Las Vegas Housing-Market Conditions

Transcription

1 Las Vegas Housing-Market Conditions The Center for Business and Economic Research Still, a Ways to Go Volume 45, 4th The oversupply of single-family units that was created in the speculative-housing euphoria of the past few years has left more than 27,000 vacant units in the Las Vegas metro area. See the table below. Large numbers of vacant single-family units set in motion market forces that affect the vacancy rates of other housing types. Estimated Excess Supply of Housing Units in the Greater Las Vegas Area by Housing Type: March 2008 Type of Housing Unit 1 Vacant Units Estimated Units in the Greater Las Vegas Area 1 Excludes mobile homes 2 Estimated excess supply = estimated units less estimated normal vacancy inventory 3 Includes apartments and multiplex units The assumptions identified above yield an estimate of 27,455 vacant housing units. This estimate, however, may overstate our current problem because there are always vacant units needed as inventory for prospective buyers and renters. To be sure, vacant units and the normal supply of vacant units are subject to change with the forces of supply and demand. Still, we need an estimate of the excess housing supply to get a picture of how we might get back in balance. Using assumed normal vacancy rates, shown in the table above, we see an estimate of the normal vacancies of about 19,000 units across all housing types and an excess of 8,521 units that will need to be occupied before market forces come back into balance. Moreover, the movement of households into single-family detached as renters is reason to believe that the mix of units to get back into balance will differ from what we show above. New construction in 2008 will also add to the current excess supply. New construction is down significantly from past levels and it likely to be so for 2008, a reflection of the tough market environment, still market opportunities will arise. The long-run outlook for economic and population growth remains favorable. A large inventory of empty nonowner-occupied units has increased rental activity. These owners find it better to rent and make a contribution to their mortgage payments than leave units vacant. Some households have moved into single-family units and out of apartments. As a result, apartment vacancies rose in, ending the year with a 7.7 percent vacancy rate. Las Vegas Housing-Market Conditions, Volume 45, 4th Assumed Percent Normal Vacancy Rate (%) Estimated Normal Vacant Inventory Estimated Excess Supply 2 Single-family detached 11, , ,401 5,502 Condominium 2,429 67, , Townhouse , Multifamily 3 12, , ,521 2,697 Total 27, ,263 18,924 8,521

2 Housing-Market Overview Las Vegas Housing-Market Conditions Cont d Clark County s 2008 population growing at 2.5 percent and new construction at 12,000 units would result in increased demand for housing units of about 20,000 units for With an excess supply of 8,521 and new construction of 12,000 units one would find a markedly different environment than we see. Under this scenario we go from imbalance to balance. On the other hand, construction of more than 12,000 units in 2008 would push back the date of balance into Of course, uncertainties hinder specifying the path back to balance as there are many decisions made about future residential construction. Average rental rates for apartments have inched forward to $876, up from $868 for third-quarter. All in all, the rental apartment market has been affected by the excess supply of single-family units from those unable to sell units at desired prices. Once the excess of single-family units goes away and residential housing comes into balance, apartment vacancy rates will recede. Residential permitting increased at a torrid pace of 6,196 for fourth-quarter, an annual rate of 24,784. With an estimate of 27,455 vacant units, one searches for an answer to a seeming loss of economic understanding. There is, however, a simple explanation soon to be implemented increased hookup fees sent a wave of developers to get permits before the rates went up. This explains the sharp increase in permitting at a time of substantial excess supply. Having built up the stockpile of permits, one might expect some slowing in permitting activity forward. As such, one might expect to see more time between permitting and building in the current, more restrictive financing standards. In the future, however, market opportunities will open up as the excess supply dwindles with population growth. Housing sales prices continue to decline. Our estimate of the median price for homes sold declined from $320,000 in the 4th quarter of to $272,000 in the 4th quarter of. To be sure, these averages show different mixes of properties, still one clearly sees that prices are dropping as a reflection of the excess supply. This 14.7 decline in one year goes some way in retreating from a near 50 percent increase in one year in For those who bought at a high price a year ago and now want to sell, the outlook is bleak. Owner-occupied units for which no market transaction is desired remain removed from such adverse conditions, however. Using median mortgage values divided by median sales price we find that credit standards increased. The loan-to-value ratio dropped from 88.7 percent in the 4th quarter of to 84.3 percent in the 4th quarter of. Housing prices have declined for Las Vegas and four western regions. Prices have declined in Las Vegas and Phoenix throughout the year, but prices in Salt Lake City grew until the 4th quarter of. R. Keith Schwer, PhD Director Please note: the numbers at the end of the figure and table titles correspond to sources of data, which are listed on page 12 along with notes about major data changes. Las Vegas Housing-Market Conditions, Volume 45, 4th Page 2

3 Housing-Market Overview 9,000 Permits Issued in Clark County by Type of Unit 1 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, th Total: 5,620 1st Total: 4,984 2nd Total: 5,834 3rd Total: 6,493 4th Total: 8,071 Commercial Units Multifamily Units 2, ,081 3,964 5,368 Single-Family Units 2,767 4,059 4,446 2,232 2,275 Residential-Building Permits All Types of Unit Permits Issued by Issuing Authority 1 6,000 5,000 4,000 3,000 2,000 1, th Total: 5,363 1st Total: 4,704 2nd Total: 5,527 3rd Total: 6,196 4th Total: 7,643 Uninc. Clark County 2,969 2,324 2,496 4,660 5,697 City of Las Vegas City of North Las Vegas Henderson , Boulder City Mesquite Las Vegas Housing-Market Conditions, Volume 45, 4th Page 3

4 Local Growth 90,000 Clark County Redeemed Drivers' Licenses 2 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, th st 2nd 3rd 4th 1st 2nd 3rd 4th Quarterly 19,917 19,906 20,522 22,618 18,328 18,957 18,681 19,925 17,114 Year-to-Date 83,730 19,906 40,428 63,046 81,374 18,957 37,638 57,563 74,677 Unemployment 6 Las Vegas Q4 4.1% Q1 4.4% Q2 4.4% Q3 5.1% Q4 5.3% U.S. Q4 4.4% Q1 4.5% Q2 4.5% Q3 4.7% Q4 4.8% 40% 35% 30% 25% 20% 15% 10% 5% Clark County Redeemed Drivers' Licenses: Major Categories 2 0% 4th st 2nd 3rd 4th 1st 2nd 3rd 4th Percent from Outside the 50 States and DC 0.2% 0.3% 0.4% 0.3% 0.4% 0.4% 0.2% 0.4% 0.4% Percent from California 34.8% 35.3% 34.2% 32.6% 33.6% 33.9% 32.7% 30.7% 31.6% Percent Senior: Age 60 or Older 11.9% 10.1% 11.1% 10.5% 11.3% 10.4% 10.0% 10.6% 12.2% Las Vegas Housing-Market Conditions, Volume 45, 4th Page 4

5 Substitute Market: Apartments Apartment Rental and Vacancy Rates by Zip Code Area 2 ZIP CODE UNIT RATES Studio 1 Bed 2 Bed/1 Bath 2 Bed/2 Bath 3 Bed AVERAGE RATES Furnished Unfurnished Furnished Unfurnished Furnished Unfurnished Furnished Unfurnished Furnished Unfurnished Rent Vacancy * * * * * * * * * * * * * * * 903 * * * 1116 * % * * * 821 * 930 * 987 * % * * * 738 * 740 * 923 * % * * * 576 * 579 * 691 * % * * * 808 * * * 968 * % * * * 793 * * * 941 * % * * * 906 * 1070 * 1092 * % * * * 872 * * * 1040 * % * 724 * 777 * % * 579 * 670 * 721 * 824 * % * 624 * 748 * 828 * 907 * % * * 739 * 867 * % * * * 671 * 735 * 816 * % * 632 * 710 * 707 * 831 * % * 667 * 732 * 782 * 883 * % * 506 * 636 * 626 * 816 * * % * * * 688 * 681 * 824 * % * * * * * * * * * * * * * * * 679 * 707 * 795 * % * * * 914 * * * 1046 * % * * * 848 * 858 * 1022 * % * 794 * 892 * % * * * 799 * 838 * 926 * % * 581 * 738 * 735 * 857 * % * * 685 * 663 * 829 * % * * * 858 * * * 995 * % * * * 811 * * * 911 * % * * * 864 * * * 1024 * % * * * 709 * * * 827 * % * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 949 * * * 1225 * % * * * * * * * * * * * * * * * 731 * * * 849 * % * * * * * * * 1196 * % * * * 1010 * * * 1137 * % * * * 756 * 762 * 907 * % * * * 894 * * * 1049 * % * * * 962 * * * 1109 * % * * * 848 * * * 989 * % * * * * * * * * * * * * * * 752 * 842 * % * * * 884 * * * 1069 * % METRO LV * % * Number of observations insufficient for statistical purposes. Las Vegas Housing-Market Conditions, Volume 45, 4th Page 5

6 Substitute Market: Apartments Apartment Rental and Vacancy Rates by Zip Code Area R en t Data Suppressed Vacancy Data Suppressed Las Vegas Housing-Market Conditions, Volume 45, 4th Page 6

7 Single-Family Housing-Market Details 6,000 Distribution of House Size in Square Feet 3 5,000 4,708 5,195 4,953 4,969 4,962 4,000 3,000 2,358 2,327 2,366 2,358 2,405 2,000 1,000 1,827 1,781 1,825 1,817 1,857 1,484 1,427 1,493 1,492 1, th 1st 2nd 3rd 4th Note: The boxplots can be interpreted as Half the houses have a [square footage, price, price per square foot, or mortgage] between [value at bottom of box] and [value at top of box], with the median being [value in middle of box]. The other half of the houses is evenly split between values that are higher and values that are lower. To show this, lines extend out of the box upward and downward, with 98 percent of houses between [value at top of line] and [value at bottom of line]. The extremely high 1 percent and the extremely low 1 percent are not shown in order to avoid the detrimental effects of outliers, data entry errors, or other anomalies of the market. $1,600,000 Distribution of Sales Price 3 $1,400,000 $1,200,000 $1,226,600 $1,377,942 $1,313,525 $1,400,000 $1,321,800 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 $420,000 $406,353 $395,000 $377,429 $350,000 $320,000 $309,900 $307,718 $296,000 $272,750 $267,000 $258,089 $256,450 $245,847 $224,000 $154,169 $132,000 $153,385 $140,000 $135,000 4th 1st 2nd 3rd 4th Las Vegas Housing-Market Conditions, Volume 45, 4th Page 7

8 Single-Family Housing-Market Details $400 Distribution of Price per Square Foot 3 $350 $348 $353 $334 $341 $318 $300 $250 $200 $150 $203 $204 $182 $181 $163 $161 $196 $175 $155 $190 $168 $148 $173 $150 $128 $100 $105 $96 $102 $96 $88 $50 4th 1st 2nd 3rd 4th Note: The boxplots can be interpreted as Half the houses have a [square footage, price, price per square foot, or mortgage] between [value at bottom of box] and [value at top of box], with the median being [value in middle of box]. The other half of the houses is evenly split between values that are higher and values that are lower. To show this, lines extend out of the box upward and downward, with 98 percent of houses between [value at top of line] and [value at bottom of line]. The extremely high 1 percent and the extremely low 1 percent are not shown in order to avoid the detrimental effects of outliers, data entry errors, or other anomalies of the market. $1,200,000 Distribution of Total Mortgage Value 3 $1,150,000 $1,000,000 $1,035,350 $999,082 $1,000,000 $800,000 $878,060 $600,000 $400,000 $200,000 $367,295 $359,538 $338,207 $317,869 $283,900 $273,900 $265,945 $251,349 $228,000 $218,500 $213,726 $199,488 $295,698 $230,000 $169,150 $0 $0 $0 $0 $0 $0 4th 1st 2nd 3rd 4th Las Vegas Housing-Market Conditions, Volume 45, 4th Page 8

9 Housing-Market Comparisons $800,000 Median Home Prices in Selected Western Counties 4 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 4th 1st 2nd 3rd 4th Clark County, NV $318,000 $308,894 $303,333 $296,507 $273,536 Maricopa County, AZ $273,728 $271,492 $269,700 $265,000 $254,566 Salt Lake County, UT $282,625 $287,363 $292,467 $292,600 $281,314 Los Angeles County, CA $536,000 $550,000 $575,000 $575,000 $505,000 Orange County, CA $685,000 $695,000 $724,500 $710,000 $655, % Quarterly Increase in Median Home Price 4 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% -14.0% 4th 1st 2nd 3rd 4th Clark County, NV -0.6% -2.9% -1.8% -2.3% -7.7% Maricopa County, AZ -0.7% -0.8% -0.7% -1.7% -3.9% Salt Lake County, UT 3.7% 1.7% 1.8% 0.0% -3.9% Los Angeles County, CA 0.2% 2.6% 4.5% 0.0% -12.2% Orange County, CA -1.6% 1.5% 4.2% -2.0% -7.7% Las Vegas Housing-Market Conditions, Volume 45, 4th Page 9

10 Single-Family Housing-Market Details Number Available and Median List Price of Existing Single-Family Residential Units 5 26,500 $350,000 24,500 $340,000 22,500 $330,000 20,500 $320,000 18,500 $310,000 16,500 $300,000 14,500 $290,000 12,500 April May June July August September October November December $280,000 Available units (left axis) 22,242 23,042 23,642 24,087 24,341 24,218 23,917 23,494 22,005 Median list price (right axis) $341,900 $339,900 $338,900 $334,990 $329,000 $324,000 $315,000 $306,000 $299,900 Percent Existing Single-Family Residential Units Sold by Time on Market 5 100% 90% 20.7% 21.2% 18.6% 19.1% 18.2% 23.4% 22.6% 26.5% 24.7% 80% 70% 9.6% 9.6% 10.9% 11.7% 12.6% 12.2% 13.9% 12.3% 13.0% 60% 16.0% 16.5% 17.7% 18.1% 18.5% 50% 16.7% 16.0% 15.7% 15.4% 40% 21.2% 22.0% 21.8% 22.0% 22.5% 18.6% 19.6% 18.7% 19.5% 30% 20% 10% 32.4% 30.7% 31.0% 29.1% 28.2% 29.1% 27.9% 26.8% 27.5% 0% April May June July August September October November 0-30 days days days days 120+ days December Las Vegas Housing-Market Conditions, Volume 45, 4th Page 10

11 Single-Family Housing-Market Details Number of Single-Family Home Sales 4 th Num ber of Sales Las Vegas Housing-Market Conditions, Volume 45, 4th Page 11

12 Single-Family Housing-Market Details 4.0 Clark County Population Long-Term Growth: Clark County Population (Millions) Source: CBER Sources: 1 Local building permitting agencies. 2 CBER. 3 CBER calculations using First American Real Estate Solutions RealQuest, data based on new and existing recorded home sales. 4 Metroscan, First American Real Estate Solutions data based on recorded home sales. These statistics may differ from CBER calculations based on the same data (reported on page 7) because Metroscan uses raw estimates. 5 Greater Las Vegas Association of Realtors data based on MLS records, which do not necessarily account for newly constructed homes sold by local builders. 6 Bureau of Labor Statistics and Nevada Department of Training and Rehabilitation. Note: As of the 1st 2005 report, statistics in the Single-Family Housing-Market Details section have been revised to reflect only single-family housing. Copyright 2008 Conditions Las Vegas Metropolitan Housing-Market Conditions is intended for subscribers. Subscribers may reproduce the publication s items if they cite the publication name and date, and note the copyright of the Center for Business and Economic Research. Send address changes to: The Center for Business and Economic Research, UNLV, 4505 Maryland Parkway, Las Vegas, NV, Phone: (702) Fax: (702) cber@unlv.nevada.edu. Web page: Las Vegas Housing-Market Conditions, Volume 45, 4th Page 12