Nevada Housing Market Slumping… Not Crashing
The Nevada economy will see slower-than-usual growth, a continued housing market slowdown, and more increases in the cost of living, according to In Business Las Vegas.
But the portrait isn’t entirely glum, according to UNLV’s Keith Schwer, a local economist who believes that since growth will be higher here than throughout the nation, and the real estate market will pull through the slump in only a year, the region will emerge strong.
Schwer, director of the Center for Business and Economic Research at UNLV, said 2007 and 2008 would be good years for Nevada mortgage activity, despite a residential real estate sales slump.
He said 40 percent fewer housing permits would be approved in 2007, as a market glutted with inventory corrects itself. About 20,000 units will be approved in 2007, about 10,000 fewer than in 2006.
But the cost of home mortgage loans remains low, and the region’s economy should spark demand. By mid-2008, excess inventory will have been scooped up by residents and investors and more permits will be approved.
Schwer said Nevada home prices slowed down during the second half of 2006 to a rate of 1,400 permits per month. But the average resale home sits on the Las Vegas market for 55 days, compared to six months in Atlanta.
Industry experts say at 90 days sellers and the industry at large has cause to worry, according to Schwer. Before the downturn, 16 percent of homes purchased in the state were considered investment properties.
Schwer said the national housing market would be similar to the situation in Nevada - a bit slower than 2005 and the first half of 2006, but in the midst of a slump rather than a crash.
“Perhaps this market will be good for us, because we will be re-evaluating the risk situation,” he said.
Nationally, energy prices will affect the economy, too. Other variables in Nevada’s economy are factors out of the state’s control, such as terrorism or a national pandemic, which could affect tourism and travel.
Schwer said there is much to be learned from the last six years of data from Nevada. The bottom line is that the current real estate and economic conditions are strong, with good job growth prevailing throughout the state and plenty of first-time home buyers interested in the market.
Schwer said Nevada’s population growth will also continue in 2007-2008, with a 4 percent growth rate compared to the U.S. rate of 1 percent. In Clark County, growth should be at least that rapid.