Home sales begin to rebound in Las Vegas

— -- There's a glimmer of hope in the neon city of Nevada, where home sales are starting to heat up after two dismal years. In fact, sales in Las Vegas have risen over the past six months.

Bank-owned foreclosed properties are setting the pace. With prices falling, the homes are grabbing attention. The median home price was $225,000 in June, down from a peak of $315,000 in June 2006.

"About 60% of everything that is selling is foreclosed properties," says Patty Kelley, president of the Greater Las Vegas Association of Realtors. "A feeding frenzy of buyers is coming in and picking up property at the 50 cents to 60 cents on the dollar that owners had paid for it."

Las Vegas was one of the first areas hit by the subprime mortgage collapse. In a city where many gamblers have lost their shirts in casinos, many investors and other home buyers lost their luck in the mortgage market. After the housing bubble burst, foreclosures rose quickly. Last year, Nevada posted the nation's highest state foreclosure rate, according to RealtyTrac.

It's unclear if the housing market has hit a true bottom and begun to reverse course for good. "We're not looking for things to rally vastly until the end of 2009," Kelley says.

Las Vegas is apparently in a local recession, says Keith Schwer, a professor of economics at the University of Nevada-Las Vegas. The area, he says, has been hard hit by speculation and excessive supplies in the housing market. Even worse, fuel prices have battered the tourist-based city as airfares have increased and schedules have been reduced.

"We may have been able to avoid a recession had it not been for the rise in energy prices," Schwer says.

Though the slowdown in the national economy is causing many Americans to hold back on buying a home, Las Vegas still enjoys an advantage. Many foreigners love to visit the city, and some are eager to take advantage of the lower prices and favorable currency exchange rates.

"We're getting a lot more people from Canada and other foreign countries who are able to pick up property that they can afford," Kelley says.