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Hubble Smith
 

Las Vegas Median Home Price Increase Sets Record

17 August 2004

Las Vegas' 52 percent increase in median prices for existing homes in the second quarter was the largest jump in any metropolitan area in any quarter since the National Association of Realtors started keeping records in 1982, according to a survey by the group.

While existing home prices continued to soar in most parts of the country, the Realtor group's survey said the median price of an existing home in Las Vegas was $269,900 in the second quarter, compared with $183,800 nationwide.

That increase compares with California home prices, which shot up 30 percent, and Florida, where home prices rose 20 percent, according to the survey.

The incredible year-to-year increases in Las Vegas home prices should return to some "semblance of normalcy" by the end of the year, said Dennis Smith, president of Home Builders Research.

Some local home builders have even rolled back prices in new subdivisions, he said.

His numbers showed resale home prices jumping 45.3 percent to $240,000 in the second quarter. New-home prices rose 25 percent to $241,750.

Smith said his prices are based on actual closings recorded at the Clark County Recorder's Office. The national association's numbers are based on sales reports from real estate agents in the metropolitan Las Vegas area.

The Greater Las Vegas Association of Realtors showed a median price of $329,900 for new listings of single-family detached homes in July, up 78.4 percent from a year ago, based on the Multiple Listing Service.

"I think it's good news for existing homeowners," Lee Barrett, president of GLVAR, said Monday. "I think we were an undervalued market for so long. People in other markets saw the values and came in as investors and pushed up values."

Statistics over the last couple of months show more listings have come onto the market and that's going to lead to a stabilization in price increases, Barrett said.

"We're still going to have nice appreciation, but not the rapid appreciation we saw from January through May," he said. "If the national rate is 9.1 (percent), we'll still see 12 to 14 (percent)."

Strong housing market fundamentals such as low interest rates and steady demand are propelling existing home sales to the highest pace on record. Through six months, resales in Las Vegas totalled 33,873, up 54.2 percent from a year ago.

"We get asked almost every day, `How long can this continue?' " Smith said. "What some don't comprehend is that many of the housing sales have not been to local residents. They are from investors or people who are moving to Las Vegas.

"Therefore, it is very difficult to analyze the depth of housing numbers. The strength of our consumer demand is now more than ever tied to California and other parts of the world."

In all, a record 49 U.S. metropolitan areas saw home prices rise 10 percent or more in the quarter, according to the National Association of Realtors. Only 11 saw price declines, the largest of which was 7 percent.

Anaheim-Santa Ana, Calif., followed Las Vegas with a 38.7 percent increase in home prices and Riverside-San Bernardino, Calif., was third at 38.5 percent.

Regionally, the strongest increase was in the Northeast where the second-quarter median resale price was $214,800, a gain of 17.6 percent from a year ago. The median existing home price in the West was $259,700, up 10.9 percent.

Median prices ranged from $93,800 in South Bend-Mishawaka, Ind., to $655,300 in Anaheim-Santa Ana.

All of this comes during a year in which economists had been predicting home-price gains would moderate to something around the historic norm, 4 or 5 percent annually.

"That prices continue their relentless climb even though mortgage rates were nearly a full percentage point above their level in the year-ago second quarter shows one of two things," said Steve Kerch, real estate editor for CBS MarketWatch. "There continues to be severe supply restrictions and strong demand in most markets around the country, or people are nuts."

David Lereah, chief economist for NAR, said the Las Vegas price performance is quite remarkable.

"That is the biggest annual home-price increase of any metro area on record," he stated on the association's Web site. "A close examination of the data shows why -- Las Vegas only had a 1.7-month supply of homes on the market in the second quarter, compared with a 4.2-month supply for the nation as a whole."

Lereah said housing supply in the range of six months represents a fairly even balance between buyers and sellers.

The supply pipeline should improve for Las Vegas as new-home building permits ended the first half of the year at 20,315, a 67 percent increase from a year ago, Home Builders Research reported.

There were 13,917 homes available for sale on the MLS in July, including nearly 7,000 new listings, Barrett said.