Moody's Economy.com analyst believes housing values will take a long while to regain the levels they reached around 2006, the peak year of this recent ultra expansion. Prices went up at a rather steep curve and then hit the breaks and plunged at a breath-taking velocity. With that a lot of other economic fundamentals were thrown out the window, too, and there apparently are the seeds to the sluggish real estate recovery.
Housing values will take 20 years to reach the earlier high point in California and Florida, the Moody's Economy.com forecast says. That's possible knowing what those states have gone through. Arizona and Nevada are conspicuously absent in it, although they are generally considered among the four most bubbling ones and then later the most tormented ones, sporting as severe mortgage foreclosure figures and stagnant housing market conditions as the other two.
Southern Nevada - Las Vegas, Henderson, Summerlin, Green Valley, Nevada Trails, Eldorado Highlands and Mesquite - then should look forward to getting the prices back sometime under 20 years. Provided that this report proves somewhat accurate. 10 years is a long time, 15 even longer. It could easily take double digits. To achieve that, let's say 15 years, depends on several key market fundamentals that are currently out of balance.
Mortgage interest rates today are very reasonable and home prices in Southern Nevada at ten-year lows that together would at first glance signal robust demand and possibly a nice-looking recovery on the near horizon. There are some noteworthy obstacles, however, that keep a lid on that for now. Home loan underwriting requirements are still strict, unemployment in Las Vegas is over 13%, down payment money is scarce and the move-up market is stagnant due to the severe upside down factor. Lot of parts that need fixing.
Las Vegas real estate sector should be on its way to a decent recovery once the employment in the valley and the entire nation, for that matter, improves. The sooner that happens, the better. The average median income that lagged way behind the rapid price appreciation and the spread eventually led to the head-first crash is pretty much covered, as values have plummeted. It's the other fundamentals that need help now.
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Provided by:
Esko Kiuru
Mortgage, real estate and apartment industry analyst
www.BluefoxToday.com - syndicated mortgage, housing and property management blog
eskokiuru@gmail.com
My cell: 702-499-1006
I want to mention that HVCC (Home Valuation Code of Conduct) will also prevent rapid appreciation.
Like you say, a significant recovery here in Nevada and nationwide as well requires stronger employment. Without jobs, no down payments and no loan approvals. Just as important, employment restores confidence among home buyers. However the contribution of lower interest rates to the recovery is not to be discounted. (that was a pun I guess)
Hey Esko,
Looks like recovery is better in your area than in mine where there is a slight up tick in closings but inventory levels are harder t bring down with the types of properties out there.
Esko, I always take these type of reports with a grain of salt, especially since most of the ones that I have seen in the past have been wrong.
Renee,
Yes, the infamous HVCC. There is talk about it being possibly suspended for a while.
Kate,
Vegas especially needs to turn the tide on unemployment.
Neal,
The market is showing signs of stabilization, which is encouraging.
George,
These studies can be on target, or widely off it. Only time will tell.