The median price of a conversion has risen more than $10,000 in the last month to $160,589.
Taken together, these statistics powerfully suggest that we have entered an “echo-boom.” There are certainly analysts would strongly disagree with our assessment. Such analysts point to the 10,929 available listings on the MLS as an indication of market difficulty. We think at current sales rates, that's just three months of inventory. And, it's just about the same total we had last July.
Other analysts think that 2005 will be a "down" year. We don't agree. Given June and July's statistics,
- Las Vegas housing market will certainly crack 34,000 sales in the new home arena.
- At its current pace, Las Vegas should be off less than 3-5% from last year's record existing home sales totals. And, with a little luck in the fall, Las Vegas might even reach or exceed last year's totals.
- Prices are up 26.7% thus far this year for new homes and 23.4% for resales. The echo boom will sustain those price increase levels through the end of the year.
In summary, keep those seat belts buckled - Rocket Ship Las Vegas is still accelerating!