Summary
The Las Vegas housing industry started the New Year with dismal sales volume, declining inventory and median prices that appear to be in the process of stabilizing. In view of January’s housing statistics, this year may, in fact, have started with a good news/bad news scenario. The bad news came on two levels: (1) a decline in sales volume for all housing product types; and (2) a record foreclosure level. The good news also came on two levels: (1) Inventory in every category continues to decline; and (2) prices appear to be in the process of stabilization. In effect, January may be the beginning of the end of the housing slump here.
Analysis
Yes, new home sales plummeted to their lowest level in this century. The total of 901 was the worst since the mid 1990’s and a 56.4% decline over January 2007 results. Worse, it was a 27.9% drop from December’s totals.
Yes, existing home sales also nosedived in January. The 1,061 was 53.9% below last January and a drop of 26.9% from last month’s total.
Even sales in the vertical category declined in January. The total of 235 was 213 under last January, although this was an improvement over December’s total.
1. The number of new home subdivisions continued to decline for the sixth consecutive month. Although the total of 525 new home communities is still the highest per capita in any city in the world, it is a 2.4% decline over last month and a 9% decline from its peak last July. More importantly, there are at least 30 more subdivisions with 30 or less new homes to sell.
2 The number of new home permits remained almost infinitesimal. The total of 358 in January marks the third consecutive month in which new home permits were less than 400.
3 Existing home inventory continued a 5-month long decline. The 23,803 total was barely under December. Still, it is important to remember than normally, existing home inventory rises in January. The downside to the figure is that it represents 21 months of inventory.
1. The median price of all new homes (including vertical product) in January was $275,000. While that figure is 18.8% below last year, it is the third consecutive monthly increase.
2. The median price of traditional new homes was $268,000, a 19.1% decrease over last January and only a slight dip from December’s $272,500.
3. The median price of an existing home slid to $247,000. That’s an 11.8% drop from last year and a slight dip from December’s $253,000. Yet, when you consider the number of foreclosure sales that impact this number, the figure is much stronger than we anticipated. (Remember that January saw a record 2,177 homes foreclosed in Las Vegas).
I started this brief artical by noting that we are looking at good news and bad news. The bad news is that I can’t tell you how long this situation will last. The good news is that we know we are closing in on the “bottom.”
