Debunking the Las Vegas housing bubble
For a couple months now we?ve read in local newspapers about how the Las Vegas housing market is showing signs of cooling. Industry ?experts? have chimed in on both sides of the housing bubble debate.
Perhaps we could shed some historical light on the topic.
According to the Greater Las Vegas Association of Realtors, what we?ve seen this January and February. is precisely what our community has seen for the past three years. Each January and February there are fewer real estate transactions than the rest of the year.
However, if you look at median home prices, from Feb. 2004 to Feb. 2005, it increased by 39.4%. Then during the same period from 2005 to 2006 the median home price increased by 8%.
Perhaps we?re just settling into a more normal rate of growth.
There are signs that more people are looking to move-up or move out. From Feb. 2004 to Feb. 2005 there were 10.4% more homes on the market. Then from 2005 to 2006 the increase was even greater, at 21.7%.
In Feb. 2004 the majority, 65.9%, of single family residential units were on the market for 0-30 days. In Feb. 2005 that number dropped to 38.3% and the 31-60 day category increased to 21.2% (from 16.8% the year before). Last month those figures were 38.2% for 0-30 days and 20% for 31-60 days ? pretty much what we saw in 2005.
While there may be more homes on the market now than there were a year ago (14,041 in Feb. 2005 and 17,675 in Feb. 2006), sellers are still getting more for their homes than they did a year ago. It just takes longer to make the sale than it did a couple years back.
With the continued demand for housing, impressive growth planned in the valley?s gaming and resort corridors, along with steady business growth (think of all the ancillary services that grow when casinos grow), the economic outlook for Vegas is still sunny.
Baring an unexpected act of God or terror, tourists will continue to play in Vegas and locals will continue to reap the rewards of one of the country?s most insulated, resilient economies.
Where else has the population nearly doubled every decade since 1940? Where else can homeowners expect an annual increase in equity well above the national average?
A bubble, a bubble. Where?s the bubble?
