SIGN POSTS INDICATE BETTER YEAR FOR LAS VEGAS

Implications: Housing market’s statistics from 2007 showed why Las Vegas builders and Realtors raised their glasses to toast the New Year with trembling hands. Many analysts have already forecast 2008 to be a worse year for Las Vegas than 2007. I disagree.

Analysis:

The total of 19,299 new home sales in 2007 was the weakest in this century, nearly 50% below the market’s peak year in 2005. Existing home sales fared little better. The total of 23,956 was less than half of the halcyon year of 2004 (56.8% below) and 40% below a relatively weak 2006. While descending to levels not seen in three years, the sub-prime credit crunch did not impact prices as badly as sales. The median new home price (traditional and vertical combined) slid just over 20% in the year to $273,359.

Interestingly, December’s median price was a $2,000+ uptick over November – the first price increase since May.

As predicted in July, year-over-year existing home prices faltered 11.2% below 2006 to settle at $253,000 at the end of the year.
----> That last figure is considerably less than what was predicted by Fiserv, Moody’s and a host of other knowledgeable analysts.

Year-end stats gave the market two small, glimmering rays of hope.
A. NEW HOME INVENTORY:
1. The number of new home communities in Las Vegas – the highest per capita in the nation – continued its six month slide from a peak of 579 in July to 538 in December – a decline of 7.1%.
2. In December, new home permits reached the lowest monthly level this century at just 215. The annual total of 12,386 new home permits was 38.9% below 2006. Five out of the last six months, the totals have been less than 1,000.
B. RESALE INVENTORY
1. Existing home inventory dipped below 24,000 for the first time since March. While seasonal factors aided the dip, we suspect that sellers understand market conditions.
2. Foreclosures for the month of December were the second highest total of the year at 989. However, that is a slight dip from November’s all-time high of 1,327.
The reason we call these last statistics hopeful is that inventory tends to be a leading indicator. When inventory falls and prices stabilize, the worst of this downturn will be over.
It's too early to say that has happened. But, if inventory continues to decline in the first quarter, prices will stabilize. And, the Las Vegas market will begin a mild recovery in the second quarter.

At which point, we'll all be drinking with a steadier hand.
And, not so much!