Las Vegas Still Lags U.S. Housing Market

Residential News » Residential Real Estate Edition | By Kevin Brass | August 9, 2010 12:57 PM ET

While home prices in most U.S. cities show signs of stabilizing, Las Vegas continues to slide.

In May, Sin City prices dropped 0.5 percent from April, even though the housing industry received a boost from expiring tax credits, according to the latest S&P/Case-Shiller Home Price Index.

In fact, 19 of the 20 cities in the index reported an increase in May, with Las Vegas the lone exception. Prices in Vegas are down 54.6 percent from the peak, according to the index. Detroit is the only city performing worse than Las Vegas, with prices down to 1994 levels.

In contrast, other spots popular with international investors showed signs of stabilizing, including Miami, which posted a 0.9 percent gain in May, while New York's values increased a modest 0.8 percent from April.

California has seen a dramatic bounce, with San Francisco prices increasing 18.3 percent and San Diego up 12.4 percent from a year earlier.

Las Vegas prices are down 6.5 percent from 2009, the worst fall in the 20-city index--even worse, year-to-year, than Detroit.

The numbers suggest that Las Vegas is still reeling from its former status as the fastest growing market in the country. Pummeled by economic conditions, Las Vegas is also facing an oversupply of tract homes and condos built in the last 10 years.

According to the Greater Las Vegas Association of Realtors, the number of sales in Las Vegas is increasing, even though prices are still slipping. More than 4,200 homes were sold in June, up from 3,600 in May--but still a drop from 4,700 in 2009.

However, in June, short sales accounted for 34 percent of sales, up from 22 percent in February. Meanwhile, the number of bank-owned home sales, which represented 53 percent of the market in February, fell to 38 percent of overall sales in June.

In a statement, GLVAR President Rick Shelton said the local housing market "seems to be taking one step back for every two steps forward."

"To really rebound from the downturn of the past few years, we need to see home sales, inventory and prices all pointing in a positive direction for an extended period of time," Shelton said. "For the most part, two of these three key factors have been in place. We just need prices to go up consistently."

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