As usual with markets in the midst of a boom/bubble cycle, there’s no definitive answer to this question.
Housing prices in Las Vegas have skyrocketed in the past few years, no doubt about that. Between the second quarters of 2003 and 2004, single-family-home prices in Vegas shot up 52.4%, according to the National Association of Realtors. It was the largest 12-month increase for any metropolitan area in the NAR’s 22 years of tracking home prices. In addition, the last nine months of 2004 saw residential real estate appreciate nearly 50%, strongest in the nation overall.
Still-more-recent numbers indicate that the Las Vegas housing market frenzy has cooled off a bit. Experts projected in late 2004 that 2005 would be a record year, with 30,000 new-home sales and a jump of 22%-25% for the median price of a home over 2004. However, through May 2005 the average price of a single-family home in Las Vegas was $342,250, compared to $321,770 the year before, a 6% increase; condos were at $196,665 compared to $187,470 -- a 4.7% increase.
Meanwhile, there are a lot more houses for sale in a year-to-year comparison. New listings were up 13% through May 2005 over the same period in 2004. Concurrently, sales dropped in every month in 2005 compared to 2004, from 19,687 through May 2004 to 17,793 through May 2005, a 10% decrease. And days on the market rose from 21 in April 2004 to 52 in April 2005.
What about supply?
One early indication that Las Vegas is currently overbuilt surfaced when major builder Pulte Homes got into a bit of trouble with an oversupply of inventory (and questionable sales tactics) in Fall 2004. Pulte had to cut the price of its new Las Vegas houses up to 25%, which prompted a slew of doomsayers to predict the end of the Las Vegas housing bubble. Pulte is also in the midst of several hundred lawsuits filed by disgruntled buyers who paid up to $100,000 extra for houses whose prices dropped shortly thereafter.
In addition, local home builders subdivided just under 25,000 new-home sites through May 2005, a 22% decrease when compared with 31,751 lots in the same period in 2004. Further supply-is-down stats: Permits for new homes were down substantially in the first five months of 2005 when compared with the same period in 2004, from 17,074 though May 2004 to 12,104 permits this year, a 29% drop.
To some analysts, the lower numbers of new-home permits indicate a slowdown in demand, as the above prices also show. To others, they could mean a dwindling supply in coming months, which would mean a further upturn in prices, if demand stays steady.
That's for new single-family homes. As for condos, every day it seems, another developer makes another announcement about another high-rise condo tower. There are so many of them now on the drawing board that even we can’t keep track of them all. So the building boom remains mostly unabated, in our opinion, overall.
Is the Las Vegas real-estate business a bubble? Cleveland-based National City Corp., one of the nation's largest financial holding companies, reported in a study released in early February that Las Vegas real estate is overvalued by as much as 24%.
On the other hand, many local realtors and experts dispute the overvaluation conclusion, insisting that the Las Vegas real estate market is simply catching up from years of being undervalued!
As you can see, it's tough to come to a conclusion, especially when it involves predicting a future market condition in an environment as voluble as Las Vegas is currently. Whatever’s going on, we wish you luck with your investment properties and your move to Las Vegas.
