The light at the end of the tunnel is not a train.

(City Center Photo by J. Meinbendir Documentories, used with permission.)

In today’s Review Journal, Mr. Richard DeKaser, chief economist for Global Insight/National City Corp, says that
Las Vegas “No longer occupies a spot on National City’s watch list” and that “the majority of Las Vegas’ price correction is behind us.”

In that arrticle, the Sullivan Group Real Estate Advisors chimed in that the median price of new homes in Las Vegas - about $260,000 - is right where it would have been at this time if we had had normal inflation rates. In other words, they think we are about where we should be, but for the notorious bubble.

In fact, some data from Global Insight & National City Corp indicates that Las Vegas new homes have slipped into “undervalued territory.” (See 6/4/08 Review Journal - Housing: Economist describes Las Vegas…”)

Mr. John Altman, a fellow CRS agent in San Diego (please visit http://www.recoaching.biz/), suggested that, in this blog, I should also track Pending Closings for Las Vegas as a leading indicator. So, I decided to start with what I’ve got and see what it shows “moving forward” as people these days like to say. So, at the moment, June 5, we have 2542 pending single family homes. I noted in a previous blog (my only other data) that we had 2234 pending single family transactions on April 18. We know closings increased each month in April and May. We now know Pendings for early June are up over mid-April. Rule of thumb - possibly look for closings to be up again in June!

To get a little more precise than that, what I have just done is set up an Excel Table where I can enter SFR Pendings on the 1st and 15th of each month from here to eternity, or less. The data above has been entered as May 1st and June 1st. One must start somewhere. I figure it will average out as we go along. Now, thanks to John A., we’ll begin to build a tool to forecast closings NEXT month, as soon as we have enough data to estimate what percent close.

Last year I was trying to follow the number of new single family permits pulled. Home Builder’s Research tracks this as does the UNLV page in links, and for years we believed Las Vegas needed 2000 permits each month to stay even. Over a year ago these fell below 1000 per month. Last fall they fell below 500 per month and have been only a few hundred per month, with rare exceptions, ever since.

So what does it all mean?

It means that whenever the pent up buyer demand is again offered a viable mortgage program, the so called glut of homes on the Las Vegas market should evaporate fairly quickly and, with the House Team Comparison showing less than 5000 single family homes under $150/sq ft, the median home price should begin to rise. (The House Team Comparison contains only 1 and 2 story single family homes WITHIN the Las Vegas Valley that are NOT short sales, ARE under 150/sq ft, in all ML areas except 3, which I can only whisper to you through a door.)

Will this return to “normal growth” be a reasonable, sustainable, moderate, even conservative experience?

“Oh, yes,” says Las Vegas. “That is just my game!”