Las Vegas Real Estate Appreciation from July 2004 to July 2005
Review Journal - Sept 2
The average U.S. home price increased 13.4 percent in the second quarter compared with the same quarter a year ago, with Nevada real estate appreciation rates topping the list at 28.1 percent, the Office of Federal Housing Enterprise Oversight reported Thursday.
The national increase was the largest in more than 25 years.
"There is no evidence here of prices topping out," agency Chief Economist Patrick Lawler said in a statement from the Washington, D.C.-based agency. "On the contrary, house price inflation continues to accelerate, as some areas that have experienced relatively low appreciation are picking up steam."
Those would be inland areas of California such as Bakersfield and Merced, which ranked No. 2 and No. 3, respectively, in one-year house price appreciation at 33.9 percent and 32.7 percent. Naples-Marco Island, Fla., was No. 1 at 35.6 percent.
Las Vegas, Nevada, which led the nation for two consecutive quarters last year and had been among the top 20 since the fourth quarter of 2003, barely fell out of the agency's top 20 list, which is not a bad thing, said Dennis Smith, president of Home Builders Research.
The metropolitan statistical area listed as Las Vegas-Paradise ranked No. 21 with a one-year appreciation of 26.9 percent. Appreciation for the most recent quarter was 4.4 percent and over five years it was 96.1 percent.
"I'm not surprised Las Vegas isn't further up on the list because, as you know, real estate prices have leveled off from runaway year-to-year comparisons a year ago," Smith said. "We're seeing year-to-year percentages decline because our Las Vegas real estate market is leveling off and you'd better hope it's leveling off, otherwise our prices would be even higher. That said, the Las Vegas real estate market still has increases but at a much more controlled pace. That's what we want. That's OK."
Las Vegas was experiencing quarterly home appreciation rates of 40 percent and 50 percent last year and the median price of a new Las Vegas home, not including apartment conversions, reached a record of $317,909 in July, Home Builders Research reported. The median resale price was $280,000, a 13.1 percent increase from the same month a year ago.
Among all states, Nevada continues to have the highest appreciation, followed by Arizona (27.8 percent), Hawaii (25.9 percent) and California (25.2 percent).
Smith said the top 20 cities on the agency's list are not the typical places that we've seen in the past such as San Diego, Las Vegas, Los Angeles and San Francisco because of housing affordability.
"Why isn't San Diego on there? Because they've moved off the shore to Stockton and Merced. Stockton is No. 6. What's in Stockton? That's where investors are putting their money because they have a chance of bigger gains. The best example, I think, is Bakersfield," Smith said.
Thirty of the 265 ranked metropolitan statistical areas had one-year appreciation rates exceeding 25 percent and, for the first time, cities from Idaho ( Coeur d'Alene) and Utah (St. George) made the top 20 list at No. 14 and No. 17, respectively.
John Ritter, chief executive officer of Las Vegas-based Focus Property Group, said he's expanded his company's territory to include parts of California such as Victorville, where Focus owns about 650 acres and is developing a 450-acre master-planned community.
"The reason we look at other areas is it's getting very difficult to buy land here affordably," he said. "Land prices have risen so dramatically that we're looking for other areas of opportunity. There are markets in the Western United States in which there's a better ratio of land prices and appreciation."
Las Vegas real estate is still a strong market, Ritter said, and Focus will continue to develop here, but he doesn't feel there's a lot of appreciation left in this market.
"Generally all that's left within the Las Vegas real estate marketing is BLM land and those sales haven't been cheap," he said.
Lawler, the federal agency's economist, said price increases are the result of many factors, including low mortgage interest rates and speculative investing.
"The robust appreciation rates are striking both in terms of their magnitude and in their geographic scope," he said. "However, they are likely unsustainable given the underlying inflation rate, income growth and other factors."
The oversight agency analyses combined the mortgage records of Fannie Mae and Freddie Mac and publishes a quarterly housing price index based on average house price changes in repeat sales or refinancings of the same single-family properties. The current conforming loan limit is $359,650