Las Vegas Real Estate Analyst
Las Vegas Real Estate was among the hottest housing markets in the nation last year, and it isn't expected to cool off much in 2005, a local housing expert said.
The first six months of the year certainly won't measure up to the first half of 2004 when median existing home prices rose an average 50 percent, the largest increase for any metropolitan area in the United States.
At the end of the year, though, median prices and total sales will break records set last year, SalesTraq President Larry Murphy said.
Murphy laid out the numbers for about 600 people in real estate at his Crystal Ball 2005 housing forecast Thursday at the Tropicana.
Among the highlights:
• 28,773 new-home closings, up 14.5 percent from 2003.
• 59,613 existing-home closings, up 28.6 percent.
• 88,386 total home sales, up 23.7 percent.
• $300,780 median new-home price, up 42.3 percent.
• $250,000 median existing-home price, up 39 percent.
• 32,659 new-home permits, up 39.6 percent.
• 3,073 new-home sales in December, an all-time monthly sales record.
"I've been in town 30 years and I have never seen a market like last year and probably won't ever again," Murphy said. "We called it `the perfect storm' last year."
It was created by low interest rates, high demand for housing and an inventory of Las Vegas homes for sale that fell as low as 1,450 in February. That's about a two-week supply.
People were having to camp out to get a new home and it would take six months to a year for the builder to deliver the product.
Those who didn't want to wait turned to the resale market, where a home can close in 30 to 60 days. That pushed resale prices from $183,750 in January 2004 to $250,000 in July.
It was also a record income year for builders, contractors, suppliers, title companies, even companies that rent portable toilets, Murphy said.
"People were camping out at Pardee and they had four Porta Pottis in the parking lot, so it should have been a good year for those folks," he said.
KB Home was the No. 1 builder for the seventh year in a row with 3,680 sales at an average price of $238,000.
Pulte and Del Webb combined for 3,364 sales and were tops in sales volume at $1.4 billion, compared with just under $1 billion for KB.
A few builders, probably 10 percent, were overly aggressive with their pricing structure and got themselves in a situation where they had to cut prices, Murphy said.
"KB Home, in about July of last year, said, `Whoa, it's about time to pull back on price increases,' " he said.
Others, such as Toll Bros. and Pardee, never dropped prices.
To illustrate how home prices have skyrocketed in Las Vegas, Murphy reported 535 sales of existing homes for more than $1 million last year, compared with 225 in 2003.
Conversely, 99 new homes sold for less than $100,000, down from 216 the previous year.
"This is rapidly becoming an endangered species," he said.
Segmenting the valley by six submarkets, Murphy reported median home prices of $186,000 in the east, $232,000 in the north, $282,000 in the northwest, $246,000 in the southwest, $252,000 in the south and $322,000 in Henderson, the most expensive area. The southwest was the hottest area in sales with more than 8,000.
Appreciation rates were 23 percent in the east, 41 percent in the north, 42 percent in the northwest, 44 percent in the southwest, 33 percent in the south and 44 percent in Henderson.
Murphy predicted total sales could reach 100,000 in 2005. New-home prices, which topped $300,000 for the first time in December, may actually come down in the beginning of the year. "The brochure prices of new homes have been steadily declining for the last six months," he said. "What does that tell you about median price of Las Vegas new homes for sale for the next six months? Any increase in prices will be generated by outside buyers and investors more than the locals market."