[dude66]

Two top US economists present scary scenarios for US economy; House prices in some areas may fall as much as 50% - Housing contraction threatens a broader recession

By Finfacts Team

Sep 3, 2007

US homes may lose as much as half their value in some US cities as the housing bust deepens, according to Yale University professor Robert Shiller. Meanwhile, Martin Feldstein of Harvard University says that experience suggests that the dramatic decline in residential construction provides an early warning of a coming recession.

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Two top US economists present scary scenarios for US economy; House prices in some areas may fall as much as 50% - Housing contraction threatens a broader recession

[dude66]

Bubble Markets Inventory Graphs: Tracking Las Vegas/Clark County

[jfkIII]

Inventory WAYYYY UP and sales down...looks like a collapse...on paper, at least! I'd love to hear some stories from the street...but then again, most of them probably lost their internet access when they left the house empty behind them.

Viva, Las Vegas!

[ParkTwain]

These charts are obviously not very informative. What's the breakdown of single-family vs condo vs high-rise? The condos always take the worse hit. They ramped up in price last during the boom (it's what the least qualified can buy late in the boom cycle), and fall the fastest and most on the down side of the cycle. You also don't see the standard deviation of all these averages; it can be a significant percentage of the average figure itself. The decline figures are also very location dependent. Summerlin will fare better during the downturn than the NW and most of Henderson, etc.

[coolricks]

Originally Posted by jfkIII

Inventory WAYYYY UP and sales down...looks like a collapse...on paper, at least! I'd love to hear some stories from the street...but then again, most of them probably lost their internet access when they left the house empty behind them.

Viva, Las Vegas!

Sarcasm in times of trouble is not always very wellcome. IMHO

[olecapt]

I believe the chart is reasonably reflective of reality. As of the end of July the GLVAR inventory of Single Families was 24069 and condos was 6269. August is up around 600 units for SFRs. Median price for SFRs is up...$300,000 versus $295,000 in July. Sales are down less than 50 units from the July number of 1318 (SFRs). The official numbers probably won't be out to Thursday but these are close.

These numbers are distorted by some technical factors. I believe the actuals and what I see in most neighborhoods is a decline of 5 or 6% from the first of the year. There is a significant price decline...but there is no "bubble burst".

Areas most impacted will be areas with high sales between mid 2004 and mid 2006. Overall I would not expect any particular difference between Summerlin, Henderson or the NW.

In general the worst hit sigment will be the moveup region. From about the median to 700K.

Condos are taking a real beating in not selling at all rather than declining price. Good part of this is the conversions which have badly clotted up the bottom of the condo market. The high rises are reasonably small in number and have little impact except a whole building will hit the sold column in a very short period of time heavily distorting the month or so involved. The high rises appear to be very bad resales. Virtually all occupied buildings have very big inventory.

Inventory will take a downturn shortly. A calendar thing. Just means we can't really tell whether things have peaked until spring.

[jfkIII]

Originally Posted by ParkTwain

Summerlin will fare better during the downturn than the NW and most of Henderson, etc.

Just wondering why you state that? For instance, my bro lives in Summerlin and he's been watching his house estimate drop by 4-5k per month on zillow.com. Isn't the drop pretty much across the board in all areas?

[ParkTwain]

Originally Posted by jfkIII

Just wondering why you state that? For instance, my bro lives in Summerlin and he's been watching his house estimate drop by 4-5k per month on zillow.com. Isn't the drop pretty much across the board in all areas?

Most of Summerlin, even the parts NOT on a golf course, is more desirable than almost all of LV and Henderson. It really is like living in a resort community.

Zillow.com shows my house is down 4% for the last 12 months. It has been fluctuating between -2% and -6% since February 2007.

It shows all of ZIP code 89138 is down 9% for the last 12 months and that almost all of that happened before November 2006. (Is that the case for the rest of the city?) It shows "LAS VEGAS" down 6% for the last 12 months.

[jfkIII]

WOW...he's not on a golf course...and his house is -9.4% for the last 12 months...and -$4,038 in just the past 30 days!

[olecapt]

Originally Posted by ParkTwain

Most of Summerlin, even the parts NOT on a golf course, is more desirable than almost all of LV and Henderson. It really is like living in a resort community.

Zillow.com shows my house is down 4% for the last 12 months. It has been fluctuating between -2% and -6% since February 2007.

It shows all of ZIP code 89138 is down 9% for the last 12 months and that almost all of that happened before November 2006. (Is that the case for the rest of the city?) It shows "LAS VEGAS" down 6% for the last 12 months.

Note that this valuation is very tricky. There are a mess of technical factors that screw up whatever you try to do. Zillow is grossly inaccurate in many cases including overall statistics. Their model simply is too volatile and fails pretty much completely if not a newish home in a high volume tract.

The best model I know of is one of the services that uses only the second sale of a property to project trends. That model says Vegas is down about 5.2% this year. I have personal numbers on Sun City Summerlin which shows a similar drop. I have numbers on the upper tracts in Desert Shores which show similar numbers. The GLVAR site shows a drop of around 3% this year...but technical factors would likely indicate that drop in reality could easily be 6%. Interesting that the GLVAR median SFR price is up in August over July. The GLVAR numbers show Vegas flat over 2006...again though that could conceal a drop of up to 3% or so.

I would expect 89138 to be hard hit. It has lots of tracts actuve in the 2004 to 2006 period where the heaviest problem lies. It may well get worse as the banks end up owning more and discounting. We now see the banks discounting reasonably heavily in condos and the less expensive tracts. Don't see that yet in the more expensive tracts.