Although the existing home market has been rebounding in recent months with sales running ahead of last year’s pace, the new-home market remains in the doldrums.

One national builder has called the third quarter “one of the most difficult in homebuilding history.”

When Congress and the Bush administration enacted a housing stimulus bill in July, many expected the bill’s main provision, a temporary $7,500 tax credit for first-time homebuyers, would help the industry.

That hasn’t been the case, especially in Las Vegas where new-home sales in July (731) and August (792) were the weakest of the year. September is likely to be even worse because of the meltdown on Wall Street and tight lending standards hampering the ability of many potential buyers to obtain mortgages.

Builders are facing continued competition from foreclosed homes, which is bringing down the price of existing homes to $200,000. New-home prices fell below $260,000 in April, but have steadied since, landing at $253,000 at the end of August. That gap between new and existing homes had been as little as $28,000 in April.

Through the end of August, new-home closings were down 49 percent compared with the first eight months of 2007. In contrast, existing home closings were up 5 percent, according to SalesTraq.

“All you have to do is look at the numbers, and you can see the (stimulus) has not helped the housing market,” said Steve Bottfeld, executive vice president of Marketing Solutions. “It didn’t have a huge impact.”

Without the Wall Street meltdown, Bottfeld says it could have made a difference, but the dynamics of the market have changed.

“The tax credit can’t get you a mortgage, and that is the key issue on whether you can buy a home,” Bottfeld says.

Bottfeld, one of the biggest cheerleaders for the housing market, says he remains concerned about where the market is heading because he thought prices would start rising by the fourth quarter and first quarter of 2009.

A Wall Street bailout package will help the housing market because it should give buyers access to loans. It will slow down foreclosures because owners will be able to refinance, Bottfeld says. More important, it begins to restore confidence because people will realize prices are bottoming out, he says.

“Until prices go up, we are still going to be in a recession,” Bottfeld says.

What the bailout won’t do, however, is address the long-term concerns of what triggered the need for the bailout in the first place, Bottfeld says. Housing needs to go back to being treated as shelter rather than a commodity, he says.

“This bill is not doing that,” Bottfeld says. “I love investors to death. They were 20 percent of the Las Vegas market up through the boom, but speculators are deadly because they don’t give a damn about the neighborhood. All they care about is turning a profit fast.”

Las Vegas construction permits

The value of building permits issued by Las Vegas has dropped 27 percent through the first three quarters of 2008 compared with the same period in 2007.

Through Sept. 30, $588 million in permits were issued, down from $809 million a year earlier. The biggest decline has been in new-home permits, whose numbers declined from 1,941 last year to 939 this year. The value dropped from $230 million to $103 million. New-commercial construction fell sharply from $344 million to $120 million. The category showing the most improvement was the construction of apartment complexes with $134 million in permits issued compared with none a year ago.

In September, the value of permits fell 20 percent to $34 million, down from $43 million a year ago. There were $11.3 million in new-home permits compared with $10.8 million a year ago and new-commercial construction was $9.2 million, up from $7.6 million a year ago. The category that recorded a decline was duplex construction, which fell from $9.2 million a year ago to zero.

In other real estate news:

# Las Vegas had one of the biggest declines when it comes to metropolitan areas creating and sustaining jobs and creating economic growth, according to the Milken Institute. Las Vegas ranked 75 in 2008 after a ranking of nine in 2007, a drop of 66 spots. Reno was ranked 133, a decline of 107 positions from a year ago. The Utah cities of Provo and Salt Lake City were ranked first and third, respectively.

# Gemstone Development announced that Camco Pacific Construction has been hired to complete the first phase of Manhattan West. Camco replaces APCO Construction. Gemstone Chief Executive Alex Edelstein says the contractor was replaced because the project was not being kept on schedule or meeting other expectations. APCO officials did not return phone calls to comment. Manhattan West is on track to complete mid-rise residential buildings by the end of the year and a nine-story tower by January, Edelstein says. It is a $350 million mixed-use development near Interstate 215 and Russell Road.

# Prudential Americana Group, a Las Vegas real estate brokerage, has formed a partnership with Shelter Mortgage to provide residential mortgages. Shelter is a subsidiary of Guaranty Bank, a family-owned bank with branches in Wisconsin, Illinois, Michigan, Minnesota and Georgia. This is the company’s first partnership in Las Vegas, and it has more than 40 nationwide. “At a time when many other real estate lenders are shutting down altogether, it was important for us to work with a reputable mortgage provider,” said Mark Stark, chief executive of Prudential Americana Group.

# Applied Analysis reported the number of resale homes on the Multiple Listing Service jumped by more than 359 units and was the largest weekly increase since May 2007. The number of vacant properties has also increased by nearly 400 during the past week. The number of owner-occupied homes declined by 50 to 7,568 and represents 34 percent of all homes listed for sale, the firm reports. Tenant-occupied units represent 9.5 percent of the total while vacant properties account for 57 percent. The inventory is down nearly 6,700 units or 23 percent from 2007.

Credits: In Business Las Vegas

Tags | builder, home, market