Las Vegas Housing Market Continues To Struggle With Declining Home Prices – When Will It Turn?

The city real estate market continues to go through tough times. In addition to the decline of home prices, a rise in foreclosures and a tough economy, things do not appear to be improving any time soon for Sin City.Home Prices Continue DecliningIn “Sin City”, home prices currently sit at 25 percent below its price-to-income trend of 2.7. Prices have been on the decline for five years and at the height of the housing bubble, this price-to-income trend was 5.6. Home prices have dropped so much, that in March 2011 they were only 2.1 times of Las Vegas’ household incomes.Furthermore, Las Vegas homeowners may now have to wait an estimated nine years to get back 50 percent of the home’s pre-recession value, according to Moody’s Analytics. Even worse, the homeowners could see a two-decade delay before they see home prices fully recover.SalesTraq reported that for July, bank repossessions slowed down to 1,502 while notices of default remain in the thousands. In addition, bank-owned properties absent from the market, called shadow inventory, reached a low point in March 2008; however, in the last year, Las Vegas has gone through these properties at a ratio of 2,900 units to 10,478.Upon reviewing Las Vegas’ distressed sales, which includes foreclosures and short sales, they represented 70.6 percent of July’s transactions. This figure can be broken down into 59.5 percent as foreclosure resales and 11.5 percent in short sales. This market peaked in April 2009, when it hit 73.7 percent of the resale market.Las Vegas is the capital of foreclosures for the country with its current July statistic of one in every 99 homes has received a foreclosure notice, according to RealtyTrac. In the Las Vegas real estate owned arena, over 85 percent of homeowners now owe more money on their mortgage that what their home is currently worth.Tough Economic ConditionsLas Vegas is facing tough economic times. Unemployment is close to 14 percent; Nevada’s homes have a vacancy rate of one in seven homes and there is a drought. In June, southern Nevada saw its unemployment rate climb to 13.8 percent, up 1.4 percent from June with Las Vegas dropping 4,000 jobs alone. The construction industry has been especially hit hard. A forecast from UNLas Vegas projects one percent or less for job growth all the way to 2013.Is Las Vegas Poised For Collapse?Las Vegas saw a great rise in real estate values during the early 2000s but it suffered a great fall by the end of the decade. Home prices from 2008 to 2011 dropped 42.3 percent, coming in at No. 2 for declines in the nation and the value of homes are down 58 percent from peak values.Case-Schiller has projected additional declines of 13.9 percent by the first quarter of 2012, and an additional 6.3 percent the first quarter of 2013. It is projected to hit rock bottom in the fourth quarter of 2013. With its high unemployment rate, low median home price of $140,000 and family income of $58,900, 24/7 Wall Street included it on the list of metropolitan areas to collapse.One Bright Spot – TourismThe city has seen visitation and room rates rise in the last 18 months according to the Las Vegas Convention and Visitors Authority. In July local visitors rose seven percent and in the first half of 2011, tourists coming to Las Vegas rose 5.1 percent for the first half of 2011. However, these visitors have changed from the past as they are budget conscious, spending less on the Strip and visiting less frequently.Las Vegas is facing many challenges but it has an immense appeal to a broad range of people and it will eventually get back on its feet.Sin City – Nicknames of the city