Wednesday, April 29, 2009

Median Home Prices in Las Vegas Fall to Lowest Since 2000

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Wow - this is some serious price contraction. And just think we are still spending hundreds upon hundreds of billions (down the drain) from stopping the market from working. [Mar 5, 2009: WSJ - Mortgage Bailout to Aid 1 in 9 Homeowners] [Dec 8, 2008: More than Half of Homeowners with Modified Loans are Back in Trouble] So in the end, the market will work despite government trying to stop it from doing so; and we'll have saddled generations of children with debt. What is so sad is all these mortgage "saves" (both first and NOW second mortgage per this week's latest "government initiative" which I did not even bother to post due to "bailout fatigue") done at 105% of value of home will be at 120-130% of value in a year from now. Just a waste of money...

Las Vegas home prices are down to levels not seen since 2000 - so the whole speculative fever and THEN SOME has been erased... and 3/4ths of all home sales in the past month were recent foreclosures. It's now been a year since that trend starting appearing and it will only grow from here [Mar 25, 2008: WSJ - Wave of Foreclosures Drives Prices Lower, Lures Buyers] So our framework is playing out perfectly - we will see a surge in transactions (see title insurers) but the prices will be atrocious. This "should" be bad to new home builders as it pressures their prices but in this market, everything is traded in lockstep so what's good for home transactions will be seen as good for home builders... no need to apply logic. Bulls will apply some circular logic about how this will drive down inventories, not realizing to be competitive new home builders are going to destroy their profit margins to keep pace with these rock bottom prices created by a tsunami of foreclosures. Wait... the home builders don't have profit margins to destroy anymore. Carry on - buy home stocks.

Don't even ask what the EXISTING home owners must be thinking right now - almost anyone who bought this decade is now underwater in Vegas. And trapped unless they have cash to bring to the table to "get out of jail". And we're still not going down in price unless you believe March was the bottom. [Dec 8, 2007: Analysis - What Should Housing Prices Be Today?] [Feb 13, 2009: US Home Prices Fall to 2003 Levels]

Via Bloomberg
  • The median home price in the Las Vegas area fell to $144,000 last month, the lowest since 2000, as a rise in foreclosures lowered the value of single-family houses and condominiums, MDA DataQuick said today.
  • March’s median in the Las Vegas metropolitan region was down 4 percent from the previous month and down 42 percent from a year earlier, the San Diego-based real estate research company said in a statement. The median was last lower in December 2000, when it was $143,000.
  • Almost 74 percent of all previously owned homes that sold in the Las Vegas area last month had been foreclosed upon in the prior 12 months, MDA DataQuick said. Almost 2,800 foreclosed properties sold in the area last month, said the company.
  • The decline in prices in the Las Vegas area helped boost sales. (economics 101 still works) A total of 4,268 new and existing single-family houses and condominium units sold in the area last month, up 29 percent from February and up 35 percent from a year earlier, MDA DataQuick said. [Mar 28, 2009: Some Real Estate Markets Warming Up]
As I said in 2007, and as I said in 2008... this will be a GOOD THING for Americans in the future... even if its a painful one time adjustment. Having to spend only 25, 30, 35% of income on housing will be much better for everyone than having speculators with easy money run prices up to the point many families who just want a place to live have to pay 40, 45, indeed 50% of their income just for shelter. [Sep 26, 2008 : 15% of Americans Spend 50%+ of Income for House Payments] Government does not agree with me, and is fighting this reality tool and nail. As a homeowner, trust me - it stinks; but if you take a step back it's fantastic for future homeowners.

Look for a new wave of walk aways in latter 2009 and 2010 as people look around incensed they are living in houses with mortgages 1.5-3.0x time the size of their new neighbors. My prediction for 1 in 4 Americans being underwater by the time this is all said and done might of been conservative.... [Mar 9, 2009: One in Five Houses Underwater] Not to mention all the foreclosures coming from job losses in the next 18 months. All those losses goes to bank balance sheets and Fannie/Freddie (and then the Federal Reserve balance sheet)... green shoots everyone. No mind numbing losses to be seen here - move along.

[Apr 23, 2009: As More Homes Fall Underwater Trapped Americans Cannot Migrate]
Apr 8, 2009: Recession Causes Relatives to Move in Together & Sharp Drop Off in Divorces. Housing Bubble 2.0? (Not)]
[Dec 24, 2008: Median Home Prices Fall Most Since Great Depression]
[Jul 10, 2008: Foreclosure Activity Map]

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