Las Vegas Residential: ON THE BOTTOM!

In fact, June showed us four critical factors which define a bottom for Las Vegas:

       PRICES: After a long period of decline, existing and new home prices were stable or increasing;

       INVENTORY: Inventory declined markedly in both the new home and existing home segments of the market

       SALES: Sales reached the highest level of the year for both the new and existing home markets. In fact existing home sales reached a record level.

       FORECLOSURES: Despite the (not unexpected) increased level of foreclosures, the actual number of foreclosures in inventory decreased.

             Here are the details.

----->PRICES: It has been two and one half years since Las Vegas experienced a month in which existing prices did not fall. The $125,000 price tag for an existing home in June broke a 57% pricing plunge from February 2007. New home prices dipped less than 1% from last month to $209,382.

       The price per square foot of an existing home sold in June was $76.34. It is one reason why existing home sales are so much more powerful than new homes, which offered an average price per square foot of $107.65.

       Price per square foot indicates some measure of where the market is going. The existing homes sold in June tended to be larger than those sold in May. The reverse is true of new homes.

       INVENTORY IS AT THE LOWEST POINT IN MORE THAN THREE YEARS: At current sales rates, the 12,652 available resale listings - the lowest since January 2006 - represents just 3.4 months of supply. A "hot" market is defined as one with 3 months of supply or less. Financial institutions now sit on approximately 13,200 REO's, off the peak of 16,400 in February.

       SALES CONTINUE STRONGLY: June showed the best sales volume of the year for both existing and new homes.

       June marked the 18th consecutive month of increasing existing home sales. May's 4,476 existing home sales were a record level and a 67.4% improvement over the same period last year and a 15.3% improvement over May sales.

       While June's 474 new home closings were well off last year's pace (-46%), they represented an increase of 23.7% over last month.

EXISTING HOME SALES CONTINUED TO EXCEED THE CREATION OF FORECLOSURES: June was the fourth consecutive month in which the number of foreclosures purchased exceeded the number of foreclosures created. In our mind, that is the beginning of a trend.

      The impact created by the end of the foreclosure moratorium on March 6 may interrupt this trend later this summer. But, the trend now looks solid.

       Despite a 17% year over year increase in the number of foreclosures to 2,486, there were 2,892 foreclosed homes sold in the month.

       The question now is not: When will Las Vegas hit bottom? The question now is: How long will Las Vegas stay on the bottom? 

        

       Looking back, we should be able to say that the second quarter was the bottom of this cycle for Las Vegas residential real estate.

       But, as I noted last month, hindsight is always 20/20.