The Las Vegas real estate market has had mostly bad news for the last five years. After all, this was one of the cities hit hardest by the housing collapse.
Home prices in Las Vegas began dropping in the fall of 2006, ahead of the national downturn, and they didn’t stop falling until the end of 2011. This put thousands of homeowners underwater and left entire neighborhoods in a distressed state.
With all of that drama in mind, it’s nice to share some good news for a change. A recent report shows that local real estate prices are on the rebound.
According to the latest release of the S&P/Case-Shiller Home Price Index, Las Vegas home prices have risen by double digits, year over year. The report was released on January 29, 2013 and contained data through the end of November 2012.
By their numbers, housing prices in the Las Vegas real estate market rose 10% from November 2011 to November 2012. The numbers were positive at the monthly level as well. This will no doubt be welcome news for many homeowners in the area.
Economists: Las Vegas is on the Rebound
We are seeing a major shift here. The Las Vegas housing market has lagged behind other major metro areas for some time. Following the housing crash, it was one of the last metros to regain year-over-year appreciation of home prices. The economists behind the Case-Shiller index noted this shift in their January 29th release:
“Regional patterns are shifting as well. The Southwest — Las Vegas and Phoenix — are staging a strong comeback with the Southeast — Miami and Tampa close behind.”
Inventory is a major factor driving these changes. A few months ago, real estate investors began to “sense” that house prices were bottoming out in this metro area. They began snatching up homes by the thousands, racing to beat rising prices that would eat into their resale profits.
This has driven inventory down across the entire metro area. According to Realtor.com, the number of homes listed for sale in Las Vegas has dropped by 25% over the last year or so.
During the same 12-month period, the median list price rose by 12.5%.
Demand is rising among “regular” buyers as well, but at a much slower pace. Unemployment is still high in this metro area, and it’s limiting the size of the non-investor buyer pool. At the end of 2012, the unemployment rate in Las Vegas was hovering above 10%, compared to 7.8% nationally. You might say the local real estate market is improving in spite of the job market — not because of it.
Existing Home Sales are Up; New Construction is Down
According to one source, sales activity has risen among resale / existing homes and condos, while falling in the new-construction category. DataQuick reported that resale activity in November 2012 was 22.5% higher than average for that particular month. In contrast, sales of newly built homes fell by 54% in November, compared to the average.
The 54% decline might be disconcerting for developers. But you have to consider that the “average” in this scenario includes the boom years of the early 2000s, when new homes were selling like hotcakes across the Las Vegas area. Overall, sales were down at the end of 2012. But when you exclude new construction, sales were actually above average.