Las Vegas home prices approach pre-recession mark: What's changed?

LAS VEGAS (KSNV) — “The way we got here this time is way different than the way we got here before.”

Those assuring words from Tom Blanchard, the President-elect of the Greater Las Vegas Association of Realtors, as median home prices move to within $5,000 of the all-time high before the crash more than a decade ago.

According to the latest GLVAR statistics, the median price for a single-family home in September was $310,000, approaching the record high of $315,000. However, this time, the 3.3% year to year growth speaks volumes, compared to the furious run-up in home prices before the 2006 bubble. “This runup has been different,” said John Restrepo of RCG Economics. “It's been based on more solid growth, and it's cooling off, it's just cooling off to be a more normalized housing market here in Las Vegas. A normal market is 3 to 4 to 5 percent a year, kind of matching the rate of inflation.”

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Restrepo says the slower, more sustainable growth, isn’t the only thing that makes this housing market different than the last time it reached these levels.

“The 2006 runup, in terms of the housing demand, was really driven by a lot of foolish lending practices that let a lot of people that shouldn't have bought homes buy homes,” said Restrepo. “There were a lot of flaws in the home financial system. Those have been pretty-much fixed.”

“We’ve learned from our mistakes in the past,” said Tom Blanchard, “And we're all doing it right this time, and we're all doing it correctly.” Blanchard says it also means homeowners who rode out the ‘great recession’ and stayed put while home prices slowly climbed, are finally seeing some breathing room. “If you're a seller who bought toward the high watermark, you're probably just finally breathing some air and seeing some light at the end of the tunnel, You're not underwater,” Blanchard said.

Blanchard says homeowners who bought near the bottom are in much better shape, but also warns, “For those that were able to buy really well, you have plenty of equity, and hopefully you're not refinancing and taking money out of your house and doing the home-churning ATM which got a lot of people in trouble the last time.”

While Las Vegas is nearing its all-time high for median housing prices, the recovery still lags behind the rest of the nation. According to Blanchard, Las Vegas is one of only a handful of large real estate markets yet to see its median housing prices climb above the record highs before the crash. Restrepo believes the reason is pretty clear cut. “We were one of the hardest-hit housing markets in the country because of the great recession, and it's taken us a longer time to recover.”