By HUBBLE SMITH LAS VEGAS REVIEW-JOURNAL
Las Vegas will lead the nation's housing market recovery, probably starting in the second half of the year, the chief economist for the National Association of Realtors said Monday. For the full article click here
Low mortgage rates, combined with first-time homebuyer assistance from the federal stimulus package, will push buyers off the fence and into affordable homes, Lawrence Yun said at the Realtors association's Rocky Mountain Regional Conference held at Green Valley Ranch Resort.
. "Rising sales could help stabilize prices by the end of the year. Vegas is a leading edge and portends what's coming for the rest of the country and also for financial institutions."
Prices are still falling, but monthly sales of existing homes have doubled for the past few months, a precondition for prices to stabilize, Yun said.
The long-term prospect for Las Vegas is bright because baby-boomers reaching retirement age are migrating to cities with warm climates and favorable tax structures, the economist said.
Yun, who earned a doctorate degree in economics from University of Maryland, said President Obama's stimulus plan is going to be a "net positive" on foreclosure mitigation. However, he'd rather see the $75 billion for loan modification go to the Federal Reserve to drive mortgage rates lower.
The homebuyer tax credit accounts for less than $10 billion of new $787 billion stimulus package, a rather small amount, but nonetheless sufficient to help spark a comeback, he said.
"I'm a little disappointed that it didn't address as much as it could have, given the size of the bill," Yun said.
The stimulus package creates an $8,000 tax credit for first-time homebuyers and raises loan limits to $720,000, though not in Las Vegas. It will keep mortgage rates low through the Troubled Assets Relief Program and will lower foreclosures through loan modifications, Yun said.
That's going to raise a "moral hazard," he said. People who purchased homes responsibly, who bought within their means and didn't skirt lending requirements, are wondering why they're not getting help while others are.
"If the housing market recovers, it's money well spent. If not, it will be difficult to get the second $350 billion in TARP," he said.
Housing is the source of the national recession, Yun said. The boom from 2000 to 2005 was an "artificial boost" to home values and the general economy as well. Now, with declining home prices, consumers are more cautious about spending.
The second part of that is the "bleeding" of bank balance sheets, he said. Tightened credit flow is hampering the economy.
"We have to go through recession to take exuberance out of artificial growth," Yun said. "Now I'm afraid the economic downturn could be snowballing and hard to stop without the stimulus package."
The media report that new home sales have collapsed, but they're missing the real story, he said. A more accurate interpretation is that builders have cut back on production, which is the way to correct inventory, so naturally there will be fewer sales, Yun said.
Home builders in Las Vegas pulled just 183 new home permits in January, compared with 353 in the same month a year ago, according to SalesTraq research firm. The 5,550 permit total for 2008 was down 53.2 percent from the previous year.
The home-building industry won't recover until 2010, Yun predicted. He forecast an increase of 10 percent to 20 percent in existing home sales nationwide.
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Here is some really great news at a time when Americans really need it!
read below: The Obama mortgage plan
Below is a list of key elements of the plan outlined Wednesday by President Obama that aims to aid as many as 9 million households in fending off foreclosures:
The Obama administration announced new plans Wednesday to make it easier for up to nine million people to rework or refinance their mortgages, as the White House began an aggressive effort to stabilize the housing market.
A central element of the plan would allow up to five million people to refinance their mortgages into more affordable products through Fannie Mae and Freddie Mac, according to a summary of the plan.
A total cost of the effort was not immediately clear, though it could eclipse more than $200 billion because of new commitments to the Fannie Mae and Freddie Mac.
The White House summary says its plan would not help speculators, and instead would be aimed at keeping "hard pressed homeowners" in their homes. They also said they are working on "clear and consistent guidelines for loan modifications," which many have argued are necessary to speed up the process of making loans more affordable.
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After showing improvement in December, the Las Vegas housing market relapsed in January with a drop in sales and a steeper slide in prices.
January showed a decline in total sales, including the number of distress sales. Average sales price fell 7.3 percent, the biggest monthly drop in more than a year, he noted. The supply of single-family homes crept up to 10.9 months.
The Greater Las Vegas Association of Realtors reported 2,224 single-family home sales in January, a 126.2 percent increase from the same month a year ago, but down 11 percent from December. Sales began trending up in May, topping 2,000 and staying there for the rest of 2008.
The article also goes on to mention that The $15,000 tax break for homebuyers approved by the Senate last week should help to revitalize the downtrodden housing market.
Excessive inventory, foreclosures, job layoffs and tough financing will keep prices down this year, said Ken Lowman, owner of Luxury Homes of Las Vegas.
There were no sales of million-dollar condos and only three sales of single-family homes over $1 million, compared with five the previous month.
Read the full article in The Las Vegas Review Journal By HUBBLE SMITH
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There is a positive undercurrent in real estate right now. Our population continues to grow, with 25 million more people now than a decade ago. Housing affordability is the best in years. Mortgage rates remain low. According to the National Association of Realtors, existing home sales rose 6.5% in December. In fact, Showing Time reports that showings were up 10% over the year before.
So is this the time to buy? It is certainly the time to be looking for great deals and preparing your current home if you decide to sell. With flexible sellers and historically low interest rates, it may be smart to sell now and buy up to the neighborhood or home you’ve always wanted.
Inventory is declining. National statistics show that a typical buyer plans on staying in their home for at least seven years. Buyers are taking advantage of great deals. Just remember – location, location, location.
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This is positive news for everywhere in the USA. Most especially in Las Vegas which was first to feel the foreclosure pain and most likely will recover before the rest of the nation.
Economists’ Forecasts
Economists forecast pending sales to be unchanged in December after an originally reported drop of 4 percent in the prior month, according to the median forecast of 28 economists in a Bloomberg News survey. Estimates ranged from a drop of 5 percent to a 2 percent increase.
The share of homes for sale that were empty rose to 2.9 percent in the last quarter, matching the highest level in data that go back to 1956, the Census Bureau reported today. A record 19 million houses stood empty, including those for sale, rent, or used as secondary residences.
The pending purchase report showed resales jumped 13 percent in both the South and Midwest regions. Signed purchase contracts declined 3.7 percent in the West and 1.7 percent in the Northeast.
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