With home prices rising for three years in much of the country, and soaring at dizzying rates in a number of metro areas, the inevitable is happening: sales stalled. But prices have continued to rise, even as sales have deteriorated further. Something has to give. And it’s not going to be maxed-out American consumers. They’re not going to all suddenly inherit enough money to buy these mid-range homes that have moved beyond reach.
But something else is happening.
In the Las Vegas-Paradise metro area, one of the epicenters of the former housing bubble, and one of the epicenters of Housing Bubble 2, the ratio of homes sold to absentee buyers (mostly investors) as a percent of total sales in July plunged by a quarter year-over-year, according to DQNews, a division of CoreLogic. The ratio of homes sold to cash buyers plunged by a third. The ratio of homes flipped swooned. Total home sales have dropped year-over-year for the past 10 months; in July, they were down 11.8% to 4,260 units, the lowest for any July since crisis-year 2008.
And the median price? $190,000, up 9.6% year-over-year. The highest since November 2008. It has now booked 28 months in a row of year-over-year gains that reached up to 36.5%. Crazy! But July was the first month in two years with ‘only’ a single-digit gain.
This post was published at Wolf Street on September 6, 2014.