Sunday, May 15, 2005
Las Vegas housing prices rise
For two decades, Las Vegas has been the nation's fastest-growing metropolitan area, yet its housing has remained very affordable -- until about two years ago. Then housing prices began to rapidly rise, increasing by 50 percent in just over two years. As this story reports, prices continue upward.
Realtors are so naive. "What's driving appreciation is the growth of the city," says the past president of the Greater Las Vegas Association of Realtors and owner of a major local realtor. If that is true, then why weren't prices growing before 2001? (In fact, they were growing, but no faster than local incomes, whereas now they are growing much faster than incomes.)
The real problem is that Las Vegas has run out of land. More than 90 percent of the land in Nevada is federally owned. In the past, the Bureau of Land Management has made regular sales of land to developers to allow them to keep up with the demand for housing. But land sales have slowed thanks to environmental objections. The price rise has seen more speculative buying. Any increase in land sales could burst the bubble of this speculation, leading prices to fall again.
The hook for this story is the release of the National Association of Realtor's first-quarter 2005 home price data, which shows how prices have appreciated in the past year. The spreadsheet also shows prices back to 2002, indicating that Las Vegas prices grew from less than $160,000 in 2002 to more than $290,000 in 2005. These numbers represent the median price of homes sold so may not be strictly comparable if, for example, homes in one metropolitan area are larger than in another.
Realtors are so naive. "What's driving appreciation is the growth of the city," says the past president of the Greater Las Vegas Association of Realtors and owner of a major local realtor. If that is true, then why weren't prices growing before 2001? (In fact, they were growing, but no faster than local incomes, whereas now they are growing much faster than incomes.)
The real problem is that Las Vegas has run out of land. More than 90 percent of the land in Nevada is federally owned. In the past, the Bureau of Land Management has made regular sales of land to developers to allow them to keep up with the demand for housing. But land sales have slowed thanks to environmental objections. The price rise has seen more speculative buying. Any increase in land sales could burst the bubble of this speculation, leading prices to fall again.
The hook for this story is the release of the National Association of Realtor's first-quarter 2005 home price data, which shows how prices have appreciated in the past year. The spreadsheet also shows prices back to 2002, indicating that Las Vegas prices grew from less than $160,000 in 2002 to more than $290,000 in 2005. These numbers represent the median price of homes sold so may not be strictly comparable if, for example, homes in one metropolitan area are larger than in another.
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