Foreclosures.com: Las Vegas Home Price Bubble Set to Deflate.

SACRAMENTO, Calif. -- Foreclosures.com, a California-based distressed property investment advisory firm, says signals are appearing that portend a slowdown in the extraordinary 2004 price appreciation in Clark County, NV.

"As of July, price inflation of resale homes in Clark County reached 45.3% year over year," said Alexis McGee, president of Foreclosures.com. "That's an all time record for U.S. housing markets and is far above a sustainable level." Ms. McGee added that, according to the Greater Las Vegas Association of Realtors, new listings of single-family detached homes has reached a median price of $329,900, a 78.4% increase over a year ago.

"That's a sure sign that speculators are in the Las Vegas market," said Ms. McGee. "Inman.com news service reported last month that this was indeed the case, that speculators were buying new homes from builders, and reselling them at a profit a few weeks later."

Ms. McGee went on to say that, while a 1.7 month supply of unsold homes was a major factor in the Las Vegas price explosion, that also made speculation possible and introduced an "unreal element" into the actual supply/demand equation. "When you have speculators buying and reselling quickly to end-users, you actually have two buyers for the same house. If speculators sell to other speculators, you start to get a house of cards situation."

There are, however, signs that in the near future, the inmates may no longer be running the asylum. "Building permits are up 67% from a year ago, and that should improve the inventory situation," said Ms. McGee. She added that some major builders were already scaling back prices in new subdivisions, and that, according to the GLVAR, the time on market had increased from 8-10 days to more than 30 days.

"When things slow down," said Ms. McGee, "the speculators will leave the scene and there will be a shakeout. Foreclosures are low right now because it's easy for distressed homeowners to sell their way out of trouble, but as interest rates rise and time on market increases, more will find themselves trapped."

Foreclosures.com has been tracking foreclosures and assisting investors since 1992 at their website www.foreclosures.com. The company serves investors in Clark County, NV, eighteen California counties, Phoenix, AZ, Chicagoland, IL, New York metro, and all of New Jersey.