Real estate professionals in Nevada are hopeful that the signs of a recovering market in 2012 will continue through 2013.
In December, the Northern Nevada Business Weekly quoted Helen Graham, president-elect of the Reno-Sparks Association of Realtors, saying, “We had our strongest sales since 2005,¨ of 2012. ¨Optimism is high. We see all the trends going in the right direction.”
According to the association, sales of existing single family homes increased 5 percent from 4,892 in 2011 to 5,057 in 2012 in Washoe County.
Meanwhile, the median Reno home price rose 23 percent to $181,750 in October.
Graham said the low end of the market is outperforming the high end, thanks to difficult to obtain credit. “There’s a two-week supply for houses priced $100,000 to $199,000 and 4.9 months of inventory for homes priced at $400,000,” she said. “The higher the price, needless to say, the higher inventory we have.”
She added that she and other area real estate professionals expect interests rates to remain low until 2014.
Carson City is experiencing similar trends, with a 12 percent jump in the number of single family homes sold there through December of 2012. The median home price in 2011 was $134,000 compared to $130,000 in 2012.
“Prices have stabilized and we’re seeing multiple offers on properties under $250,000,¨ said Heidi McFadden, president of the Sierra Nevada Association of Realtors. ¨There is a demand for housing under this range.” Such a demand, she added, that there have even been bidding wars at the market´s low end.
Lake Tahoe is also showing signs of a recovering real estate market, with sales of homes rising 2 percent from December 2010 to November 2011, and jumping 27 percent to 731 sales from December 2011 to November 2012, according to the South Tahoe Association of Realtors.
The home inventory in Lake Tahoe, meanwhile, has fallen by nearly half in two years to a 5.5-month supply.
Though nowhere near as robust as it was during its peak years, the Las Vegas new homes market is showing strong signs of recovery.
According to an article published by Vegas Inc. in February (¨New housing market off to a strong start this year¨), there were 513 new home sales in January, up from 217 during the same time the previous year. That number was also the area´s highest January total since 2008, according to Home Builders Research, of Las Vegas.
Prices are on the rise in Las Vegas as well, with the February, 2013 median sale price at $220,700, up 6.7 percent from the same time the previous year.
The good news in the Las Vegas new home sector began in 2012. That year saw 5,544 new home sales, a 42 percent increase over 2011. There were also roughly 5,900 construction permits in 2012, a 58 percent increase over 2011 permit numbers. Those numbers, however, are a far cry from those of the boom years, when new home sales peaked at nearly 39,000 (2005) and permits reached nearly 33,000 (2004).
Not all Las Vegas real estate news is positive, however. Nearly 60 percent of local mortgage holders were underwater at the end of 2012, according to Zillow. That was down from 70 percent a year prior, but still among the worst of the nation’s 30 largest metropolitan areas. That number is expected to drop to about 56 percent by the end of 2013.
Discovery Bay, Calif.-based foreclosure listing service ForeclosureRadar.com reported the number of Clark County homes in preforeclosure, or those that have received a notice of default but have not yet been scheduled for sale, fell to 12,469 in December after running as high as 47,550 in August 2010.
Las Vegas broker Glenn Plantone recently blogged about the rising prices of residential land in the region, asking, “is it a second bubble?”
On April 1, Plantone wrote, “The price for residential land in Las Vegas has risen 90 percent in only a year as new construction continues to feverishly attempt to capitalize on the demand for housing created by the slowdown in foreclosures. According to an article in the Las Vegas Review Journal, Sunbelt Development and Realty Partners reported an average price of $202,983 an acre for medium-density (6 to 14 units an acre) residential land in the fourth quarter of 2012, compared with $170,450 in the third quarter and $104,000 at the beginning of the year. This rise in land prices comes as the last of the ‘dinosaurs’ haunting the Las Vegas valley are sold off. These dinosaurs are projects that were abandoned in various stages of incompletion after the real estate bubble burst in 2008. For several years, home builders who wanted to, could purchase these partially finished lots for fabulously low prices, but not many wanted to.”
New home construction all but stopped completely in 2009, wrote Plantone. However, over 2012, demand for new homes mushroomed, prompting developers to enter bidding wars for residential lots, he added.
“Land is becoming a precious commodity in Las Vegas,” Plantone continued. “This is partially due to the geography of the valley itself. There is only a limited amount of land remaining in the Las Vegas valley, and much of it is owned by the United States government as BLM (Bureau of Land Management) land. This is an issue that Las Vegas developers have always known they will have to face sometime in the future.”
At the moment, there are still plenty of residential lots available in Las Vegas, but prices are climbing quickly, wrote Plantone. “Home Builders Research President Dennis Smith has described the increase land prices over the last year as ‘downright scary.’ Robb Beville, president of Las Vegas-based Harmony Homes, elaborated, ‘low inventory is what is driving up the demand, not job growth or employment growth.’
“This ‘artificial’ increase in real estate prices is something we’ve been talking about for the last year. It is creating a lot of uncertainty in the Las Vegas real estate market and makes it difficult to know if the recovery we are currently experiencing in home prices will continue, or lead to another bubble bursting.”