Earlier this month there was promising news that home inventory fell below 20,000 for the first time in months, causing some to predict the worst was over and that the housing market would stabilize in 2007.

That was followed by bad news last week that Nevada gained the top spot in the country in the number of homes entering foreclosure. RealtyTrac reported foreclosures in Nevada rose 12 percent from October to November and are up 188 percent from November 2005.

That's one new foreclosure filing for every 362 Nevada homes. And the problem is expected to worsen in 2007 because of the heavy use here of exotic mortgages that will substantially raise monthly payments beyond the ability of some to pay.

There is no agreement over where the price of housing is heading in 2007 in the resale market, but there are some analysts who expect the price of existing homes to drop.

Some national forecasters have regularly predicted large double-digit drops in housing prices, but that has yet to occur.

"We have this high housing stock, and it's not going to go away right away," said Alan Schlottmann, a UNLV economics professor. "It could take a whole nother year."

SalesTraq reports the median price of an existing single-family home is $287,500, which is up slightly from the $283,375 price in December 2005. The latest price, however, doesn't include incentives offered by homeowners, which essentially cut the price.

Las Vegas real estate guru Richard Lee, vice president of First American Title, said he wouldn't be surprised if the price of resale homes fell at least 15 percent during 2007. He said that will create opportunities that some buyers missed out on the last time homes appreciated.

"Over the next 12 months, it needs some sort of an adjustment," Lee said. "In certain neighborhoods you will see as much as 15 percent and even more, but I can't predict where those are going to happen. It got overpriced because of investors and low interest rates. We were undervalued compared to the rest of the country, but the pendulum swung too far and needs to come back a bit."

Not every local housing analyst, however, agrees with that assessment. Steve Bottfeld, executive vice president of Marketing Solutions, sees the resale market rebounding given strong job growth. With much of the new housing to be built on smaller lots, many buyers who want larger yards will look more and more to resales, he said.

The incentives that have played a large role in the new home market, meanwhile, are expected to cease at some point in 2007 as the low inventory is whittled away. The lack of inventory is expected to increase demand for new housing by the end of the year, analysts said.

Through November, new home permits were down 27 percent for the year and new home closings are down 6 percent.

"I think we are going to see continued improvement in terms of housing sales," said Monica Caruso, spokesman for the Southern Nevada Home Builders Association. We have stabilizing prices, and we are feeling there will be somewhat of a sales comeback in 2007 to meet the needs of people moving here. By mid to late 2007, we are going to be back on track for what we are used to “ 25,000 new home sales annually."

Several high-rise projects near and off the Strip are expected to open in early 2007, but the biggest issue for local residents to watch more and more is higher density in the form of mid-rise housing developments, said John Restrepo of Restrepo Consulting Group.

Brian Gordon, a principal at Applied Analysis, said the office market will have a significant amount of space come on line 2007 that will push up vacancy rates approaching 12 percent by the end of the year. That's because in response to a one-time shortage, developers have brought more office space into the market, Gordon said.

"There is going to be a slight imbalance between supply and demand, but it will still remain below regional and national levels," Gordon said.

Look for rents to continue to rise in 2007 by 8 percent to 10 percent because of the cost of land and construction, he said. Once leases expire, even mature properties will see rent increases.

"I think that landlords that have properties at a lower base are making adjustments in lease rates," said Mike Hillis, managing partner at Commerce CRG. "There is no reason to be way below the rest of the market. Tenants are going to see a healthy increase in leases that turn over in the next year or so unless they locked in at a fixed rate."

Developers are starting to put projects on hold because of the high cost of land along with increasing cost for materials and labor, Hills said.

In 2007, Restrepo said office projects will see increased competition from the condo-office space. There was overbuilding in for-sale office developments and those who bought those buildings are competing for leases, he said.

As for retail, there are several projects in the pipeline that will come on the market in 2007. There will be a handful of power centers that will open, in addition to a 1.8 million square foot $700 million retail center on Las Vegas Boulevard near the I-215 interchange that is a partnership between Centra Properties and Turnberry Associates.

Retail rents will grow on average by 10 percent, Gordon said.

Several million square feet of industrial space is under construction and will come on line in 2007 in what Gordon said will be the last major wave of development activity given the lack of industrial land and high price of land.

"Beyond that it will be a challenge for developers to have projects that make financial sense," Gordon said.

Restrepo said there is 3 million square feet of industrial space under construction and another 3.2 million planned. He said the vacancy rate will range from 4 percent to 4.5 percent.