Summary
In a week in which Las Vegas learned the local unemployment rate had skyed to 13.9% … passenger traffic at McCarran Airport slid 1.2% … and Nevada bankruptcy filings jumped 64% in the last nine months …. September housing market data actually comes as relatively good news.
At worst, Las Vegas is scudding along a bottom like a sailboat on choppy water. At best, it may be in recovery. The key statistics: Prices appear stable. Inventory is still dropping. Sales continue to be strong.
Analysis
Here are the details:
PRICES: Both existing and new home prices have been trading in narrow ranges over the last two quarters. They appear to be approaching stability.
The median price of an existing home in September rose $3,500 to $123,500. This is the third time in the last six months that existing home prices have risen. In fact, since April, existing home prices have found themselves trading in a narrow range between $120,000 and $125,000. It has been a bumpy ride.
New home prices show a similar pattern. The $210,877 median price for September is just $473 under the August figure. And new home prices have been trading in a narrow range between $213,990 and 209,000 over the last five months.
FORECLOSURES: September breaks six consecutive months of foreclosure sales exceeding foreclosure creation. There were 2,346 foreclosures created in September. That was 98 units more than foreclosures sold in the month.
There are two ways to look at that statistic.
----->The pessimist predicts the worst is yet to come.
----->The optimist looks at that statistic and sees the possibility that non-REO product is picking up steam and moving the market toward normalcy.
----->The pessimist predicts the worst is yet to come.
----->The optimist looks at that statistic and sees the possibility that non-REO product is picking up steam and moving the market toward normalcy.
We’ll know which view is correct by the end of the fourth quarter.
INVENTORY: While REO inventory increased a grand total of 52 units in September, available listings dropped 658 units. At current sales rates, the 10,698 units in inventory represent a scant 2.7 months of supply. The last time available listing inventory was that low was more than four years ago (June, 2005).
The new home segment of the market continued with just 407 permits in September. But, the third quarter was the first time in a year that there were three consecutive months of more than 400 new home permits.
SALES: September exhibited the third highest existing home sales total of the year at 4,311 units. That’s 32.5% above last year and a 7.5% increase over August totals.
September also exhibited the third highest new home sales total of the year at 459 units.
The discrepancy between the new home price per square foot of $106.71 and the existing home per square foot price of $73.68 accounts, in large measure, for the differences between new and existing home sales totals.
THE FUTURE: Are the changes in the housing market an indication of a more positive future? Will MGM CityCenter impact Las Vegas in the same manner as the Mirage and Bellagio? .
At the very least, the next quarter should be very interesting.
Steve Bottfeld consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
