LAS VEGAS: MARCH MADNESS

Implications: In sports, March Madness starts with the opening “tip off.”  In Las Vegas real estate, March Madness starts with February’s housing stats.  And, those stats are the “tip off” that this market is making progress in its struggle to get off the “bottom.”

Analysis:

A bottom is like a three-point play. It occurs when there is: (1) a reduction in inventory; (2) price stabilization; (3) and sales increases.  Team Las Vegas has tenuously placed two of those three elements “in play” in February.

<!--[if !supportLists]-->1.      <!--[endif]-->INVENTORY CONTINUED ITS LONG SLIDE

Available resale listings fell nearly 1,000 units to 22,837.  It has been nearly a year since the market was on that level (April 2007).  More importantly, current supply represents about 20 months of inventory.  “Normal” Las Vegas markets generally hover between 7-11 months of inventory.

The number of active subdivisions dipped to 517 in February, the seventh consecutive monthly decline and almost 11% below the peak reached last July.  The number of active subdivisions with very limited inventory is well above 30 – so it is not difficult to predict this level will drop rapidly over the second quarter.

Plus, there is very little new inventory dribbling into the market.  New Home Permits inched up to 370 over January’s 358.  Seven of the last eight months have seen New Home Permits slip under the 1,000 mark

<!--[if !supportLists]-->2.      <!--[endif]-->PRICES ARE BEGINNING TO STABALIZE

New home prices increased slightly in February.  The median price of a traditional new home (single family and condominium) increased for the first time since May 2007.  Granted, the price increase to $271,600 was minimal.  But, it was an increase.

When vertical product is added into the equation, prices score higher.  The median price of all new homes also increased, to $283,315.

Existing home prices also bounced up slightly in February to $250,000.  Considering that there are a significant number of foreclosures in that figure, it is a strong showing.

<!--[if !supportLists]-->3.      <!--[endif]-->SALES ARE STILL DISMAL

We can’t drive down the court and score the winning bucket without better sales. And, February’s home sales in Las Vegas were sitting on the bench.

New home closings inched up in February over January, but were still under, 1000 (867).  Existing home closings fell slightly to 901.

Even the vertical market failed to contribute, barely falling below January’s weak showing (78).

But, don’t count vertical out.  The “Buzzer Beater” next month will be vertical closings.  Allure, Palms Place and Trump Tower each had their first closings in February.  They should make a strong contribution to March sales.  And, because of that, March could be the first month to see a year-over-year increase in New Home Sales since July, 2006.

One thing’s for certain: The rest of this year will not be a slam dunk.  But, Las Vegas may be one of the very few cities still in the game.