Paul Francis - Las Vegas Real Estate & Summerlin Homes

Carl in Chicago,

I'm a licensed Broker in Illinois.... I'm currently #41,000 something on the Cubs Season Ticket list.... maybe once I get those season tickets I'll move back to Chicago and handle your real estate investments.

By then... maybe global warming (LOL!!) will have made the winters more bearable. - Fri Jun 26 2009, 13:39

Hello Nicholas,

I'm not missing the point at all.... In Las Vegas we've seen first hand what happens when "creative destruction" is allowed to take place and prices are not tampered with and allowed to reset. Keep in mind that much of what you bring up has already happened here.... and from some of my friends in Phoenix, Florida and some parts of California... has already happened there. All of the current programs came out long after our troubles started... People are buying here again because of the prices. Yes... we have million dollar bank owned homes. And yes... New home builders are building homes here again.

And REALTORS in these areas certainly know what a cut in income is since the vast majority of us have experienced this and we've certainly made personal spending changes. Except for a handful of RE Agents listing homes for the banks... we've all taken a major cut in our income.

I do short sales and have been for almost a year now..... we are working twice as much for half the pay. A 50% drop in home values means our 2.5 to 3% is half of what it was during the peak false economy days. So... when people talk about a cut in pay... we CERTAINLY know what a cut in pay is. Unemployment did not cover us during the year and a half where there was only 1 sale for every 5+ agents.

And I call it a false economy because that is what it was due to the inflated prices and all of the refinancing and equity withdrawals that took place during the boom...... Mortgage Equity Withdrawal chart provided previously shows that. The money taken out was spent on new cars, clothes, flat screens, IPods, Playstations, etc.. etc... That money is obviously gone and so has all of the spending in the economy.

I'm certainly not discounting what you are providing... because I certainly believe (know) that there are many areas of the United States that will eventually see what we have already seen and it won't be pretty. My Bank contact for Georgia/Florida is telling me what is currently taking shape in Georgia and it's ugly. They are in Commercial Lending and they will be the first ones to tell you that they built WAY too much and the regional bank they are with is in panic mode. As I told them well over a year ago... it was not a matter of if... it was a matter of when it will happen to them.

I am a firm believer that until everything resets back to before all of the lax lending and everybody own a home social experiment that started in 2002, it's going to be ugly. After the Tech bust and 9/11 -- prices should have dropped but due to tampering with interest rates and rubber stamping loan applications.. prices went up, up, up and now we are in a credit crisis as people got stretched out and buried in debt.

It's really not that complicated.... let the reset happen and the recovery will come much quicker. We see it here... sales are taking place left and right and properties priced right sell in a matter of days. (Obviously unless somebody has been under a rock for the past three years --- knows that prices in Las Vegas have been decimated from the highs.)

Now that prices are extremely affordable... homes in our area are selling again. This results in home inspectors, appraisers, lenders, repairmen, Real estate agents and title officers all getting paid -- making money again and spending it in our local economy. New home builders are starting to cautiously build homes again. (Like the old days when they did not build until they had a contract in hand.)

You know... doing short sales I've seen first hand what happens when somebody gets out of a huge mortgage that was sucking away all of their income and rents something comparable for far less until they get their debt paid off..... they become much happier people.

In summary... the issues you bring up are a cause of what already happened. What happens tomorrow is taking shape today.

As far as the deflation / inflation debate... of course prices for cars, homes and other items have come down in price because people can't afford them or are no longer interested in being in debt up to their ears. You have to lower the price to sell them...

The inflation will eventually come though due to the federal policies in place. You can't just print up a bunch of money / sell a bunch of debt and flood the economy with "stimulus" packages and not expect any future consequences. There are no charts to show it.... yet.... because it is happening now.

Let Americans reduce or increase their cash flow the right way and it will sort itself out. The process to get there might be temporarily ugly but the long term benefits will be priceless. - Fri Jun 26 2009, 13:34

All good points Nicholas,

At this point I'm not following any of that very closely anymore... all I know is that it's easy to purchase real estate with a positive cash flow that easily beats out the returns I could get in the bank, municipal bonds, T-Bills, annuities or under my mattress. On top of that... somebody else is paying off the debt.

And yes... that's even discounting the rent to get them rented fast because we obviously know that everybody is looking for a good deal to reduce their cash outlay.

Regardless.... real estate is and always has been meant as a long term investment... all of the charts tracking real estate on a month to month basis as if it's a stock is ludicrous.

It's all about cash flow....

In my last example for the $135K home that is currently getting $1,200 a month... If the positive cash flow is applied to paying down the loan... it's paid off in about 12 years.

Will the home be worth zero in 12 years? Will the monthly rent be zero in 12 years?

Will the rent drop so low that it does not cover the PITI? (When I first moved to Vegas in 1992 a one bedroom apartment near UNLV was $600 a month.)

As I think I've mentioned before.... I have a client who has over 60 homes paid off in Southern Cal that they started purchasing in the '70's. (They have a tenant who has been in one of the houses for 27 years and they've only raised the rent $50 on them when they replaced the carpet... LOL!)

They don't care what they are worth tomorrow or next month or even next year.... they just collect all of that rent each and every month and enjoy their lives without too many worries right now...

This whole crisis has been created because people think too much about what something is going to be worth tomorrow instead of being able to calculate where the best return on your actual cash is today.

Take advantage of the low rates and create the right leverage and let somebody else pay off your debt and build a future.

Or save money on rent and purchase something where the mortgage is going to be less then rent.... (Even without the tax deductions.)

And if you can't do that where you live... then move to Florida, Las Vegas or Arizona where you can... ;) - Fri Jun 26 2009, 02:37

Voices Member,

Las Vegas real estate in 2004 was up 42%..... it certainly did not mean to buy it.

I am a fan of silver but the stockpiles are not generating any postive cash flow and it does not pay the bills unless you sell it.

The coins are pretty though. - Mon Jun 22 2009, 18:51

It comes to a point where price/perceived value is a moot point... Just because everybody was buying in '05 does not mean it was a good time to buy... and just because not everybody's cat and dog is buying today does not mean it is a bad time to buy.

Case in point... deal just closed with a tenant in place paying $1,200 a month for a $135K home built in 2006 in a desirable area of Las Vegas. (Rent could actually be a 100 or two higher but we want to keep this tenant..)

$40,500 down generates a positive cash flow before taxes of $460 a month or $5,520 a year....

Could you tell me where else you can get a 14% return on your cash? - Mon Jun 22 2009, 10:31

Nicholas,

The current storm brewing up concerning interest rates has to do with the loss of interest in purchasing govt. debt due to the obvious reasons. (Too much spending... too much of a deficit.) When the Federal reserve has to print money to buy U.S. Treasury Bonds it's only a matter of time... Not only will rates go up... but the dollar loses it's value.

The Zimbabwe mess you mention is actually HyperInflation due to printing too much money and essentially made their currency worthless. http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Following some of the overseas business channels shows that Europe and Asia (specifically China) see better opportunities then U.S. Treasury debt and the dollar to put their money.... rates need to rise to attract investors to pay for all of these programs that are not going to generate any real return on the investment in my opinion. (Not anytime in this decade anyways....) .... And questions are being asked as to how it's going to be paid back when we have massive obligations such as Social Security and Medicaid right around the corner. (2009 is the first year the more is being paid out in Social Security then is coming in.)

Good luck raising taxes when people are making less money.

Keynesian economics is what the current government is attempting to get out of the mess.

http://en.wikipedia.org/wiki/Keynesian_economics

"Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches: a reduction in interest rates and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.[2]"

I could buy that theory if the Government was spending money on programs that would really generate some income.

Unfortunately... we (the U.S.) do not have the money to artificially get us out of the bottom of the Austrian business cycle -->

http://en.wikipedia.org/wiki/Austrian_Business_Cycle_Theory

"The theory views business cycles (which they also call credit cycles) as the inevitable consequence of inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings.[2]"

Here is a nice collection of articles on chinese sentiment that have been brewing this year:

http://markschinablog.blogspot.com/2009/03/what-to-do-with-c…

Read all of those articles and form your own opinion of what is taking place. I have mine since I've been watching gold/silver and oil go up in price.

I've also been following some of the overseas business networks and there are plenty of articles out there with opinions on the path the U.S. has been going on.... which basically in the end the message has been to get out of treasuries and the dollar while you can.

Yes... some inflation is good... kind of like if it would have happened in 2004 to put a halt to the buying/credit frenzy that started up to put it in check. (Austrian Business Cycle -- Low rates for too long creates a credit bubble.... But hey... we have to keep selling all of these houses because they always go up in price!)

Unfortunately..... right now is not the best time for interest rates to go up when some parts of the U.S. are just now experiencing the correction.

For areas that have been decimated in value, buy and lock in the rates now because there is little to ZERO evidence that rates are going to get better.

For areas just now starting to experience the correction... I would be expecting some very bad things coming.

The Fed can only print money and artificially keep rates low for so long until the Zimbabwe effect takes place.... and the growing sentiment that I see is that U.S. Treasury Bonds are not the best place to be...

Think about all of the borrowed Money being spent on programs such as GM, bailing out California, Performing Arts centers, etc.... Does anybody really think that these are going to generate a return on the money? If you do... I have a bridge to sell you.

The only way Keynesian economic policies work is for projects such as building a Hoover Dam, offshore drilling, etc.... things that will actually someday have a return on the money invested.

Unfortunately... economic policy today has too much money being used on programs that benefit loyal supporters. - Fri Jun 5 2009, 15:39

For us.... it's often far cheaper to buy then rent so it's kind of a no brainer --- especially with the incentives.

Higher interest rates are on the way though.... along with a flood of new foreclosures due to the foreclosure moratoriums that were put in place so it's a real possibility that prices could continue to fall.

We have people running around here acting like there will never be another home for sale and buying anything...

I just say be selective and don't get caught up in emotional bidding wars...

Anyways.... as far as the U.S. Economy... take a look at this post from Calculated Risk:

http://www.calculatedriskblog.com/2009/05/mew-consumption-an…

Take a look at the U.S. Savings Rate chart tracked from 1929 and then the Mortgage equity withdrawal chart that shows all of the equity taken out of homes during the boom. (Or... why we built a Starbucks on every corner and built more Mega Resort Casinos in Vegas during the 2002 through now period then the previous two decades combined.)

Add that data to all the BK's, (which by the way... is not a lagging indicator since all of those people will not be buying anything anytime soon), Credit card defaults taking place (highest on record) and all of the people that have been foreclosed on in the past year or two.... and all of the homeowners currently in default or in the foreclosure process (1 in 8 from the latest reports from the Mortgage Bankers Association)

http://www.reuters.com/article/bondsNews/idUSN2832609020090528

In other words.... there are a lot of people that can't buy even if they want to. (Sadly... I just came across a buyer who has no credit because they've paid everything in cash for the past 5+ years, have no debt and they have no trade lines and can't get a home loan??? What a wonderful system the banks have created.)

And now.... I'm coming across homeowners who have done a loan modification where the actual mod. is just a temporary interest rate reduction and the unpaid principal is just added on to the balance for a couple of years. (Basically.... extending/delaying the inevitable and one particular homeowner already told me how they were going to play that out which makes me wonder how many others out there are just going to do the same thing.)

And then... let's throw in the out of control spending and deficits taking place by the Govt and we have a catastrophe in the works when it comes to any future means of raising capital without printing money....

I do say buy.... but only if you will be saving or making money from the alternative choices available and not thinking that prices are going to go up anytime soon.

It's a lot more complicated though then just saying "big discounts" from the inflated prices, everybody is buying, low interest rates, etc... etc...

Which is really not too different from 2004 when "everybody was buying", interest rates are low, real estate always goes up in price and we are running out of land.... - Wed Jun 3 2009, 15:08

Oh Boy...

http://news.yahoo.com/s/ap/20090602/ap_on_bi_ge/us_automakers

Interesting since Geithner is currently in China

http://www.reuters.com/article/companyNewsAndPR/idUSPEK14475…

Quote from Article:

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home."

End Quote.....

Anyways... The importance of this relationship that I mention in the last couple of answers concerning rising interest rates and the Chinese is that until recently.... the Chinese have gladly bought up our cheap debt.... Which... helped keep our interest rates low so we could go out and buy more junk.

In the past, it's been perceived that they needed us to buy their stuff as much as we needed them to provide us with cheap money but that sentiment is obviously changing.

It appears the Chinese are soon going to own Hummer as Government Motors sells it off.... - Tue Jun 2 2009, 12:47

And here is something to go along with the Chart that Carl has linked to:

http://www.calculatedriskblog.com/2009/05/mew-consumption-an…

You'll see the correlation between home values and the Mortgage Equity Withdrawal chart located at the bottom of the post. Basically.... money was extracted from home equity such as Cash out Refi's and used to spread the wealth throughout the economy. Or.... why a Starbucks was built on every corner, everybody bought a SUV or more mega resort casinos were built in Las Vegas during this time frame then the previous two decades combined...... ;)

So obviously.... not everybody who bought a home before 2002 is just fine and dandy....

In the middle of the post is the annual savings rate that goes back to 1929 which I found quite fascinating when we consider the Great Depression and all of the arguments of how we really got out of the Great Depression..... and how the U.S. became a Super Power. (Financing England and France in WWII, saving money and going full blown into manufacturing and providing the world with American Made products.)

Which.... could be the only REAL way we will get out of this mess instead of getting even deeper into debt with a Govt. out of control in spending, getting deeper into debt and printing money.

Now... think about what the Chinese have been doing for the past couple of decades and compare that to what the U.S. did in 1942 through 1975.... Except the Chinese have an even higher personal savings rate.

Tie it all together with this article from Fortune Magazine all the way back in March of 2006:

http://money.cnn.com/2006/03/03/news/international/chinasavi…

So... should we be bailing out failing businesses or saving money? - Tue Jun 2 2009, 09:48

The inflation questions that some people are just now bringing up is all great and good.... but I'll follow the people who have been right about many things since 2005 and brought up the whole inflation thing and predicted what is currently going on several months ago.

Let's not forget that the Govt. needs to raise a lot more money.... I don't even think we are halfway of what they need to raise to cover all of these programs.... all while tax revenues are down significantly and it's obvious that the previous purchasers of the debt appear to be losing their appetite. (Hence... the increase in interest rates to make that debt more attractive to purchase.)

I kind of find it funny that people are using lagging indicators to say everything is A-OK with inflation... Kind of reminds me of so called real estate gurus saying everything was just fine in 2006 and there was no bubble...

(Meanwhile... somebody is snatching up Gold, Silver and Oil... Hmmm....)

As far as creative destruction... I think the $20 Billion+ used in the GM bailout could have been used in something better then who knows what. I'm sure there will be stories in the near future of just where that money went... much like the AIG bailout money. It took a little while but it eventually came up who really received the billions.

Let's not forget that we now have people in charge trying to run businesses who have never successfully run a business.

Once again... the current path was well predicted by some not so mainstream media economists that have been right more then they have been wrong.

Interestingly... they don't have any political ties ---- they just know the eventual results of actions taken/currently taking place.

Unless something significantly changes such as the Fed hitting the world lottery for a trillion or two.... expect more of the same as the next rounds of debt come up for sale.

What will be interesting to see is what the higher interest rates will do to areas that are being held up artificially in price with all of the current programs in place. It's obviously not working... otherwise the $8,000 tax credit would still be used the way it was and not switching it to be able to be used as an actual down payment. And... the mess that the foreclosure moratoriums created by delaying the inevitable is still on it's way....

And honestly... that $8,000 tax credit was more then an incentive all by itself to purchase real estate with our market conditions....which obviously had already started correcting significantly long before the Govt. even figured out there was a problem and came up with programs to try to save the rest of the "it will never happen here" markets.

Don't take any of this as gloom and doom because it's really just opening up eyes of all the opportunity out there as long as you stop listening to people (and the people they pay) more interested in getting re-elected.

As long as it's cheaper to buy then rent... take advantage of the current interest rates and $8,000 tax credit (if you qualify) while you can. If prices go down due to the eventual increase in interest rates... you can just rent out the property and have inflated wages due to inflation cover the note and move on to the next property if you have to.

Deflation? I just filled up on gas and it cost me more then it did last week, last month and several months ago. Groceries? For the most part, the staples have not gone down in price. The only things that I've seen go down in price are things that I don't need....

So... I guess if you want to count the non essential items going down in price as a sign we don't need to worry about inflation... go ahead... I don't buy it though. - Mon Jun 1 2009, 14:57

Nicholas:

"In short, high inflation is around the corner but I wouldn't worry about it today."

So... are you suggesting not to prepare for it?? Much like to ignore the ugly warnings of what was to take place in real estate all the way back in 2005??

A little secret... short term ARM's actually had a higher interest rate then 30 year traditional mortgages in late 2005... the first time since the great depression. It was a big warning sign and all of my investors caught right on and we got out of Las Vegas real estate... my last personal piece was sold in March of 2006... thank goodness.

As far as your variations of why real estate varies in value to Jeff... don't forget the supply vs. demand factor. From 2003 through 2006 EVERYBODY was building as many homes as possible... it's precisely why I brought this up long ago concerning why Atlanta and a couple of other cities were going to eventually crumble. Cities such as this have no shortage of land and just kept building farther and farther out... (As somebody recently mentioned from a Kool-Aid agent... "We never had the high rates of appreciation so our city will be ok." (Ummm... that's because you were building and building and building on all of that super cheap land...)

And guess what... now they are crumbling hard and are only in the first phases of the foreclosure crisis. Shudder because what will eventually happen in these areas will be worse then all of the bad news you may have heard about Las Vegas.

Have you noticed that Silver has skyrocketed in the past week? How about Oil?? I'm sure you've filled up with gas and noticed the big jump in prices.

The news is all out there and easy to find... the current rate of Government spending to give everybody the temporary high to feel good with no money to pay for it unless they print up money is going to end pretty soon. It's not just inflation that's going to happen.. It's high inflation and maybe even Hyperinflation if the trend continues.

Did you know that this is the first year Social Security has paid out more then it has taken in? Do you think that's going to get any better?

I will bet that your dollars sitting "safely" in the bank (LOL!) is going to be worth far less in the near future as you wait for real estate prices to fall even further.

Maybe your market has not fallen in price enough yet... but there are several markets where it has.

Don't worry about it now?? I'm not because I'm already prepared for it. Find a great home at a cheap price and lock in at the current interest rates because it will not be long until the mortgage payment is a big joke.

(Of course... there are plenty of people who have to worry about increased property taxes as a certain type of Govt. thinks that is the solution to all of their worries... ROTFLMAO!)

Best wishes... The big mess is only getting bigger.... - Sat May 30 2009, 05:11

Nicholas,

Nice find on that article.

On the flip side... Inflation is on it's way with the printing machines working on overtime as interest in buying up Government debt wanes and other countries are slowly getting rid of their dollars...

Basically... more dollars flooding the system which means the cost of commodities such as gold, silver, oil and even homes going up in price. (There is a difference between cost and value.)

So... a $1,500 future mortgage may soon be equivalent to $500 today. If you own rental homes... you jack up the rents to make up for your costs.

There is a reason why historical home appreciation is in the 3 to 5% range when it's not tampered with.

The raise in interest rates is only going to speed up (the decline in over inflated home values) what should have been taking place anyways before Govt. interference. (Which is obviously starting to show failure with the recent news.... nothing unexpected though if you follow the right economists that for some strange reason are rarely credited in the mainstream media with their predictions of all this mess years ago.)

For markets that have already been hammered (corrected in value) you really can't build some of these homes at the current prices.

As you know... all of these new real estate markets with all of the bad news coming out is no surprise to me since the same crappy loan products were used across the entire country. They are just behind in the correction process.

Our current wave of foreclosures in Las Vegas are more to the tune of people just giving up on $400,000 mortgages on homes only worth $200,000. I guess it would be considered the third wave of the correction process. However... we have people lined up to buy them at $200,000.... many with cash.

Sadly... as mentioned by some with the tampering of the market products out there such as the $8,000 first time homebuyers tax credit that expires Dec. 1st and the foreclosure moratorium that took place, there is a lot of uncertainty of what is really going to take shape. Meanwhile...

I have investors with fantastic credit scores and plenty of cash that are limited to how many homes they can get investment loans on... even when they are putting 25% down, have plenty of reserves and the properties EASILY cash flow using the most conservative expectations in rent.

It's Pretty darn stupid if you ask me...

Regardless.... the printing machines are running on overtime so if you have cash hidden under your mattress or "safe" (LOL!!) in the bank... expect it to have less purchasing power in the years to come as the Govt. attempts to spend it's way out of a nasty mess.

Personally.... I really don't care what interest rates or home values are as long as I have a before tax positive cash flow using a 30 year fixed mortgage. Once you understand what that really means.... all of the current mess is better suited for a trivial pursuit game or sales tactics. (I'm already seeing this...)

Interest rates are going up... you better buy now!! LOL!!

Regardless... it's well documented that if the Government can't raise money through debt, they are just going to print up the money to pay for all of these programs. - Thu May 28 2009, 17:09

Nice video Nicholas,

Reminds me of a New York Times Subscriber.

Anyways -- More signs that consumption is going to be going down -->

http://www.usatoday.com/money/perfi/credit/2009-05-26-credit…

"In the first quarter of 2009, credit card delinquencies hit a record high of 6.5%, while charge-offs reached 7.5%, a near-record high, according to the Federal Reserve."

Tough to buy up all of those bank owned homes or a car from Government Motors when you are not paying those credit card bills.

Maybe we can just do away with credit card scores to jumpstart the economy again? - Wed May 27 2009, 14:02

On another note...

With what is going on behind the scenes with all of the money being printed up.... buy up everything you can on credit with the cheap money being offered and leverage yourself to the max....

Inflation will eventually hit and a $1,000 mortgage payment will be the equivalent to filling up your car with gas.

Sad.... but true... - Sun May 10 2009, 03:11

JR,

Send your sellers down this way... for $250,000 they can get a 3 car garage..

Maybe even a pool... ;) - Sat May 9 2009, 21:09

Good Points Lori,

I think the internet and some certain third party real estate websites have attempted (miserably) to make real estate similar to stocks with all kinds of charts and other blah, blah, blah information.

When you really think about all of the third party website services and the information they provide... it's certainly pretty easy to see where irrational exhuberance came into play.... and then fear as the charts took another direction.

Interestingly... I know people that own homes free and clear and don't fret about current market values.... This includes friends/clients that own well over 50 homes in Southern California. Yep.. the values went down significantly from the peak but their rent checks are still coming in every month. (Of course... they bought them right to begin with.)

They've had tenants in one of their homes for 28 years now...

"Own Thy Own Home" I think is Rule #1 in the classic "The Richest Man in Babylon" from what I remember and that means having no Mortgage.... Reading that book is probably more valuable then all of the money now being committed to the latest educational program announced.... that really does nothing but keep the cost of a college education high since colleges are now going to be subsidized even more by the Federal Government aka Taxpayers.

Funny... I don't remember having a hard time paying for a good college... but I also worked in a job that probably taught me more then the majority of classes I had to take.

Oops... sorry... straying from the topic somewhat but in reality it's the same.... subsidizing something only makes it more expensive.

It just kind of makes you wonder what the real cost of everything would be if people did not rely on credit so much. Because in reality... if credit would not have been so easy to get... I don't think we would be in this mess to begin with.

The Banking/Lending industry has somewhat become similar to the tobacco industry.... pushing something addicting that will eventually kill you. - Fri May 8 2009, 10:03

Another short sale closed... another one in final file review. Behind the scenes, it appears now that the mouths in D.C. have been directed to important issues such as a College Football Playoff, lenders are focused on what they need to be doing instead of waiting for more hope and another "plan" irrelevant to homeowners who have 30%+ negative equity.

It's amazing what can be accomplished when there is clear direction.... - Fri May 8 2009, 08:50

My Point Exactly:

http://www.cnn.com/2009/US/04/09/hawaii.volunteers.repair/

"So Slack, other business owners and residents made the decision not to sit on their hands and wait for state money that many expected would never come. Instead, they pulled together machinery and manpower and hit the ground running March 23.

And after only eight days, all of the repairs were done, Pleas said. It was a shockingly quick fix to a problem that may have taken much longer if they waited for state money to funnel in.

"We can wait around for the state or federal government to make this move, or we can go out and do our part," Slack said. "Just like everyone's sitting around waiting for a stimulus check, we were waiting for this but decided we couldn't wait anymore."

I just found out where I will be taking my next vacation.... and I will go on a Kayak tour with Napali Kayak. - Fri Apr 24 2009, 17:05

Carl,

I was actually referring to the U.S. House of Representatives.... Unless you think she is a he??

What the State of California does is not too much of my business since I don't live there. (Of course I do appreciate all the Californians being sent my way to escape.)

I know.... California donates a lot of money for federal taxes .... but perhaps more of that money should be staying in California??

My point is that the system is backwards from the original intention this country was created on. More money should be staying in the states where the residents have control of who represents them directly then sending it to the Federal Government and letting the powers of position (due to being in office for decades since there are no term limits) decide how it should be spent.

Just like federal taxpayer dollars should not be used to clean up houses in a community that can't figure out what to do.

You know... I see it left and right.... areas with a sense of community are faring far better then areas with no sense of community. Real leadership should be able to figure this out.... especially if you are a career community organizer.... - Fri Apr 24 2009, 16:57

Jeff:

"There are a few shadow homes around here. On one close by, the neighbors are starting to mow the lawn in order to maintain appearances.

The FDIC, who is monitoring some shadow homes, needs to use some of the TARP money to hire maintenance for these places."

I've been known to pick up phone books, trash and flyers from bank repos... we don't need TARP money to take care of homes... we need neighbors that care about their neighborhood and help out.... since it does effect them. We had a bank repo on our street and the previous owners had over $20K in palm trees in the front yard... we watered them so they would not die since they were so nice and the bank listing agent was too cheap to turn the water back on.

TARP Money is Taxpayer money and why should taxpayers in communities that look out for each other be paying for communities that don't?? Vegas is hurting just as bad as anybody but the casino execs are not flying in to D.C. looking for bailout money.

And that's the problem... too many people are relying on the Federal government to solve problems when the original intention of the Constitution is for the local and state government to be more important when it comes to our day to day lives. (Let's certainly not forget how this whole mess was created in the first place with the tampering of the markets to get out of the last recession.)

State Taxes and Local taxes too high and government regulation too high or restrictive in running a business? Move it to another state that is business friendly. Why should we be using Federal Taxpayer dollars to throw money at bad business policies?

Bailing out California because their government lived the high life while being the eigth largest economy in the world.... and now they are teetering on BK? We need to send Billions to them because of some Kook running the house of representatives that would not get elected in 90% of the country?

Does anybody else feel all of this is ridiculous? - Fri Apr 24 2009, 14:05

It is certainly a bizarre time... partially due to all of the special interest forces in D.C. and our state legislatures.

Regardless.... The foreclosure moratoriums that were put in place just delayed the inevitable as Las Vegas is number 1 followed by the other usual suspects with the surge of foreclosure notices that were delayed due to the foreclosure moratoriums.

http://lasvegasrealestate4u.com/2009/04/23/las-vegas-foreclo…

The Good News for us though is the huge increase we've seen in sales with over 10,500 properties currently in contract... Inventory has dropped... but once again... we have a surge of foreclosures coming since the process was delayed for three months waiting around for a program that would not help homeowners buried.

With all of the programs (and money).... still no real solution for speeding up the short sale process and sellers are still being held hostage by lenders in second position that will receive nothing if the property goes to foreclosure.

For examply.... we have Chase holding one of our sellers hostage... They are being offered $5,000 to release the second but they want MUCH, MUCH more up front (will not accept a note) which the sellers obviously can't afford. If the property goes to foreclosure... Chase receives nothing but they don't seem to care and would rather destroy the sellers credit.... a seller who owns a business that has been a victim of the economy with a dramatic decrease in sales. This process has been going on for almost four months now and nobody has been getting paid...

This is one of the biggest travesties currently taking place.... many more properties could be avoiding foreclosure in the first place and moving the correction process along. And the sad part is... the short sales in our area tend to be in much better shape then the foreclosures.

I can certainly understand frustrated homeowners stripping out homes with some of the stupidity being displayed by lenders when homeowners try to do the right thing.

It certainly is a bizarre time when we think that certain banks are too big to fail... when in reality they are too big to react to what is taking place. I have a contact in a regional bank that can make a decision on working with a homeowner in 30 minutes and short sale a home from start to finish in 30 days....

Yet... it takes a bank too big to fail 30 days just to upload the short sale paperwork into their system because their departments are too small to handle their business and they certainly don't know the markets they are servicing.

Bizarre..... generally happens when you have parties involved in business that they have no clue about and are completely out of touch with the real world.

And that pretty much sums up what is currently taking place.... - Fri Apr 24 2009, 11:24

As far as the short sales and pricing low to create feeding frenzies with the intention of the price being bid up higher (auction concept -- get a bunch of people chasing after one thing and let the emotions take over).... we saw these tactics in early 2008.

We all know what happened afterwards.... (And I don't think anybody who was bidding up the prices and won during early 2008 in our area is very happy right now.)

Low list prices create a lot of attention and make properties stand out..... unfortunately.... buyers that don't offer more and don't get the property start ONLY looking for similar prices on similar homes and ignore the fair deals.

Or worse yet... the buyers just get frustrated and quit looking.... - Thu Apr 23 2009, 15:02

Quote from Nicholas:

"Im smelling a rat though with the banks holding onto properties and not putting them on the market. Estimates are that there are 600,000 forclosed homes that are not currently on the market. Estimates are in that say we will have 5 million more forclosures between now and 2011. Once banks begin to realize that they cannot hold onto these properties and that the housing market will not get better they will capitulate and we will see a collapse in the housing market again."

End Quote

No Worries Nicholas,

We have the former Executives of Countrywide with their new company, PennyMac to buy up everything on the cheap. This blog post mentions PennyMac along with something else concerning the toxic partner program:

http://brontecapital.blogspot.com/2009/03/why-countrywide-gu…

With the Toxic Partner Program and the Taxpayer funding the guarantees... there will be massive wealth being made from these partnerships... it just won't be made by the average Joe on Main Street.

If there was no end in sight... these companies would not be getting formed or involved because they are far savvier then people give them credit for.

The Banking/Lending Industry is a small world.... - Wed Apr 22 2009, 13:43

Nicholas,

Actually, I like all of the links with the brief summary you provide.... I don't have time to track down blogs and articles from all over the place and you seem to pick out the good (National) articles for review.

Quick and concise... precisely why Twitter is becoming so popular.

And when you really think about it... this thread is kind of twitterish in a way.

Lori is right that we could sit around a computer all day and track these articles down... but my time is limited since I do actually buy and sell real estate....

So I actually appreciate the links that go along with your research.

Certainly much more interesting then opinions with no facts to back it up. - Wed Apr 22 2009, 13:12

Nicholas,

Fantastic charts... Page 26 of the presentation supports what I've been discussing about rent to a T. Page 29 shows home prices in one of the bubble areas crashing below the Trend Line... possibly showing an over correction in home values for California... back to our herd mentality theories mentioned almost a year ago.

Chart # 6 is fascinating but I wonder what it is today? - Fri Apr 17 2009, 15:04

General Growth has done more for communities then AIG... where is their bailout or stimulus money? Guess since they were on the top 100 Contributors list, they get nothing.

http://www.opensecrets.org/orgs/list.php?order=A

The National Association of Retailers better start donating... LOL!!

Don't worry.. the new Toxic Partner Program will shore up those bank assets.... Just find the companies that will be participating... I hear one of them is being run by some former Executives of Countrywide.

http://stationcharon.blogspot.com/2009/03/country-wide-scam-…

http://www.nytimes.com/2009/03/04/business/04penny.html?_r=1&hp

"But to some, it is disturbing to see former Countrywide executives in the industry again. “It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies."

"Its biggest deal has been with the Federal Deposit Insurance Corporation, which it paid $43.2 million for $560 million worth of mostly delinquent residential loans left over after the failure last year of the First National Bank of Nevada. Many of these loans resemble the kind that Countrywide once offered, with interest rates that can suddenly balloon. PennyMac’s payment was the equivalent of 38 cents on the dollar, according to the full terms of the agreement."

How Ironic... some of the biggest sub-prime lenders with some of the laxest lending standards are now saving the very same people they buried... For a Huge Profit of course....

Nicholas...

There was a big disconnect between the cost to purchase and the cost to rent which is one reason (of many)we are in this mess.... especially since we saw it first hand here in Las Vegas with "Investors" buying $350,000 homes that only rented out for $1,250 a month....

And were purchasing because some geniuses were reporting 20%+ appreciation rates without any explanation except that real estate always goes up in price..

My point on rental rates is that there has been some decrease due to what you mention... but I have not seen it follow in the 50% decline range even in the neighborhoods here in Las Vegas that I have seen decline by 50%+ in value. (And yes... I know several neighborhoods that have declined by 50% in value in Las Vegas from the peaks.)

And that is because rents did not go up 50% when home values did.

Throw in the tightened lending standards, all of the bad credit, fear, etc.. and you still have demand for rentals even though it's cheaper to buy then rent... (If you qualify.)

Not sure... but I think we had more "Investors" buying in 2004 and 2005 then we do today since todays investors are limited to how many properties they can buy on credit... and the ridiculous requirements set forth by the same idiots who got us here. They are treating today's investors who understand cash flow and the real reason to invest in real estate as "Evil" people and stereotyping them as the "speculators" of yesteryear.

(Unless of course you have a hundred million to do deals directly with your buddies sitting on $800 Million of bad loans. Funny how they now understand actual cash flow since they are somewhat servicing a loan...)

Anyways... better stop ranting before I end up on the "Right Wing Extremist" list thought up by our genius Homeland Security Czar...

Of course... I guess I'm already on it because I'm a veteran and watch Fox News... LOL!! - Fri Apr 17 2009, 11:32

My Question Was Based On A Real Life Example for a Real Life Condominium that I have Listed for Sale right now...so Yes.... condos for $50,000 are available for sale in Las Vegas in desirable areas. (The Condo is about 300 Yards off of South Las Vegas Blvd.

Here is the condo --> http://www.realtor.com/realestateandhomes-detail/2615-W-Gary…

I've already written up an offer on it but I also have a one bedroom condo for $30,000 that could rent out pretty fast for $600 a month.

Regardless.... I can find properties with a Before Tax Positive Cash Flow all over Las Vegas.... just give me what you have available for a down payment and it's done.

Carl from New Jersy -- pretty good job but What is my Cash on Cash Return?

Is $55,000 better in gold, a mutual fund or stocks? I have a brilliant friend stocking up on gold and I grilled him on the value of owning something that generates an income. All of his gold is really cool but it sits there making no monthly income.

Tempedude --- Laws concerning associations are different for every state. It's amazing how many times I have to correct people when it comes to associations in Nevada because they heard something about the nightmares happening in California or Florida. Foreclosures in Nevada also do not take a year to perform... (your reference to homeowners not paying their dues for a year --- does not work in Nevada.) it's a rather quick process compared to other states and the lenders are responsible for paying the HOA fees for the previous six months. If a lender is on top of what is going on.. it can take less then six months to foreclose on a property. Of course, lenders have to be on top of what is going on and from some consulting work...

I've found out that lenders are actually pretty clueless when it comes to actual real estate and are only concerned with how they can make money lending money.

And yes... I already know how many people are currently delinquent in the association that the condo for sale is in. A SFR in the 89123 zip code area for $70K? Good Luck. You might be able to find it but it will require more money for repairs to make it habitable.

Nicholas --- Rent dropping? Rent has dropped a little but there is already a tenant in the property paying $850 a month that wants to stay. Generalizations that rent has to drop to nothing because of the economy should be more thought out. When home prices were $400,000 and the rent was ONLY $1,300... did Rent Prices Skyrocket? NO.

I sold a bunch of homes for my investors in 2005 for $300K+ that were only renting out for $1,200. (My clients paid under $200K for these homes.) I certainly remember laughing my $%# off when a Realtor representing so called "investment" buyers bought two of them with tenants in place. $300K to get $1,200 a month in and around $340K to get $1,300 in rent.... BRILLIANT "Investors".

The Generalization that rents must collapse because prices have collapsed is skewed thinking.... The whole point of this is that Prices should have NEVER gone where they did because Renting was SO much cheaper then buying in '05 and '06.

NOW... IT's Cheaper to Buy then Rent in Las Vegas.

Regardless....

The Economy is in bad shape because everybody got strapped in debt with high mortgages on overpriced real estate for one. Renting became a bad word due to clever advertising from lenders, Realtors, etc... I remember renting out a home on a street we pretty much owned and the tenant (from Chicago who was a loan officer) wanted me to tell everybody they owned the home since we pretty much owned the street... LOL!

I know several people that are doing just fine because they have zero debt and have lived within their means. I also know several people that are strapped because they had to have the overpriced home with the granite counter tops, etc...etc.., nice car, clothes, eat out every night, etc...

Chicago Carl.... I'm also a licensed Real Estate Broker in Illinois and there is absolutely NO WAY I would ever purchase investment homes for lease in Illinois due to the laws in place that are socialist in nature. The taxes are incredibly bad to pay all of those bloated government incomes and pensions.... Evicting a tenant in Illinois is a complete nightmare compared to Nevada. You really don't own property in Illinois when you consider those property taxes. Pay off your home and pay over a $1,000 a month in property taxes hardly qualifies as owning a home free and clear in my book.

Regardless and to end my rant.....

Las Vegas is far ahead of the majority of the country when it comes to the "Correction" currently taking place.

http://lasvegasrealestate4u.com/2009/04/03/las-vegas-foreclo… - Tue Apr 14 2009, 00:42

While we are at it...

Let's seperate the Men from the Wannabe's with a real life example:

$50,000 Two Bedroom Condo. Taxes are $750 a year, Association Fees are $176 a month. As an investor, My lender tells me I have to put 20% down for a 6% interest rate. If I put 25% down, I get a 5.75% interest rate.

Current rental rate for this two bedroom unit is $850 a month. Let's say I put it up for rent for $800 and it takes me one month to rent it out. (One Month Vacancy.)

What is my Before Tax Cash Flow? Cash on Cash Return? ROE for the year?

Should I put 20% or 25% down?? - Mon Apr 13 2009, 00:18

Unless somebody can accurately predict the future 100%....Up, Down... who cares as long as it has a before tax positive cash flow?

Because in reality.... what really determines the so called Value as defined in the past 8 years? What other homes sold for in the same neighborhood?... What it appraises for?? Ridiculous.

$350,000 homes that could rent out for $1,200 were rubber stamped through by "genius" lenders four years ago. Now the same lenders make the savvy investors jump through hoops and sing a song while dancing to purchase the same home for $150,000 that rents out for $1,300 a month....

Absolutely genius.

Figure out the PITI for a home along with Association fees if any, what it rents for on the low side, throw in a month of vacancy and if you have a positive cash flow at the end of the year with what you are putting down with your loan terms... buy it and don't worry about what MIGHT or MIGHT NOT happen in a couple of months or even the next few years.

Before Tax Positive Cash Flow is the key phrase.

My Grandfather racked up Thousands of Acres of Ranch Land during the Great Depression using a simple cattle per acre calculation and to this day, that land is still in the family.... He did not care what it might be worth next year, what the so called "appreciation rate" was or any of this other junk I see all over the internet... He cared how much cattle an acre of land could support and what the price of beef was.

Funny... what I see in regards to real estate nowadays reminds me of going out to the ranch and feeding cattle.... Throw cake in the back of the truck, give the secret horn honk and cattle come from out of nowhere to feed on whatever we give them.

I could put manure in the back of the truck, give the secret horn honk and the stupid cows would eat it up...

It's really no different then 2004 when Las Vegas had 42% appreciation rates... Report it and people came out of nowhere to buy even though it made absolutely no sense.

Today... report a 20% price decline and people run like there is no tomorrow. Probably the same reaction I would get with real cattle feed after feeding our cattle manure....

MOOOOO....

Hopefully some of that Stimulous Money makes its way to financial education... but for some reason I think the Financial/Banking Lobbyists don't want that....

Eat More Beef.... It helps the Brain. - Mon Apr 13 2009, 00:03

Check out the Mortgage Equity Withdrawal (MEW) Chart over on Calculated Risk that shows the amount of money withdrawn from 2002 through 2007 that fueled the economy:

http://www.calculatedriskblog.com/2009/03/q4-mortgage-equity…

Now that the ATM machines have run dry....

http://uk.reuters.com/article/burningIssues/idUKTRE52U72O20090331

"The John Hancock Tower, New England's tallest office building, sold in a foreclosure auction on Tuesday for $660 million, about half what the sellers paid three years ago, underscoring the crumbling state of the U.S. commercial real estate market." - Mon Apr 6 2009, 21:30

Nice... any lower in our area and they might as well be free...

Quote from Article:

"Prices were weighed down by foreclosures and bank efforts to unload houses, according to the S&P/Case-Shiller U.S. National Home Price survey."

Ask anybody doing short sales and they'll tell you the problem is due to the poor efforts of banks and their loss mitigators in dealing with distressed sellers facing a hardship and are trying to avoid foreclosure in the first place..... where the property will sell for even less....

Case in point... We have a short sale and have been waiting for Chase to approve the short on the second for four months now... they get a little bit of a payoff from the first which is better then nothing if the home goes to foreclosure. (Chase will get nothing if the home goes to foreclosure.)

In the meantime... a REO home (same floorplan, same neighborhood) is put up for sale for $80,000 less, gets a buyer and closes. I hope I do not have to explain what that does to the neighborhood home values.... and future appraisals for all of the properties currently in contract waiting for their respective lenders to approve their short sales.

There are hundreds if not thousands of the same situations taking place and with the reported declines in other markets as highlighted by the article Carl provides.... http://www.dailyfinance.com/2009/03/31/home-prices-drop-a-re… expect more of the same.

There is nothing being done by the Geniuses to help address or solve this problem (except attempts to keep artificially high home prices up) ..... and it's been going on for quite some time now. - Tue Mar 31 2009, 15:49

BTW... as a UNLV alumni that does not like Duke for obvious reasons.... I hope Coach K and Duke win it all! - Sat Mar 21 2009, 21:05

Best wishes to your Mom Carl.

Glad to see that you've caught on. It should be an outrage as failure upon failure continues with an entity in charge that has NO experience or clue on how to run a business, much less have a clue about real estate.

Here was a pretty good post on ActiveRain with everything taking place during the AIG smokescreen:

http://activerain.com/blogsview/993231/AIG-Is-Just-A-Smokesc…

Gives a nice summary of everything taking place behind the scenes.

Glenn Beck has been doing a STELLAR job of reporting the mess going on with some Fantastic guest speakers that sums it up to a T. The following article from Glenn Beck really sums up the AIG distraction for the Trillion dollars just printed up perfectly:

http://www.glennbeck.com/content/articles/article/198/22954/

For the record... Glenn Beck thinks everybody in D.C. is pretty much a bum.

As for our elected representatives... well... I asked Congresswoman Titus why they voted yes for a stimulus bill that she never read and how it was going to help... and if it really would help... why stop at $800 Billion and let's just make it 10 Trillion so we can all be happy.

I got the same form letter that I got from Senator Reid in response to the same question.

On Thursday I sent them a response telling them they did a great job for Voting yes on a bill that allowed the AIG Bonuses.... No response yet....

By the way... when you are #1 for a search term with 59,000,000 results... you are bound to attract spam.

http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=HPIB… - Sat Mar 21 2009, 20:12

LOL!! I'm going to have to redo my tourney bracket... I'm having visions of what happens in some certain countries where the Ruler of the country's team always seems to win...

As for Real Estate... buy in areas where the policymakers have an interest... If this continues... it's a no brainer. We've got Solar coming our way...

http://www.energyinvestmentstrategies.com/2008/07/29/solar-c… - Wed Mar 18 2009, 16:00

Yep... as predicted from the Dog and Pony Show currently taking place concerning the AIG bonuses:

As now being exposed everywhere.... Senator Chris Dodd created the amendment that allowed the bonuses:

http://www.foxnews.com/politics/2009/03/17/recover-aig-bonus…

"Though Sen. Chris Dodd, D-Conn., is among those leading the charge on retrieving the bonuses, an amendment he added to the $787 billion stimulus bill last month created a roadblock to getting that money back.

The amendment, meant to restrict executive pay for bailed-out banks, also included an exception for "contractually obligated bonuses agreed on or before Feb. 11, 2009."

This would seem to exempt the AIG bonuses that lawmakers and President Obama are looking to recover. Incidentally, Dodd is the largest single recipient of 2008 campaign donations from AIG, with $103,100, according to the Center for Responsive Politics."

Remember that $800 Billion Dollar "Stimulus" bill pushed down everybody's throats without anybody having a chance to read it?

Congress knew (or should have known) about these AIG bonuses long ago:

http://news.yahoo.com/s/ap/20090318/ap_on_go_pr_wh/aig_what_…

"While administration officials insisted Tuesday that neither Obama nor Geithner learned of the impending bonus payments until last week, the problem wasn't new. AIG's plans to pay hundreds of millions of dollars were publicized last fall, when Congress started asking questions about expensive junkets the company had sponsored. A November SEC filing by the company details more than $469 million in "retention payments" to keep prized employees."

Say one thing to Main Street... do another for Special Interest Groups behind closed doors.... tough to decide on what to do with these guys and how to invest for the future. Now we know why "Flip-Flopping" is such an important issue.

Reminds me of the T-Mobile commercial with the real estate agent.

http://www.youtube.com/watch?v=O2_InqWiLPg - Wed Mar 18 2009, 12:58

Wow... Interesting article Nicholas.

However.. I predict this law will be Modified REALLY Fast... Especially since the Public Employee Unions are major contributors to the ruling party.

#2 on the Biggest Campaign Contributors List ---

http://www.opensecrets.org/orgs/list.php?order=A

http://www.opensecrets.org/orgs/summary.php?id=D000000061

I give it an over/under of two weeks until a new bill is up for vote to modify the BK law before this catches on with strapped municipalities. Funny how you can view the campaign contributor list and predict what is going to happen next....

For Example....Right now everybody is Screaming at AIG when they might want to be looking at something else...

http://www.opensecrets.org/news/2009/03/before-the-fall-aig-…

Just one big Dog and Pony Show in My Opinion....

It's just so predictable.... I wish the Casinos had some betting on these issues in the Sports Books so we could watch all of the Aides come in to place the bets.... - Tue Mar 17 2009, 10:37

Porkchop,

Article to go with what you state from The Financial Times:

http://www.ft.com/cms/s/0/ba857be6-f88f-11dd-aae8-000077b076…

From the Article:

China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world’s largest holding of Treasuries.

"Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York that China would continue to buy Treasuries in spite of its misgivings about US finances.

Mr Luo, speaking at the Global Association of Risk Management’s 10th Annual Risk Management Convention, said: “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”

Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”

---- End Quote. - Wed Feb 25 2009, 02:42

I agree with you Nicholas... bailout money should have gone to the regional banks that did not get involved in the risks to get "too big to fail"....

And your campaign contribution tracking will show that same trend for many representatives including Barney Frank and Chris Dodd.

http://www.opensecrets.org/news/2008/07/top-senate-recipient…

Carl... No... sinking more money into them is just a payback from all of the campaign contributions.

Hmmm... Citigroup Contibutions:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000071

Bank of America Contributions and Recipients:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000090

Tarp recipients... Check this out for an eye opener.

http://www.opensecrets.org/news/2009/02/tarp-recipients-paid…

And this just floors me when you think about some of the recipients of the Spendulus bill:

http://www.opensecrets.org/orgs/list.php?order=A

Click on the American Federation of State, County and Municipal Workers:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000061

American Federation of Teachers:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000083

United Auto Workers Union:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000070

I feel like I can now predict the future....

Just for laughs... The National Association of REALTORS:

http://www.opensecrets.org/orgs/toprecips.php?id=D000000062

They just donate to the incumbent.... No wonder why REALTORS are not getting bailed out... Everybody in Congress just figures they are going to get their money anyways... - Fri Feb 20 2009, 15:57

LOL Nicholas,

You mean you are not the reason why money is leaving the stock market and going into gold? - Fri Feb 20 2009, 09:11

Here is the link to House of Cards --> http://www.msnbc.msn.com/id/29163182/

Next Air Times:

* Saturday, March 1, 2009 at 12a ET
* Sunday, March 15, 2009 at 9p ET

Or you go here --> http://www.nbcuniversalstore.com/detail.php?p=84587&v=cnbc_o…

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage,” Greenspan recommended in a speech to the Credit Union National Association."

They got the name for the documentary from an internal e-mail from a Wall Street Firm:

"Let's hope we are all wealthy and retired by the time this House of Cards Falters."

Something mentioned but not detailed in the documentary is all of the money made from cash out refi's and what this created in flooding the economy with buying everything on borrowed money from false equity...

It was borrowed money used to consume... just like the money in the "bailout" and "Economic Recovery Act".... What happens when this money is used up and we start the cycle again?

What will the next spending package be called?? - Wed Feb 18 2009, 13:54

Carl,

The PBS piece was not that good... Something tells me the producers of that piece received some kind of Governtment Grant to produce it.

House of Cards that ran this past weekend on CNBC was MUCH Better and explained how we got here in the first place with very candid interviews from some of the very same people who participated in the creation of "Financial Engineering" to begin with.

The Government Tampering with Interest Rates and encouraging Lax Lending standards so everybody could own a home, the scandal with Fannie Mae and Freddie Mac...etc.. etc..

All of which helped create a false economy that should have never happened... and now the price is being paid. Borrowing money to spend in hoping to fix a problem created by too much borrowing is very dangerous and IMO will only compound the problem.... If it delays it... it's only a delay.

Nobody is saying the policies of the past 8 years of extreme deficit spending were good... And the people who warned about this collapse several years ago are now saying the problem is only going to get worse as the Government meddles around in it and creates even more debt and obligations.

Insanity is doing the same thing over and over again and expecting a different result. - Wed Feb 18 2009, 12:56

Nicholas:

"You guys haven't yet begun to feel the systemic shocks that are going through our economy."

Pardon? We just had three Chilis restaurants close last week.. what do you mean we don't know the shocks taking place??

Just joking.. I have a client that works for corporate in Starbucks and things are not so happy right now.

I'm currently watching gold shoot through the roof and stocks tank as the Stimulus package gets ready to be signed and GM tanks... Nasty, Nasty, Nasty...

The commercial real estate collapse is coming really, really soon and is the next big crisis.

Gold is going nuts again --> http://goldprice.org/live-gold-price.html and doing far better then any real estate investment.

Get ready.... If you don't have gold/silver and are not in Govt. or Health Care... times are going to really, really suck as the lies unfold...

Gold is up $26.81 today... WHOOO HOOO baby!!!! We are cashing out and moving it to Silver before the Govt. comes knocking on our door to take it away...

If you have gold or silver and need a good steak... contact me. Your dollars are worthless so don't even try... LOL!!! - Tue Feb 17 2009, 09:54

I think the question needs to change. Things have certainly changed since April of 2008 to say the least...

Buy plenty of Silver Ryan... buy lots of Silver... If you want some steak... contact me. I bought up ranch land with lots of fat cows because I love Steak...

I don't know about everybody else... but I need Steak when everything collapses... - Sun Feb 15 2009, 02:15

Gerald Celente may be right --> http://www.youtube.com/watch?v=9nJ7LM3iyNg&feature=channel_page

From Housing Bubble Hall of Shame --> http://realestaterecord.blogspot.com/2009/02/revolt-brews-in…

And I just wonder what people from Oklahoma/Texas/Midwest etc. are going to think when they find out the new stimulus bill is bailing out California?

They will eventually catch on...... - Sun Feb 15 2009, 01:38

Wow,

Since my last answer with the http://www.youtube.com/watch?v=9nJ7LM3iyNg&feature=channel_page link concerning commercial real estate... I've been doing some research and it's not pretty.

Sadly... there is very litle information out there concerning this and the next crisis about to hit. These are the people that have money that creates the "trickle down theory" that are about to really lose some serious money.

To date... we've been experiencing what happens when people get over leveraged on buying homes that they could not afford... created from homes being overvalued due to exotic mortgages.

What we are about to see is what happens when the people who actually create real jobs lose their money and stop providing jobs.

Not being able to afford a mortgage once the terms adjust is one thing...

Scary stuff...

And if our debt borrowers cut us off... we are in very serious trouble when the alternative for our liberal friends is to raise taxes and/or print up money to pay their new debts.

Buy Farm Land with cash and worry about feeding your own family.... - Sat Feb 14 2009, 22:40

What we really need to get the economy going is a Pool in every backyard... LOL!!

http://activerain.com/blogsview/930780/What-This-Country-Nee…

And since it's Friday the 13th and Nancy Pelosi got her way with no 48 Hour Review of the spendulus bill so she can get out and take her 8 Day European trip... I thought this interview was appropriate for the day:

http://www.youtube.com/watch?v=9nJ7LM3iyNg&feature=channel_page

"The Commercial Real Estate collapse in 2009 will dwarf the Residential Real Estate collapse."

Tax Revolts and Revolution? Oh MY!

Happy Friday the 13th... - Fri Feb 13 2009, 19:04

Carl,

LOL!!! Funny thing is that I posted something on my Las Vegas Real Estate blog back in February of 2008 concerning how investors like yourself should have incentives to help the real estate market--

http://lasvegasrealestate4u.com/2008/02/02/the-real-estate-s…

Today... I have a slew of real estate investors that truly have an understanding of what investing in real estate is all about... (leverage).. and are not too motivated because in our market they have to put 20% down since we can't get mortgage insurance for investors. Lenders will not lend to investors unless they put a minimum of 20% down and there are some GREAT cash flow properties out here that are sitting untouched.

96 Multi Family BANK OWNED properties in Las Vegas -->

http://www.lasvegasrealestatehome.com/idx/search_repo_reo.html

The current crisis is all about Real Estate and we have a bunch of clowns trying to solve the problem with zero clue about real estate. I don't doubt that they were good Attorneys but I don't think they have a clue when it comes to business.

Oh yeah... Gotta buy now because there MIGHT be a $15,000 tax credit! (Read the fine print.) ... LOL!! - Thu Feb 12 2009, 16:10

Hey Trulia,

Thanks for joining the conversation! Please feel free to specifically call out names instead of generalizing all Realtors as one.

You make an excellent point and unfortunately... just like when the $7,500 "tax credit" was announced last year... it was abused in marketing.

No worries though... this time next year we'll probably be hitting $22,000 in a "tax credit" for the next greatest thing since sliced bread...

Thanks for stopping by and clarifying though... - Wed Feb 11 2009, 21:28

It's a Great time to buy near any of these projects --> http://www.stimuluswatch.org/

Government Commitments according to Bloomberg --> http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=a…

"The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages." - Wed Feb 11 2009, 12:11

Carl,

I'm not a big fan of tax credits to buy homes (or even cars)... If somebody needs to buy a new home or car they should do so for the right reasons... not just so they can get a tax credit.

People are buying homes out here again without any incentives but just great affordable prices. I actually see a couple of homes currently in the process of being built... It's certainly not because of any stimulus packages.

People that have gotten out of Mortgages they could not afford now have the extra monthly cash flow (permanent) to afford to eat among other things... which stimulates the economy.

Please keep in mind that as the Government has decided to increase spending significantly and increase the deficit even more... tax revenues are going way down as it is.

Spendulous bill passed the Senate today... Dow is currently down 385 points. Charles Schumer said Americans don't care about debt.

While the current state of the economy is very complicated... it really is not. We got leveraged out and we need to reset to sanity.

Not to change the subject... but I found this post quite interesting with a bigger meaning then just a Realtor that blew all of the money they made during the boom --->

http://activerain.com/blogsview/912244/2001-Realtor-vs-2004-…

I think we all know people that made a lot of money with the false economy during the hey day and blew it on Nice shiny luxury cars, Going out to eat, $4.00 coffee, Luxury homes they really could not afford without exotic mortgages, etc.. etc..

The U.S. borrowed a lot of money, the deficit was doubled in 7 years and we blew the money without creating real investments. It was bound to end and creating a false sense of recovery will only create bigger problems down the road.

Correct me If I'm wrong, but I'm pretty sure 9% of the annual budget is used up just to service the current debt. Obviously that % is going to be going up.

Borrowing money to get out of trouble through Government Spending is not a solution. It did not work for Japan when their real estate market collapsed in 1989.

Nice article done last October concerning the correlations between what is going on now and what happened to Japan in 1990 --> http://www.nytimes.com/2008/10/19/weekinreview/19impoco.html

This was done in 2006 concerning "debt exhaustion" --> http://www.oftwominds.com/blogjun06/exhaustion.html

Regardless... We have a lot of false hope currently being promised and circulated around without specific details to push some long time objectives through fear. Not what we need right now....

To finally answer your question Carl... don't care because that will now be the least of our problems.

Probably a good time for you to brush up and read Animal Farm by George Orwell... http://en.wikipedia.org/wiki/Animal_Farm

Plenty of sheep out there that prefer to chant what people want to hear and not what they need to hear... - Tue Feb 10 2009, 13:22

Quick Questions For Socialist Carl,

Do you think people would do their due dilligence if something was not supposedly regulated by the government?

Would the people automatically trust documents that are supposedly regulated and just sign them?

Real estate agents are licensed and regulated... should we automatically trust a real estate agent because they are licensed and "regulated"??

Should people have automatically trusted a Mortgage Broker because they paid $300 to get a license and be "regulated"?

Sadly..... people trusted all of the above because they were supposedly regulated. Hard core truth but if all of the above were not licensed by the Government that everybody pays into as looking out for our best interest.... MAYBE.. JUST MAYBE people would have been more skeptical and did their due dilligence on the people they were dealing with instead of just relying on the fact that the real estate agent that said a property was a great investment or the mortgage broker who said that somebody could just refinance in a year would have been more carefully scrutinized...

I talk to these people every day since I specialize in short sales and more often then not... these people were duped because they trusted that Government was regulating everybody.

Who is going to regulate the regulators?? The current regulators are far from being trustworthy and in my mind are the biggest criminals....

Sorry... just my thoughts as the Socialist Kool-Aid is getting passed around as an excuse to support and spend more money to the very same people who gave EVERYBODY false guarantees...

NO SPIN HERE....

Don't blame the Capitalists... Blame the Government for these problems because even my socialist european friends are wondering why in the hell the U.S. Government was guaranteeing these toxic investments.....

As I always tell them... just look at where the campaign contributions are coming from... - Sun Feb 8 2009, 22:47

Quote from Nicholas:

The politicians in government need to immediately cease talking about more bailouts, cramdowns, and interest rate reductions. If you are going to do it, talk about it secretly with noted economists, write the legislation and then fire it onto the floor.

The more you talk it up the worse it makes the housing industry. How many of you out there now will not buy a house unless you get a 4-handle on your mortgage?

Why buy a house now when 15k no-interest loans are comming from the Feds. Maybe if I wait longer I can get a 4.5% loan with 15k no-interest kicker on the end.

When does the cycle end?

Stop.

Further intervening in housing markets is only going to destroy the industry. Further handouts only propogate a handout mentality. The market doesn't need handouts, it needs price reductions. The end result of this action is already known. The US Auto industry found that they could sell a lot of cars at 0% interest. Great! Problem is that when the rates went back up they sold zero cars because people expected 0% interest rates and felt they were getting ripped off if they were not provided.

We all know that housing subsidies do not work and that the cure is falling house prices, the rest is just smoke and mirrors, bread and circus.

-------- End Quote----

Nicholas... quote of the year because I've had several people confused from the last "bailout" junk that turned out to be junk and only ended up draining more of their savings from false hope.

You hit the nail right on the head concerning this...

Las Vegas real Estate sales are up big time because prices have been corrected to pre-2001 days before the Government got involved with tampering with something they have no clue about except for what lobbyists are telling them.... - Sun Feb 8 2009, 22:24

Carl,

No offense but you are clueless to the fact that the so called regulators should have been regulating..

I can make a pretty long list of government regulators asleep at the wheel while we were paying for their lifestyle...

Sadly... you were obviously also sleeping with that sad socialist comment...

What Bernie Madoff was doing was regulated by the government... In fact it's the precise reason why people trusted their millions to him despite warning signs.. because they trusted the government and there is no way the government would allow such a thing... Oh my... wow.. government regulation did a really good job now did'nt they????

http://news.bbc.co.uk/2/hi/business/7786923.stm

Barney Frank said Freddie Mac and Fannie Mae were just fine in 2004 despite reports stating otherwise...

Oh... how about this from your source of news??

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF…

9/11/2003 for your records...

"The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates."

SEPTEMBER of 2003... HELLO????

Carl... please do some research before coming up with another silly statement like that. The people you and I are paying knew all about it...

Are you seriously going to sit here and tell us that they did not????

PLEASE... Don't be such a Pelosi... It's absolutely disgusting.... - Thu Feb 5 2009, 07:52

http://www.foxnews.com/video/index.html?playerId=videolandin…

Nice simple explanation on what happens when foreign countries such as China stop buying our debt.

I could be wrong... but I don't think that helps out real estate.

The "Inconvenient Debt" does not help out either...

http://www.glennbeck.com/content/articles/article/198/20816/?ck=1

Until we stop living in a false economy... who knows when it really will be a good time to buy real estate? Too many bad policies in place with no common sense solutions... such as letting everything work it's way out instead of tinkering (and confusing everybody with false hope) with the system.

If the Government would not have tampered with the system in 2001... we would not be here today.

Unfortunately, everything I see today reminds me of a first time FSBO telling me the best way to sell their home. - Wed Feb 4 2009, 20:27

Jeff,

What's another $500 to $1000 a year when you owe $184,000?? (And going higher if the new "stimulus" bill gets passed.)

http://www.pgpf.org/about/nationaldebt/

No worries Comrade... the new "stimulus" package will take care of everything.

But we've got to get it through before you get to read it otherwise (according to Nancy Pelosi) we'll be losing 500 Million jobs a month!!

http://www.glennbeck.com/content/articles/article/198/21053/

LOL!! The entire world is going to be unemployed by the end of 2009 according to Nancy Pelosi...

Of course the new stimulus package really is not going to be creating any real jobs this year or even contribute to entrepreneural endeavors so real estate probably is not a good investment since the New Party in Charge says everybody is going to be unemployed.

Nice take by Glenn Beck today on tactics currently being seen...

http://www.foxnews.com/video/index.html?playerId=videolandin…

My congresswoman still has not gotten back to me on how the new "stimulus" package is going to help real estate even though they voted for it.

Nice List...

http://www.cnn.com/2009/POLITICS/02/02/gop.stimulus.worries/…

Let's hope the Chinese don't see it or they might cut off the funding for the debt to pay for us to stay open...

Of course... everybody else is starting to catch on...

http://www.foxnews.com/video/index.html?playerId=videolandin… - Wed Feb 4 2009, 19:49

Lori,

You are right... it was answered about 2,600+ answers ago. This has turned more into a discussion of what is going to happen next. Much of what we see now was discussed several months ago. So while some are scratching their heads and wondering what happened, there have been several on here providing some pretty useful information on what to look for.

It's always best to be proactive then reactive...

I just got a call from a luxury home builder in the burbs of Chicago. I had stopped by in April of 2008 to look at what they were doing.... now I can buy the same home in the builders inventory at the amazing once in a lifetime deal of 30% off from when I was last in there.

Sign me up! - Tue Feb 3 2009, 18:35

Reading between the lines on this story http://bloomberg.com/apps/news?pid=20601087&sid=aKufqJK9j1cY… is disturbing.

Some interesting stats here including a chart on homeownership percentages --> http://www.hoover.org/research/factsonpolicy/facts/26963064.html - Tue Feb 3 2009, 14:04

Quote---

"This marks a very important shift in American pshycology. Consumers are turning into savers at an alarming rate. This is your economic contraction.

What are they saving for...Housing maybe?

On the other hand it seems that we are exchanging personal debt for national debt. It doesn't matter what balance sheet the debt shows up on, personal or federal, you still owe."

End Quote -------

70% of our economy is based on consuming... the Govt. has decided that if you are not going to borrow and spend money, they'll borrow and spend the money for you.

As for California... don't worry Nicholas... you'll soon be paying their bills if the "stimulus" package goes through.

And when that does not work...If you don't buy a house.. the Govt. will buy it for you. - Mon Feb 2 2009, 13:01

http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/

By the time they get them up for sale, a dollar or two from the new "stimulus" package may trickle through.

I'm with Carl on this one because there is so much in the new proposed "stimulus" package that is a bunch of Pelosi. (My new term for BS.)

Too slow to react and the Government is so far behind that they appear to be clueless as to what has been going on.

From 01/14/2008:

http://www.nytimes.com/2008/01/14/business/14spend.html

And it all goes back to this nicely written article with some certain people warning about this for quite some time:

http://executivesuite.blogs.nytimes.com/2008/12/03/peter-sch…

Nice collection of TV Interviews of Peter Schiff and everybody laughing at him -->

http://www.youtube.com/watch?v=2I0QN-FYkpw

Too much consumption and not enough saving. From October of 2008:

http://www.youtube.com/watch?v=4FvwxXfc7s0

Sorry.. I've got to listen to Schiff instead of thinking that the Pelosi coming out of D.C. is going to help.

Not too long ago we were mocking the executives of the big three auto makers going to Congress with their hands out for a bailout without a plan... it appears the rest of the world is now doing that with us:

http://www.iht.com/articles/2009/01/29/business/borrow.4-419…

"As the U.S. Congress looks for ways to expand President Barack Obama's $819 billion economic stimulus package, the rest of the world has an urgent message to convey: Tell us how you are going to pay for it without drowning the world in debt."

Good Question...

We could not pay down any debt when we were making money....

Peter Schiff is right. ---> http://www.youtube.com/watch?v=BSparys6duU

Even if you save your dollars, good chance it's going to be worthless not too long from now. - Fri Jan 30 2009, 00:13

No reason to apologize Nicholas... you have a great track record of providing links.

There are currently 18 Bank Owned Homes priced over a Million in our market for sale on our MLS -->

http://www.lasvegasrealestatehome.com/idx/search_repo_reo.html

Many more that used to be Million dollar homes now priced for sale under $1,000,000.

84 Bank Owned Homes for sale over $600,000.... Many of them were probably over $1,000,000 during the peak. - Wed Jan 28 2009, 11:42

Personally... I've always enjoyed stopping by to see if anybody has posted any links with an opinion then just posting an opinion with nothing to support it. (Or sharing a story...)

As for Vegas... prices have already been so decimated that in many cases it is cheaper to buy then rent and sales are back up. Banks are involved in over 65% of all the transactions out here and it's slowing us down to get them through but sales activity is back up, people are getting out of their overpriced mortgages with short sales (increasing their cash flow) and we are moving on.

The "Reset" for us is taking place and that's what we really need after the false economy...

http://money.cnn.com/2009/01/28/news/reset_buzzword.fortune/…

...for some reason politicians don't seem to understand that and think that spending their way out of it by creating even more debt is the solution.... when it's just going to cause much bigger problems.

... or they just want to delay the inevitable until they get re-elected. - Wed Jan 28 2009, 10:40

Thoughts for the Day....

"Peter Schiff was Right"

http://www.youtube.com/watch?v=9h2x7R8pxUs

Latest News.....

http://www.mcall.com/business/local/all-a12_deficit.6736779jan08…

''Despite the record deficits facing us, our number one task is an economic recovery package,'' said House Budget Committee Chairman John Spratt Jr., D-S.C. ''With Americans concerned about their jobs, their homes, their retirement and their children's future, our economic situation is so severe that stabilizing the economy must take precedence over short-term deficits.''

http://www.nydailynews.com/money/2009/01/07/2009-01-07_congr…

"The federal budget deficit will hit an unparalleled $1.2 trillion for the 2009 budget year, according to a Capitol Hill aide briefed on new Congressional Budget office figures.

The aide says the CBO also sees a $703 billion deficit for 2010.

The dismal figures come a day after President-elect Barack Obama warned of "trillion-dollar deficits for years to come."

CBO's figures don't account for the huge economic stimulus bill that Obama is expected to propose soon to try to jolt the economy. At the same time, they do not reflect the immediate cost of the Wall St. bailout.

The shrinking economy has led to a sharp drop in tax revenues, which is largely responsible for the deficit, along with about $350 billion in spending so far for the Wall St. bailout.

Obama and Congress are promising quick enactment of the economic recovery plan, which will blend up to $300 billion in tax cuts with big new spending programs and could cost up to $775 billion over the next few years.

The flood of red ink probably won't affect that measure but could crimp other items on Obama's agenda.

The $1.19 trillion 2009 figure shatters the previous record of $455 billion, set only last year. It also represents about 8 percent of the size of the economy, which is higher than the deficits of the 1980s. The 2009 budget year began last Oct. 1."

Sounds like Losing a Job and taking out New Credit Cards just to pay the minimum balances of the old ones to me..... - Thu Jan 8 2009, 09:50

Nicholas,

I always like pulling this up when it comes to Bailouts and Stimuls Packages from The Heritage Foundation...

Ten Common Myths About Taxes, Spending and Budget Deficits---> http://www.heritage.org/Research/Budget/bg1660.cfm

(Keep in mind it was released back in 2003)

"Economic misinformation begins with politicians, who are usually more concerned with winning the next election than with seeking "economic truth." And winning generally requires presenting their own views favorably and their opponents' views unfavorably."

"Yet media reports often contain economic misinformation. Reporters do not purposely mislead their readers and viewers: They have a nearly impossible job. Journalists with little or no academic training in economics are asked to define, explain, and often settle debates in an increasingly complex academic field where debates often come down to dueling statistical models."

MYTH #1:
Government spending "pumps new money into the economy."
FACT:
Every dollar that government injects into the economy must first be taxed or borrowed from it.

"Journalists with little or no academic training in economics are asked to define, explain, and often settle debates..."

An Economist at Stanford University just released this report yesterday --> http://www.aeaweb.org/annual_mtg_papers/2009/retrieve.php?pd…

From Page 8 of the Report:

"There is little evidence that short government impulses will jump start an economy adversely affected by other forces. In the current recession, the economy has been pulled down by the housing slump, the financial crisis, and the lagged effects of high energy prices. Expectations of future income and employment growth are low because the effects of the financial crisis are expected to last for years into the future. Unless these effects are addressed, a short-term fiscal stimulus has little chance of causing a sustained recovery."

From the Wall Street Journal on the latest proposals now being released:

http://online.wsj.com/article/SB123111279694652423.html?mod=…

"The largest piece of tax relief in the new plan would involve cuts for people who pay income taxes or who claim the earned-income credit, a refund designed to lessen the impact of payroll taxes on low- and moderate-income workers. This component would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, giving a credit of $500 per individual or $1,000 per family."

"This part of the plan is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion."

"Economists of all political stripes widely agree the checks sent out last spring were ineffective in stemming the economic slide, partly because many strapped consumers paid bills or saved the cash rather than spend it. But Obama aides wanted a provision that could get money into consumers' hands fast, and hope they will be persuaded to spend money this time if the credit is made a permanent feature of the tax code."

As Nicholas points something out: (Modified Slightly)

"Any spending that Politicians Promote comes directly out of your pockes or your children's pockets."

Remeber the quote from the WSJ on what most economists agree about Since the first rebate checks sent out last year:

"Economists of all political stripes widely agree the checks sent out last spring were ineffective in stemming the economic slide, partly because many strapped consumers paid bills or saved the cash rather than spend it."

Basically... consumption has dropped dramatically and stimulus packages are being created with borrowed money in the hopes of returning to the consumption days that went along with the housing bubble.

In other words... don't save your money... spend it or even better... get into more debt. (Sounds like the failed policies of the past 8 years to me.)

And... just to throw all of this in to go along with what Nicholas said about borrowed money: (Where the money really comes from for "stimulus packages"...

According to the Peter G. Peterson foundation we each currently owe $184,000 --> http://www.pgpf.org/about/nationaldebt/

America Will Soon Owe More then it's worth --> http://www.pgpf.org/newsroom/MainFeature/december15/

"PGPF’s calculations are based on the new consolidated federal financial statements as of September 30, 2008 and do not reflect the additional toll taken by more recent market declines, bailout packages, and record October and November deficits. The statements show an estimated $56.4 trillion in debts, liabilities, and promises for Medicare and Social Security versus a total household net worth of $56.5 trillion."

I think it's safe to say that we now owe more then we are worth.

Just my thoughts on what Nicholas stated in his last answer and why.... - Mon Jan 5 2009, 13:17

Here is the link to the full article that Housing Doom is referencing --> http://www.realtor.org/rmonews_and_commentary/articles/2009/…

The point of that "draw a line" excerpt was that you can't actually time the exact bottom or top of the market. Certainly nothing that I would solely use alone since I'm a very firm believer of Rent vs. Buy calculations but it does make a point.....

From the Article in REALTOR Magazine that the Draw the Line Excerpt was taken from:

QUOTE--------

"The great irony of a buyers' market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The media becomes the excited purveyor of negative news and uninformed advice, and buyers buy it all. Actually, it feels like the only thing they're buying.

Their reluctance is ironic since not so long ago buyers were incredibly excited about buying—and it was a sellers' market. Prices were escalating and it was perhaps one of the most difficult times to buy value and yet people were buying like there was no tomorrow. Buyers were afraid of losing out by not buying, even though the advantage was all to the seller.

Now a shift has occurred. Fear is still in the driver's seat but the tables are turned—the fear of paying too much seems to stop most in their tracks and immobilizes them. When they should have been afraid of paying too much they weren't, and now that they shouldn't be afraid of paying too much they are.

It's one of the great paradoxical moments of any market and the herd instinct at its most pure. Reluctance in the face of great opportunity becomes an agonizingly defining characteristic of a shift.

END QUOTE ----

There is a lot more to the story then just that little draw a line excerpt highlighted in Housing Doom...

The REALTOR industry is an entire industry on it's own of selling stuff to real estate agents and not about teaching us exactly what to say because we pay dues. That article that Housing Doom referenced in REALTOR magazine is kind of like an Amazon .com review of a book... the "Click Here to Buy Now" is the tip off. That came from Gary Keller's new book and he is one of the founders of a real estate franchise so drawing lines on sheets of paper are certainly not what all REALTORS are being trained to say and do as implied.

Housing Doom did not imply that... they just did not make it clear enough that it's not what all REALTORS are being taught to do or say or that the article was about a new book that is out.

Correct me if I'm wrong, but the discussion of the herd mentality and it's effect was discussed well over a 1,000 answers ago and how we end up going from one extreme to another.

When EVERYTHING ELSE makes sense for a buyer (or seller) then drawing the line with an attempt to time the exact top or bottom proves a point for a buyer or seller whose ONLY concern is trying to time the perfect time to buy or sell. Nothing else... nothing more... - Mon Dec 29 2008, 18:20

Merry Christmas Everybody!

I personally do not spend any time on Trulia except for this thread started by Ryan and there are certainly reasons for that. Savvy internet Real Estate professionals (the future of real estate) know the reasons to avoid this place like the Plague but I've really enjoyed reading takes on real estate from across the nation including the bashing of real estate professionals on this very thread.

There are certainly plenty of reasons to bash REALTORS and we as REALTORS should certainly learn from this and improve our services. I personally think by far the lack of education in what actual investments are is the main detriment of creating any credibilty with the general public... especially now.

Personally... I have my annual REALTOR dues sitting here on my desk that I MUST pay to continue doing what I love and to be honest with you... it makes me cringe that I have to pay these to continue in residential real estate.

I'm the borderline Residential real estate agent that understands commercial real estate. The majority of my best friends from college are all Commercial Real Estate Agents that always love to give me a good ribbing about how $400,000 homes that could only rent out for $1,300 a month are a "Great Investment" and all of the other garbage that I give zero support to.

However... I think that for the average person that starting out with Single Family Real Estate Investing the right way is the greatest path of wealth if you understand cash flow to begin with and how it works. The proper use of leverage, property management, etc... traditionally is not sexy but can be very, very rewarding in the LONG TERM.

PRE 2004 I made quite a few ordinary people quite a bit of money and for those that listened... they got out when the ROE calculations just did not make sense and people looking for short term get rich quick schemes arrived. I certainly enjoyed taking 27 year school teachers and turning them into Millionaires....

As somebody who traded stocks left and right in the 90's... (I was actually investing in stocks in the 80's) I can certainly tell you that investing in real estate the right way is far easier... IF YOU ACTUALLY KNOW what an investment is in the first place.

Unfortunately.... to get a real estate license requires ZERO EDUCATION in Investments, Finance or Economics and that's the problem. We have REALTORS running around thinking that housing is a commodity such as Oil and Gold.... Last years 40% appreciation rate means that it's going to continue (WAY DUMB!) and that real estate always goes up in price...

Residential real estate involves a ton of emotion... unfortunately that emotion is taken advantage of by real estate professionals.

Once again... I invest in stocks and have a pretty good background in Finance. From what I see taking place if a property would not cash flow if it was placed as a rental property... DO NOT BUY it in the current market.

For example... If Ryan was looking at a great little neighborhood in Chicago where one home was selling for $500,000 and the place a couple of places down was renting out for $1,700 a month... rent the $1,700 place out with no questions. (Keep in mind the property taxes involved for the $500,000 place in Chicago...)

My opinion... but there will be zero appreciation for the best case scenario for several years as this mess gets sorted out.

Anyways.... have a Very Merry Christmas and the only thing to fear about 2009 plus is not taking the time to understand what's really going on.... I'll be sharing all of this on my Las Vegas Real Estate blog as the information continues to pour in.

Higher interest rates will certainly be coming by the end of 2009... Inflation is on the way as the Printing presses keep printing dollars out like there is no tomorrow because the guidelines in place are not taking tomorrow in consideration....

It's not gloom and doom... it's just understanding what is going to be taking place.... - Thu Dec 25 2008, 06:49

Keep in mind that the link I posted in the last answer concerning the 43% of households spending more then they make is from 2004... it actually became worse as the real estate bubble peaked. I just don't have a good link to show what the numbers were in 2006 - 07.

As for anybody who thinks that printing up more money to create more credit (debt) is going to help... I suggest you take 32 minutes out of your day to see what's really going on by watching this --->

http://www.youtube.com/watch?v=O_TjBNjc9Bo&feature=player_embedded

Courtesy of the Peter G. Peterson Foundation --> http://www.pgpf.org/

Nicholas -- do you have the link to that story with David Lereah?

Quote:

"I worked for an association promoting housing, and it was my job to represent their interests."

Unfortunately... running around and telling everybody that it's always a great time to buy because inventory is high and rates are low ends up being in nobody's best interest.

There are opportunities.... just not everything is an opportunity. Cash flow is king right now. - Fri Dec 19 2008, 12:49

This is the link for the 60 Minutes story that John the Bruce mentions -->

http://www.cbsnews.com/video/watch/?id=4668112n

The charts shown with the resets have been out for well over a year+ but are just now getting mainstream media attention.

As for Alt-A's resetting... it will be interesting to see what happens when it's time for these to reset with higher rates (payments) for homes that have lost 20%+ in value. You have to understand that these types of loans were created during the peak of the housing bubble with introductory teaser rates just to get people into the home. In other words... I don't know anybody that has one that has any equity right now and they are upside down.

Something else not mentioned (yet) is the number (millions+) of people whose credit has gone south -- which means the number of people that will not be able to buy a home for quite some time since NINJA Loans (No Income, No Job and Assetts) and some of the other exotics that pushed prices up and created a huge boom in building are no longer available.

Which makes you have to ask if it's lack of available Credit that is the problem... or is it actully a Debt problem?

I pulled this story up from 2004 with a study on American Debt ---> http://moneycentral.msn.com/content/SavingandDebt/P70581.asp

Quote:

"About 43% of American families spend more than they earn each year."

It was only a matter of time before it came to an end.

As for buying.. as I've said since this started in April, if it does not have a before tax cash flow using the most recent rents.. I would not buy it. For primary homes, use a rent vs. buy calculation and don't worry about missing out on any appreciation anytime soon.

Even true real estate investors have dwindled down as evidenced with a four plex that I have for sale for $275,000 where the units each rent out in the $700 to $725 range that is still available for sale after two weeks. ---> http://www.lasvegasrealestatehome.com/idx/cms/15/details.html

Three years ago with a list price of $450,000 there would have been 10 offers on this in one day.... Now that it does make sense as an "investment", it shows just how many rookie real estate investors were out there as shown in that 60 Minutes clip.

"Repo Riviera"... that's classic. Unfortunately, the availability of these loans enabled people to purchase 4+ homes at a time and drove up prices with the artificial demand... which created more debt in the form of higher prices aka mortgages for quite a few people.

Unfortunately.. just firing up the printing presses and throwing more debt at the problem with the attempt to keep home values up will probably hurt more then it is going to help in the long run. - Fri Dec 19 2008, 05:02

Where did the other 2,400+ answers go?? What a waste if they are gone. - Mon Dec 15 2008, 16:16

We just opened up escrow on a resale home that is not a bank repo or short sale... everybody is in shock (myself included) that we could find a home priced extremely well where a bank is not involved in the deal.

It seems to be an automatic assumption that you will be dealing with a bank in one form or another when buying a home in Las Vegas.... and trust me... that's not a good thing. Banks are just getting in the way when it comes to getting back on track.

So... let the government come in and save home values from falling with a band aid in areas where they have not already plummeted and people will still migrate to where they can afford to have the luxuries (eating) that Carl mentions.

It's simple migration that I've also seen on the same channel that Carl mentions. - Mon Oct 27 2008, 09:51

@ Carl - We have 4,482 homes available for sale on the Las Vegas MLS (1642 Bank owned homes - 1798 Short Sales) with 4 Bedrooms, 2 Baths for under $399,000.

Property Taxes are around 1%. Get out while you can, move to Vegas and you'll be able to afford to eat and do the other things you mention. :) - Mon Oct 27 2008, 08:43

An 11.5 Million dollar home just sold in our neck of the woods for Cash and escrow was a whole 1 day. It'll certainly be interesting to see if and how this has an effect on October Numbers for Las Vegas. - Wed Oct 15 2008, 15:30

@ Betina,

Take an hour today and listen to the Podcast you can find here -->

http://www.thislife.org/Radio_Episode.aspx?episode=355

Hopefully that helps to answer your question. - Wed Oct 15 2008, 11:32

@ Carl in Chicago -

That's actually written by Peter Schiff who has been predicting much of what is going on today for several years now. If you go back and follow all of his interviews (Google his name for all the video interviews he's done in the past several years) --- you'll see that for "opinions" he's pretty good. - Tue Oct 14 2008, 16:29

Lake Forest??? That's old money and I can think of a lot more places that are going to be hit harder then Lake Forest.

People don't live (or move to) Lake Forest because of jobs... they move to Lake Forest because they can pretty much live wherever they want. The people I know in Lake Forest don't even have mortgages to begin with.

I'm not going to say that Lake Forest is not going to be affected, but if I was getting paid to write for BusinessWeek I think it would be pretty easy to come up with a lot more communities in front of Lake Forest that are going to get hurt much worse.

I can't speak for the other cities on that list but putting Lake Forest on there is kind of like saying the former CEO's of Fannie Mae and Freddie Mac are going to have a hard time making their mortgage payments. - Thu Oct 9 2008, 11:13

Jon,

Just some quick thoughts --

First...You need to explain what derivatives are in the first place and how it all ties into the financial markets... especially when it comes to real estate since you are on a real estate forum.

Second... It would be nice if you provided some sources for the amount of derivatives that the banks you mention are tied into. (From what I understand... nobody REALLY knows the true values of these derivatives and that's where a lot of uncertainty is in play.)

Third -- you need to explain how to read the reports you provided from the BIS.

Just some thoughts for the message you are trying to get across. If you want to make an impact... start at level 1 and build it up to level 5. - Sun Sep 28 2008, 15:11

Thanks Nicholas,

I forgot to mention that the subject property referenced before is in Summerlin -- one of the nicest areas of Las Vegas.

From what I understand about Annapolis, the homes you mention would be $400,000+.

As far as rents in our area go... I've been seeing them going up. Not sure if it's because of all the people who have bailed out and are now tenants or if it's because of all the vacant homes the banks are sitting on which can't be rented out until investors buy them.

I think I showed 14 homes this past Wed... only 1 was occupied--- with a tenant and it was a short sale. This even included 4 brand new homes by a particular builder based in Las Vegas that's doing OK because they've owned the land they are building on since the early 90's and can somewhat compete. (They've slashed some of their standing inventory prices to be right in line with the current market values for the area.)

Regardless, many of the homes shown were half price from the highs when they were being sold brand new in '04 - '06.

The point of my last answer though was the relationship to prices vs. what they can be rented for. Paying $295,000+ for properties that can only be rented out for around $1,400 did not make too much sense -- but plenty of people did it for the mere fact that they were under the impression that real estate always goes up in price.

Sometimes it makes more sense to buy.... and sometimes it makes more sense to rent. With the current lending environment, I don't see everybody all of a sudden becoming homeowners... putting those that can qualify to buy in a pretty good position for the next several years. (Las Vegas anyways.)

Long, long ago we used to tell people to buy what they can afford and in case they had to relocate, worst case scenario was they could rent the home out and somewhat cover their mortgage if they had to.

Owning rental homes that cash flow is not such a bad position to be in.

Sounds better to me then relying on investments where boneheads such as some of what we are seeing in the news make decisions where it appears their bonuses were more important then shareholders equity. - Fri Sep 19 2008, 10:03

I find it interesting to how people are reacting when it was well documented over 2 years ago all of the current problems. (OFHEO Report of 2006 -- it's all pretty much right in there.)

As for buying or renting real estate... Hmmm.. we are writing up a contract on an approved short sale for a property for $175,000. The current owner paid $295,000 for it in 10/01/05 and has been renting it out for $1,400.

So... for those of you who think renting is a waste of money.. in the above scenario, who made out the best?

The renter who paid $1,400 a month or the owner who paid $295,000 and is now short selling it for $175,000?

Now.. let's say our buyer comes in, buys it for $175,000 and rents it out for $1,400 a month... Who will be making out for the next two years?

It's really not that complicated. - Thu Sep 18 2008, 14:53

Short Sales -- That's all we've been doing lately and from what we see -- the banks are being much more receptive....BUT...

My partner only does Short Sales and working with the banks... Which means being persistent, having the time to call several times a day, processing short sale applications the right way, and knowing who to talk to for answers. In other words... she makes the job easier for the loss mitigation departments resulting in much better then your average results.

We even had a FSBO that found their own buyer who was trying to do it on thier own have the loss mitigator tell them to contact her to do everything for them.... because they did not have the time to hold somebody's hand and walk them through the process.

Short Sales are certainly a specialty... it's tough to just say across the board what's really going on in this niche since it makes such a big difference who the listing agents are when it comes to handling them. And let's face it... Vegas has had such a big hit... I think banks are pretty well aware that the prices are not going to come back to cover these losses anytime soon.

It certainly makes zero sense for a lender to go through with a foreclosure (instead of accepting a short sale) and adding more down time and then selling it for the same price.... or even less. Add the risk of the home being trashed or stripped on top of that. - Tue Sep 9 2008, 17:46

If you have some time for some interesting reading -->

http://www.ofheo.gov/media/pdf/FNMSPECIALEXAM.PDF

Here are some cliff notes done way back in 2006 -->

http://affordablehousinginstitute.org/blogs/us/2006/06/fanni…

----Quote:

"Fannie Mae management believed that, to double EPS by 2003, the Enterprise would have to achieve three business objectives. Page 45.

We need to go through these slowly, because each one is very important.

1. First, in the credit guarantee business Fannie Mae would have to securitize a greater share of the single-family mortgage market, in part by:

(a) penetrating the subprime market, and
(b) buying conventional loans that might otherwise be insured by the Federal Housing Administration. Page 45."

End Quote -------

Plenty of more in there to read.... Pretty much sums up the system that led to higher prices in areas where money was being given away to boost up those earnings.

So basically, risky decisions for personal gain (bonuses) were made since it's been assumed that ultimately, the Government (Taxpayer) would be there to bail them out if needed.

Something tells me that these same people don't care about the mess these decisions created and the effect it is having on hundreds of thousands (If not millions eventually) of American Families who just wanted to get into the "American Dream" no matter what it took.

I certainly don't expect the average consumer to understand what happens to real estate prices when anybody can buy... - Sun Sep 7 2008, 20:22

Nice --

http://abcnews.go.com/Blotter/story?id=5413172 (From 7/21/08)

"Daniel Mudd, the CEO of Fannie Mae, received $11.6 million in salary, stock and other compensation for 2007. Richard Syron, CEO of Freddie Mac, took home about $18.3 million last year."

"Yes, yes," said Freddie Mac spokeswoman Sharon McHale, when asked if Syron's leadership was worth $18 million a year. "He's done a lot."

I would say.

"Fannie Mae CEO Mudd said last week that while "this is the right time to think about" the federal government coming to his bank's rescue, "I don't think we'll need it."

(That's why I make the big bucks!)

"That is the most outrageous of the current financial disasters," well-known bank analyst Richard Bove of investment firm Ladenburg Thalmann told ABC News. The crisis, he said, was caused solely by "mismanagement, for the purpose of massive personal aggrandizement. It's an outrage."

"What worries me is the complete lack of accountability by Fannie's and Freddie's executives" and investment bankers who stand to gain from a government bailout, former Clinton administration Labor secretary Robert Reich told Newsweek magazine recently.

Anyways -- gotta get back to helping the real people that need it by selling some short sales!

(BTW Carl -- are you going to blame Reagan when Social Security is next??) - Sun Sep 7 2008, 18:46

Quote from Nicholas ---

Thanks Annette I was worried for a while that housing would never recover. So you say that a sellers market has to come after a buyers market, hmmm, interesting.

Just like she said folks, all is well with housing. Nothing to see here, resume your house purchasing.

End Quote -----

Ha!! Thanks for the laugh before I go out and pick up my buyers. I'll make sure that I let them know that a recent report from the NAR says it's ok to buy... LOL!!!! - Wed Aug 27 2008, 08:37

Quote:

"Those who pay $300,000. on a home in 2010 that they could have bought for $250,000. will not be so happy."

End Quote ----

So, you are predicting 10%+ appreciation rates for the next two years??? Pretty bold... sounds like the people running around here in 2005 saying appreciation rates were 20%+ a year. (And then everybody blames all of the speculators for prices going up so high.. and then crashing down.)

Instead of speculating, maybe you should consider doing a cash flow analysis so you can see what the true cost of the joy of owning is and then let the buyer make a financial decision on their own instead of using speculative sales techniques.

Sorry -- playing the greed card hits a nerve with me since I know a few people who ran out and bought because they were told things such as appreciation is 20%, so even though this $300,000 home can only be rented out for $1,200, it's a great investment because in one year it will be worth $360,000!!!

Or another one that was told a house was "underpriced" at $400,000 and to buy it because in one year it will be worth $480,000. You'll have to work three jobs to make the payments, but you can do that for a year and then I'll sell it for you and you'll make all that money.

True story and I was wondering how that agent was making $300,000 a year with no marketing..

Ridiculous. - Wed Aug 20 2008, 17:35

Carl,

As of today, We have 22,003 listings on our MLS and 6,386 of them are classified as a short sale. Or -- 29% of the inventory available for sale. Tough to avoid them..

We submit our hardship packages the moment we take the listing -- and we require the sellers to have all of our required documents to submit to the bank before we will even list their home for sale. For the most part, it speeds up the process and some banks have become very responsive.

If a certain process is followed, short sales really do not have to be as bad as you make them sound. (Once again though, I do want to reiterate that this is for our area...A year ago they were a waste of time because of the banks.)

Trashed though? Hardly.. I've got one owned by a contractor that relocated and it is pristine. For the most part, short sales are in better condition then the bank owned homes (that I've seen anyways)... Think about it, what does it say about the homeowners at least making an attempt to get out from underneath then the homeowners just walking away??

Can they be a pain?. sure.. Would people rather do a straight sale direct with a homeowner? Absolutely -- nobody wants to deal with a bank that I know of. But, over 60% of our sales in July were on bank owned homes so we really don't have a choice if you want to buy at current market value. - Wed Aug 20 2008, 17:27

Nice Video and he's certainly right about the adjustment that already took place... before the $300 Billion even kicks in. (For our area anyways..)

For all of your calculations and estimates below of how many people bought homes in the past five years (referencing the Zillow report), one thing you are leaving out of consideration is all of the people that refinanced and cashed out. (Especially in '05 and '06 when equity was skyrocketing.)

For example, for a community I specialize in for Las Vegas, I did a report on the Bank Owned homes currently available for sale that showed the previous sales prices -->

http://lasvegasrealestate4u.com/2008/08/12/rhodes-ranch-fore…

You'll see homes there where the last sales price was as far back as 2000... but somewhere along the way they refinanced, eventually owed more then it was worth when priced dropped and then had to let the home go into foreclosure.

This is just one very small section of Las Vegas so just going on the basis of when people bought the home, is not telling the whole story. - Tue Aug 19 2008, 18:45

Hello Geri,

This thread easily broke the Trulia record over 1,700 answers ago and I doubt it will ever be broken...

Funny.. since my last answer... we've had some new answers mentioning assets, oil, liabilities, cash flow and investment.

Put it all together and there's hope that the possibility of understanding that putting all of your money into something that generates no positive cash flow cuts out the ability to put cash into making investments that secure a future...

To put this another way relating to real estate... the greatest real estate investors did not get rich in real estate by starting out buying the biggest house they could afford with a mortgage. And... I don't think they rented either.

For anybody who caught the town hall forum with Obama and McCain last night, Mccain hit the economy question right on the head with his statement about all of the spending (debt) that took place for the past several years.... and yes.. mortgages are debt. (The term Mortgage is an Interesting combination of Latin and French put together BTW)...

He also reiterated the fact that $700 billion is leaving the country every year to our "friends" for our oil needs....

When cash is going out and nothing is coming in, you'll eventually go broke..

Seems like somebody has been taking a crash course on the economy...

Hmmm... things to think about for the ever going quest of why somebody should buy in this market...

(For me, it's never been why -- but to do it right in the first place and the rest will take care of itself.) - Sun Aug 17 2008, 17:49

Hey Geri,

I think I mentioned something about sovereign funds about 700 answers ago... :)

"Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building"

Or... it was in my blog about how much money is leaving the country every year right now...--> http://activerain.com/blogsview/586371/-3-Billion-Would

Not sure... but there is a correlation taking place. - Thu Aug 14 2008, 15:13

Here is the solution -- keep buying foreign oil and the Sovereign funds will buy up all of the cheap real estate --> http://www.nypost.com/seven/08102008/business/lost_sovereign… - Thu Aug 14 2008, 11:48

Dianna,

How can you say the property taxes in Lake County (aprox. 2.5%) are cheaper then Cook County? Elvis -- I think you need to chime in on this one.

Sure.. Cigarettes and various other taxes are cheaper in Lake County.. but property taxes from what I remember were lower in Cook County. Unless things have changed since I lived there... - Wed Aug 13 2008, 12:56

Hi Luke,

You read this entire thread?

Regarding speculating on other areas and future prices concerning the basic theories of supply and demand, my comment was using our area as an example of what we saw first hand.

I could probably dig through and find the old news articles from '06 from "experts" that said we were just leveling off and there is no bubble, "Vegas" is different because everybody is moving to Vegas, we are running out of land, etc.. etc..

Meanwhile, sales were down and inventory was building.

I certainly don't attempt to analyze every market out there but when you see inventory building, sales down, plenty of new home inventory hitting the market and tighter lending standards -- unless the local economy is absolutely stellar with a bunch of new jobs opening up, I would certainly be keeping a very watchful eye on current trends such as pending home sales and foreclosures instead of saying "we never had high appreciation rates" so we are OK and then waiting for the C/S Index to come out and saying something different.

My reference to looking at other areas did not include Nashville BTW or even anything in Tennessee for that matter.

But... even in our sub markets here in Las Vegas, there are some pockets of neighborhoods that have not had major price decreases.... but.......for one neighborhood I have been specifically watching for a client, they have had no sales since March either. Plenty available for sale... just no sales. Doing a little bit of digging around, there are currently five properties in the first stages of foreclosure and one that was just turned over to the lender.... which has not been put up on the market yet. Some obvious signs IMO of advising my client on what is really going on and letting them choose to wait it out instead of selecting from one of the 15 properties+ currently available for sale in there at 2006 prices. (In other words, I'm not saying you have to buy in there now because there is plenty of inventory and rates are low!!)

My client will buy in that neighborhood, just not at the current prices. And obviously with all of the people who have bought in the past couple of months in Las Vegas, they were not going to buy in there either...

Regardless... these same principles can be applied in any market IMO.

And... I don't think that I need to remind anybody that it was not too long ago that specific areas such as Las Vegas, Arizona, parts of California and Florida were the headliners of bad real estate news not too long ago instead of being just real estate in general.

We were the first ones to hit it and experience first hand the mess created by loose lending standards... and there is now actually some good news coming out of all of the above areas with all of the sales taking place... now that prices have dropped. (BTW, speculators picked these areas due to speculating on the characteristics of demographic changes taking place --- they just did it Too soon and got carried away when prices reached levels where nobody wanted to buy.)

As for other areas, the Housing and Economic Relief Bill may help for other areas that have not had the big price drops... not sure. Kind of hard to help any cities that have already had a major wave of foreclosures and prices have already dropped. Anyways...

As Ryan pointed out long ago, people now move around and don't live in the same cities their whole lives. We've become a mobile society and will move to areas where the cost of living is lower, the weather is better and/or there are jobs.

IMO, I would specifically pay attention to the cost of living for the next several years and that has something to do with demographics. A term "Half Backers" comes to mind here and the market they created for some certain states when Florida real estate became more expensive then what people wanted to pay....

Perhaps one of the "experts" that writes on general real estate for a major media outlet will take the time to come up with a meaningful report comparing the costs of living (real estate prices) in major markets and what it means for the average baby boomer that is set on a fixed income. That to me would be far more meaningful then what I've seen recently...

I don't know about you, but when I see a report that somewhere out in B.F.E is a great place to buy because they never had high appreciation rates or prices have been inching up for the past couple of years, I find it hysterical.

Anyways, I certainly would have preferred you using one of my very first answers back in April (?) when this thread started in using a localized REALTOR that knows how to keep an eye on inventory reports including new homes, foreclosures and pending home sales in relationship to previous years and being able to apply it to Economics 101 for advice on where your local market may be heading.... instead of just saying it's a great time to buy because inventory is high and rates are at historical lows.... - Mon Aug 11 2008, 11:10

For us, July Sales are up once again. Bank Owned homes made up over 60% of total sales on the Las Vegas MLS --> http://lasvegasrealestate4u.com/2008/08/08/las-vegas-home-sa…

27 of the sales had asking prices of a million or more. Have a great 8/8/8 day! - Fri Aug 8 2008, 10:09

Personally, I'm waiting to see if the big declines in home prices in Florida, Arizona and Las Vegas will create a vacuum for people looking to move from areas with high property taxes and state income taxes (And from cities looking to raise them even more to meet their budget shortfalls) as more and more baby boomers retire and live on fixed incomes.

As Nicholas was kind enough to point out with the list of non-essential store closings, people are out to save money right now.

Anyways -- something to share -->

http://money.cnn.com/2008/06/02/real_estate/home_price_valua…

--- Quote --

In Las Vegas, home prices have come down nearly 20% since the first quarter of 2006, when the city was deemed 30% overvalued. As of the first quarter of 2008, the survey said, home prices accurately reflected the fundamentals of supply and demand.

---- end quote

Unlike the C/S Index that reports on what happened yesterday, Global Insight looks at current prices and economic conditions for today's evaluation.

And yes... Global Insight was around during the boom stating that many markets were overvalued - long before the price drops took place. - Mon Aug 4 2008, 17:21

Quote from Carl:

"During the depression, what happened in rental market? Any 90 year olds out there?"

Probably a good time to watch "The Grapes of Wrath" again...

On another note, I know somebody that got creative on their rental homes and started putting up the individual rooms for rent on Craigs List and was overwhelmed with responses advertising rooms for $500 to $700 a month.

Quote:

"Likewise, an apt complex of condos or co-ops will have Owner occupied and rentals mixed together. And, we know that owners want rules against the ratio being to over-balanced with rentals. Why? Guess."

I'm going to assume you are suggesting something else.... but... it's partially due to meeting lending guidelines. When we did a new condo project, we had to insure that a minimum % was owner occupied to meet Fannie Mae and Freddie Mac guidelines. Blow that and financing is extremely difficult to obtain in a condo project --- Especially now. - Fri Aug 1 2008, 09:17

Nicholas,

Concerning the Wells Fargo loan that was reported in the OC Register -- I have to agree with you on this one. You Can't fix the problems if a blind eye is being turned to what caused the problems in the first place.

http://www.ocregister.com/articles/camile-house-mortgage-210… - Wed Jul 30 2008, 14:12

Interestingly, national pending home sales numbers are down --> http://abcnews.go.com/Business/Economy/wireStory?id=5330669

While our sales numbers in Las Vegas are up ---> http://lasvegasrealestate4u.com/2008/07/10/las-vegas-home-sa…

Put two and two together with the last answer. - Thu Jul 24 2008, 07:43

Ryan,

Your hypothetical example below is precisely what happened in Vegas. (And I use Vegas because we've already gone through this.)

BUT let's go over your example first ---

The buyer who bought Sellers A home for $100K has gone down in value according to your sample C/S index--- because when it was bought, the median home value according to your C/S example index was $200K.

BUT... you stated that buyers were not going to buy anything for more then $100K -- and buyers are what determine market value. If the C/S Index is stating the median values are $200K but buyers are not going to budge over $100K -- that's where you get all of the homes sitting on the market and the decline in sales numbers. (In other words... who cares what the C/S index says if buyers are not buying?)

So.. Buyer A got a $100K home where the C/S index was saying median values were $200K but buyers were saying market values were only $100K -- pretty easy to get a loan there and even refinance it and cash out some equity :) ...

As I tell sellers, you can put whatever price you want to on a home but if you really want it sold, you need to put a price that will motivate a buyer to put an offer in.

Back to your sample -- PRECISELY what happend in Vegas and other poster child markets for bad real estate news in '07.

Median prices are saying one value, but buyers are saying something else and buyers are what you need to get out if you are a seller -- not the C/S Index value.

C/S Indexes are important to see what already happened, but mean nothing if nobody is buying TODAY and inventory is rising. For a period here in Las Vegas, we had to do AT A VERY MINIMUM -- monthly market reports on homes we had listed for sale because prices were dropping so fast in '07. (And we had to fight with the reports of median home values saying one thing.... but our CURRENT market indicators were saying something else.)

There was a point where sales over a month old were considered OLD and irrelevent so C/S Index values coming out on numbers three months later certainly meant nothing.

For us...The biggest drops took place around November of '07 when the banks just seemed to all decide to dump their increasing inventory. Just like buyers B through E in your example.

(NOW -- keep in mind that in '06 was the period in Las Vegas where we hit a period where sales started to really slow down, prices remained somewhat stable but inventory started building up. I consider this the warning signs of things to happen since we saw it first hand.)

HOWEVER -- What this created was buyers that are NOW willing to buy.

Homes in Las Vegas are NOW SELLING at the lower prices and sales for June 2008 had a 50% increase over sales in June of 2007. (Obvious signs of our market stabilizing from the free fall.)

http://lasvegasrealestate4u.com/2008/07/10/las-vegas-home-sa…

So, back to Buyer A in your example -- in comparison to the C/S Index for the area you gave, the value did go down. BUT... let's say Buyer A got a loan for $100,000 and now the values have dropped to $100K. Buyer A is just fine since they are not under. Yes.. Buyer A is not so happy since his equity on paper dropped but at least he does not owe more then the home is worth.

NOW... let's say other buyers (Before Buyer A bought Sellers A home) who had bought before buyers made the market values $100K purchased at $200K and have loans at $200K... Their values are now $100K because that's all buyers are going to pay and they now owe $100K more then the homes are worth.

SO... we have to ask ourselves in your other answer concerning the new bill how giving taxpayers money to lenders is going to matter --- Are they going to refinance $200K mortgages for homes worth $100K?? I don't think so.... (But.. yes it is important to keep Freddie Mac and Fannie Mae from going under.)

IMO...Regular lenders are going to take that money and use it to offset their losses. The only way that the $100K homes are going to get back to the $200K homes anytime soon is if lenders go back to their loose lending standards and give loans to anybody who fills out an application and that's not going to happen anytime soon.

(Well... maybe it will since lenders know that some of their "preferred clients" will help them out.)

Regardless, the C/S Index only tells me what I knew three months ago. Pendings and Contingents give me better information on what it takes to make buyers pull the trigger when prices are falling.

Declines in sales, higher inventory and an ever increasing avg. Days on Market number tells me that prices will eventually go down one way or another. - Thu Jul 24 2008, 07:34

Hey Ryan,

Concerning the bill, quotes from the article and some quick thoughts:

"Republicans said they would not support a bill that puts taxpayer money at risk while potentially bailing out irresponsible borrowers and greedy lenders."

Who wins? Lenders.

"Representative Barney Frank, Democrat of Massachusetts and a primary author of the legislation, said troubled homeowners might get relief within days of Mr. Bush signing the bill, because lenders have long known details of the legislation and could move quickly to help borrowers refinance. “Many of these institutions know this is coming,” he said. “I hope they will be able to take advantage of it right away.”

Not sure how refinancing a home worth $270,000 with a $500,000 mortgage is going to help out or any lender that would do it???

Of course, it might keep home prices up in other areas of the country that have not yet seen the dramatic price drops like we've seen in Las Vegas. - Thu Jul 24 2008, 05:34

Hey Richard,

C/S data is a comparison of last year to this -- we already know prices in Las Vegas imploded in comparison to last year. My optimism is based on the fact that people are buying homes in Las Vegas again and sales in comparison to last year have increased significantly which brings us back to simple economics concerning supply and demand.

When sales are down and inventory increases, prices are going to go down. That was 2007 for Las Vegas and now that prices have gone down, buyer activity has increased which certainly shows signs of hope in comparison to having no sales or even knowing the price that it will take to attract buyers. I can honestly say that now, I can figure out the price for a Las Vegas home that will generate buyer activity instead of it just sitting around with no showings. (Granted, not every home seller is happy with that price but I don't control the market, I work with it.)

I know, my last answer sounds quite optimistic and borderline salesy (ok... completely salesy) but just for the record, I don't prospect on Trulia or even spend too much time here. I just came across this thread several months ago and enjoyed participating and reading all of the answers and chirping in every now and then.

For the record, Trulia has given me a pretty good understanding of what consumers are looking for so it has been educational (and sometimes very entertaining) so it has been worth my time in that respect.

But... I'm not going to spend time on this site telling everybody it's a great time to buy because there is so much inventory and interest rates are low... because I think you are well aware that I have a pretty good understanding of what high inventory rates mean.

Yes... the marketing gurus for Vegas are hard at work due to the economics of the entire country offering some stellar deals right now --- but as I learned back in UNLV during some of my casino marketing classes, Las Vegas knows how to market and will adapt instead of sitting around and waiting to see what happens.

$49 rooms at Bellagio, Free rooms at MGM and I know people in other parts of the country getting offers for free rooms at Wynn even though they've never even been there. Sounds like a good time to visit Vegas to me :) - Mon Jul 21 2008, 16:40

Funny how everything was quiet after my last answer for six days which was by far the longest amount of time for this question since it started. Anyways...

For us, sales in June were 50% over June of 2008. http://lasvegasrealestate4u.com/2008/07/10/las-vegas-home-sa…

It's been an extremely rough and difficult time for everybody in Las Vegas for the past year but I can honestly say it has bottomed out. And... if you've followed my answers or my http://www.LasVegasRealEstate4u.com blog, you know I never make the "It's always a Great time to buy real estate" statements. In fact, you can read this post --> http://lasvegasrealestate4u.com/2007/12/17/home-sales-to-reb… and you'll probably get a pretty good idea of what I think about real estate agents that do make these statements.

Anyways -- I've been looking at inventory and sales reports from other areas of the country that never had "high appreciation" rates and see some of the exact same things I saw in Las Vegas in 2006 before the implosion. Some of my banking contacts are Certainly very concerned.

Florida, Arizona, Las Vegas and California have been the poster childs for bad news concerning real estate for the past year or two --- but --- now that prices have imploded in these areas --- where do you think the most desirable real estate is?

For us -- we've been slammed with people from all over the country and world for Las Vegas real estate.

But... hey -- it's Vegas baby with millions of international visitors a year and we are certainly not normal town USA. For Normal Town USA, you better check out the Pickens Plan and get an understanding of what $700 Billion leaving the country every year means to you.

Personally, I have not been so positive on Las Vegas Real Estate in over two years. If you are a qualified buyer and want references to my long time savvy investors who will vouch that I told them to back off of Las Vegas real estate back in 2004, contact me.

There is no greater reference then Savvy Invesotors who ALMOST got caught up in the nonsense.

Enjoy the ride..... - Thu Jul 17 2008, 20:15

I agree with you Bayou,

There has been some very thoughtful answers from both sides supported by relevant links... But anybody who says it's a great time to buy because it's cheaper then it was two years ago seems to not understand how prices got to the point they did or don't understand the impact all of the new home inventory has.

To top it all off, I came across this interview with an insider that worked for a New Las Vegas home builder (who says it is a nationally known new home builder but they won't mention the name) and posted the video interview on my blog. ---> http://lasvegasrealestate4u.com/2008/07/11/did-a-new-las-veg…

If this was a nationally known builder, I'm wondering if or how many other markets this was taking place in. Pay attention to the part about taking the incentives addendum out of the folders before submitting them to the lender. I do know the lender they are talking about that was forced to shut it's doors but not the builder... yet... - Fri Jul 11 2008, 11:20

Carlin,

Are you sure it's not this thread? I've seen some crazy answers here since following it over a month ago and now only come here for entertainment purposes only! - Fri Jul 11 2008, 08:55

This is still going??? You've created a monster Ryan :)

Save your money and buy land in the red areas where this is taking shape ---> http://www.PickensPlan.com.

($700 Billion is leaving the country every year for oil alone?? Nuts and tough to get an economy back on track when that much money is leaving....)

You've got to have land to put those things on... If they don't own it, they have to lease it.

Besides that... all of the good jobs created are going to create a demand for real estate... and it's pretty cheap in these areas for now.

(Just thought I would throw in something new for discussion to keep this going... :)......BTW... Vegas sales are back -- we took our beating already and it appears it has now stabilized. Multiple offers coming in on the good deals and they are getting harder and harder to find.... Maybe Buyers saw my comments 1400 answers ago that it was possible to find homes cheaper to buy then rent in Vegas.

Rent vs. Buy Calculations... bottom line. That's when we finally saw signs of the bottom.... - Wed Jul 9 2008, 00:46

Zack,

I certainly was not suggesting that you were complaining that access to MLS data was a big conspiracy --- just the services that want complete access to it.

Their arguments for open access say one thing but their intentions for it are really for something else such as advertising sites, etc.. Because without listings, a real estate website is just a real estate website.

Redfin has access to the MLS for the markets they are in so the argument in place by other services (cough, cough..) that it's closed is a false one. You just have to go through the process already in place to get to it which means getting licensed, etc.. (And real estate license laws vary by state and not controlled by the NAR.) Help U Sell, Assist to Sell, etc.. they have access to the MLS in Nevada and it's never been denied to them.

When I owned a Real Estate Brokerage I had to go through (and Pay) for numerous items AND meet all of the requirements by the State AND the various REALTOR boards. It's a complex process but companies can do it if they want to take the time and pay the money and follow all of the rules involved.

The main issues of the settlement were on issues that never became mandatory to begin with (they were going to be national guidelines that were put on hold when everything between the NAR and DOJ started in 2005) even though some boards did have the rule in place such as MLSNI. (Forced registration to view all the properties or what we call VOW and Brokerages that could decide what listings that could be viewed openly without registration.)

Las Vegas is wide open and full searches offered by agents and brokerages do not require registration. The good sites in Chicago via MLSNI do require registration to see ALL of the listings available. I don't know if that's going to change or not with the new settlement and that's what it really was... a settlement. It does not even effect Las Vegas anyways because it's been wide open since IDX sites became available.

BUT... the MLS does not report on information on For Sale By Owners, New Homes, etc.. etc.. so there is a lot of information just not available to make a determination of exactly when it is a good time to buy, sell or wait. MLS info. is not the end all solution for reports.. it's just one of the sources.

As I've seen from following all of the comments on this question since I got involved about a 1,000 answers ago, there is data ALL over the place depending on what you are using for your criteria depending on who you ask and some of it's been really good info to read.

It's kind of like the NAR and DOJ settlement... depends on who you ask to see what side won. From what I see, it was all irrelevant anyways and only depends on which MLS you belong to. For Chicago it matters, for Las Vegas, it does not.

I'm a little more in tune to different MLS systems since over the years, I've belonged to three different MLS systems with all different rules, criteria, etc.. There are different MLS providers (technical platforms) etc.. etc.. and different reports we can run. Some have been very easy to run whatever I want (Las Vegas) and some have been incredibly impossible.

Regardless, the whole point of the matter is opinions on future values based on criteria that has already happened are just that.. opinions. What's going on with gas prices (wait for the corn prices to hit ... think Ethanol with the problems currently going on that we don't even know the exact damages/cost yet), jobs being lost... etc... effect different markets in differant ways.

As it's been highlighted, World famous economists can't even come up with a definitive answer or get it right due to issues going on and they certainly have access to all of the data they can get their hands on.

By the way... don't blame NAR if it's too easy to get a real estate license... blame your state licensing boards because they are the ones that actually determine what the licensing requirements for a particular state are. Some are certainly easier then others.

By the way, My wife is a Real Estate Trainer and has taught for various companies so I'm a little more in tune to what companies teach what and why. Part of the hazard of this is that I've been with multipe franchises. Some teach the quick buck and some teach the long term business. I personally prefer the long term aspect since as many people are now realizing, trust and educated advice works in any type of market.

Sorry so long.. but I have been following this entire thread and generally just comment when I see something that should have further clarification that I can add to or clear up. Technically, I do sell real estate but I have worked for developers also and studies/reports for them do not include JUST MLS info. It's a combination of many things before a piece of dirt is even considered for development.

Trust me, my contacts within various banks, builders and developers are looking for the magic answer also. - Wed Jun 11 2008, 17:42

Zack,

Just to clarify the access to MLS data comments.. Get a real estate license, pay the REALTOR fees and you get access to the data. The Recent DOJ and NAR settlement go more in line with the argument of companies wanting open access to all of the listing data so they can post listings all over their websites and collect advertising fees, etc..

I belong to Two MLS's -- one that is wide open and shows all of the homes on our IDX feeds such as my site at http://www.PremierLasVegasRealEstate.com. MLSNI in Chicago forces registration to see all of the homes available for sale. (Non registration searches do not show all of the homes available for sale if the Listing Brokerage does not want them shown on an open IDX system.)

That was the real argument concerning the NAR and DOJ because the NAR wanted that system (forced registration and listing brokers having the ability to choose where it can be listed) put in place nationwide. That rule was put on hold since the dispute started in 2005.

Access to MLS data -- As suggested by several people contributing to this post -- it's not hard to get a real estate license.

If you want specific information from the MLS, just ask a REALTOR and the criteria you want. Suggestions that make it sound like the data is a big secret more often then not are created by services that would just love to have all of the data on their national sites (such as this one, Zillow, etc..) so they can get more visitors and charge more for advertising.

Obviously, arguments and open discussions concerning the data sound much better when it's made to sound like it's a big conspiracy that's harming the public then saying we want access to it so we can make money.

Once again.. finding a REALTOR that will provide you with all of the criteria of the information you want from the MLS should be pretty easy to find. - Wed Jun 11 2008, 13:55

Hello Nicholas,

You might want to start your search for a REALTOR at http://www.CRS.com -- Some Quick Facts:

*Less then 5% of all real estate agents can say they are a CRS
*Average time in the Business according to their survey = 16 Years

There is only one designation that is harder IMO and that's CCIM but that's more geared towards Commercial Real Estate.

Look for one that has taken CRS 204 (Building Wealth in Residential Real Estate) and CRS 205 -- they should be able to properly calculate Rent vs. Buy Calculations, etc.. Something I was harping on about 1,000 posts ago.

CRS 202 teaches Negotiating Tactics to cover your complaint about your previous agent having poor negotiating skills.

Course Descriptions here --> http://www.crs.com/Education/173

You can do a search for one here --> http://www.crs.com/Find_A_CRS

Not an end all solution but it's certainly a place to start. There are only about 50,000 REALTORS that have earned the CRS designation and it's the first place we look when relocating clients out of Las Vegas to other areas.

Carl,

Here is an article I came across concerning speculators --> http://www.edmondsun.com/business/local_story_158212633.html…

"We are experiencing a demand shock coming from a new category of participants in the commodities futures markets: Institutional investors. Specifically, these are corporate and government pension funds, sovereign wealth funds, university endowments and other institutional investors."

Sovereign Wealth Funds have been making a name for themselves lately.

Also,

Check your corn futures because it's not looking good this year. I think 25% of the bumper crop of corn grown last year was used for Ethanol -- which has created the debate of the higher food costs since Corn is also used in feed, etc. (Of course, higher oil costs make it more expensive to grow corn)..

Maybe a reason for the speculation going on and the recent jumps because news on the AG and commodity reports are not looking good right now and are not going to get any better with the Midwest getting drenched.

http://ap.google.com/article/ALeqM5jND4r3B-VBZu2Ogg2_yzjYnPI…

"It was corn's highest settlement price ever. Prices have jumped nearly 40 percent since the start of the year."

Once again, do some research on Sovereign Wealth Funds and figure out where they have gotten all of their money and what they are doing with it. It's pretty interesting...

Here is a good interview (bottom of the article) with T. Boone that covers most of the topics such as ANWR recently discussed --> http://www.spectator.org/dsp_article.asp?art_id=13223

"T. BOONE PICKENS: According to the crude oil report, as of today [March 12] we have imported crude oil at the cost for $1.4 billion for the week. Multiply 52 weeks times $1.4 billion [a day]. You'll get right at $600 billion a year you're paying for imported crude oil. We can't keep doing that. It's the greatest transfer of wealth ever recorded in the history of the world."

But... at least he's investing a couple of billion for better solutions --> http://www.cnn.com/2008/US/05/19/pickens.qa/

Tough to get an economy back on track when more then $600 Billion is going out of the country every year for oil alone. - Sun Jun 8 2008, 01:14

With the latest answers to this thread and the articles provided by Ryan and Manny,

Does anybody have $22 Million to lend for a new Master Planned Community in Southern Nevada??... :) - Thu Jun 5 2008, 15:44

The_Bayou,

That was a really good article you mentioned from the Times --> http://www.nytimes.com/2008/05/28/business/28leonhardt.html?hp

About a 1,000 answers ago I had mentioned running the rent vs. buy calculations to make a rational decision.

And, your reference to the index mentioned since it's been tracked since 1987 and the relationship to rents -- that's information that I'm looking for also and playing around with some of our local zips to figure that out.

I can't help you for Boston but that's the information that I would think is the most beneficial for when it truly will be a good time to buy -- instead of the generic "interest rates are low and there is plenty of inventory" answer.

We are certainly coming across properties where it makes complete sense -- not everything but there are cases.

Anyways...Nice article and the chart was enlightening. I certainly suggest everybody read it and look at the chart for your area. Of course, you need to find somebody that can break it down even more within your area / zip code / community and it should certainly help making the right decision instead of going off of all the headlines being brought up in the news. (Geez... I've probably heard the latest C/S numbers on the news at least 30 times in the past day...)

I guess they did not read my blog post back in April --> http://lasvegasrealestate4u.com/2008/04/29/broken-record-hea…
otherwise they could be saving some air time or sell more commercials... or interview somebody such as that Times writer. - Wed May 28 2008, 08:22

What I find really interesting about the tables is the March 2008 level index which shows the median % increases for the twenty markets since January of 2000.. (The median prices in comparison to last year are no surprise for those of us that track our local markets.)

The composite 20 shows a median % increase of 72.16% since January 2000.

-- Chicago is at 50.35%
-- Las Vegas is at 69.31%
-- Washington is at 102.34%... (Where did that come from???)

Only one city, Detroit has had a decline in Median home prices since January of 2000.

Interesting.... Especially when you go to this link -->

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_H…

and follow the index for your desired market all the way back to January of 1987. For example, looking at Las Vegas it was a nice and steady (normal) increase until November of 2003 and then you can follow the ticks increase dramatically going from an index of 139.16 to a peak of 234.78 in August of 2006 and now dropping back down to 169.31 for March of 2008. (Translation -- Median home prices for Las Vegas went up:

39.16% from November of 2003 from January of 2000,
134.78% from August of 2006 in comparison to January of 2000
69.31% in March of 2008 from January of 2000.

Hmmm... interesting and IMO, evaluating those numbers are the real value. Especially for those of us who have been involved in real estate pre - 2000.

On another note, You would think that with the headlines being blasted on the news with the latest release of the C/S Index, that it was breaking news but it's not....

So, here is some more breaking news... the C/S Index is also going to be lower for April and May of 2008 in comparison to April and May of 2007 for Las Vegas.

http://lasvegasrealestate4u.com/2008/04/29/broken-record-hea…

Good... we now got that breaking news over with.... :) - Tue May 27 2008, 11:30

Ryan,

Nice article.. I don't agree with it 100% but I do agree with the ability of having retail and entertainment (restaurants, etc...) venues within walking distance. We have a couple of developers in Las Vegas that have caught on to this trend (not just building strip malls but actual vibrant village center areas) .... one reason why I like Chicago so much are the Suburban Villages one can find such as in the North Shore Villages with vibrant downtown areas. Highland Park, The Glen, Lake Forest... etc... Naperville also has a fantastic downtown area, St. Charles is getting there and even Lake Zurich is attempting to get into the action.

Being close enough to walk to these areas from your home is really, really nice... Thanks for the read... - Fri May 23 2008, 03:10

Carl,

-----------Quotes--------

Foreclosure prices are no less than what will make the bank whole or close to it.

Notice that virtually all foreclosures need work and are sold "as is" for the buyer to fix them up. They may also come with liens that the seller cannotor will not clear,leaving the buyer to deal with it.

--------------End Quote----------

Not entirely True in our area and in others. I've come across foreclosures never even lived in (brand new) and far below what the mortgage amount was. Since Las Vegas (among a couple of other places) seems to be ground zero, let's do a brief overview of what happened.

Market slows down dramatically. Foreclosures start appearing, inventory builds up, foreclosure numbers start going up ---- banks drop the prices to find the "hit" mark. (The price it takes to sell them.)

For us, it seemed like November when all of a sudden, the banks just said get them off of the books and dropped the prices with another reduction in the first week of January. (These are the time periods when I noticed significant price drops.)

I've been tracking the amount of Bank Owned homes on our MLS since March of 2007 and have provided some reports such as this --> http://lasvegasrealestate4u.com/2008/02/15/bank-owned-las-ve…

Quote from Carl -----------

Banks would go broke if they did that.

End Quote ----------------------

Precisely why the Fed has gotten involved and lowered interest rates, why FHA limits have been increased, and why the govt. got involved in the Bear Stearns Bailout. Not for the consumer, but to help keep the system from collapsing.

Prices did not drop overnight -- it was a process that took several months and it all started when sales slowed down and houses were sitting on the market not selling.

Quote----------------

They may also come with liens that the seller cannotor will not clear,leaving the buyer to deal with it.

End Quote-----------------------------

Entirely not true in Nevada when working with somebody that has experience with Foreclosures and the process in our area. We have state laws that still give us a due dilligence period --- "As-Is" simply means the bank cannot vouch for the condition of a home (or the future condition) since they obviously never lived in it -- but you can still do home inspections and even ask for repairs in a properly written contract.

Certainly do not mean to pick on you but your statements were generalized and foreclosure laws vary state by state.

Quote ----------

Banks do not want to own houses nor make a profit selling them.

End Quote -------------------

You are certainly right about that. For any market where sales percentages have been dramatically reduced and the foreclosures start piling up, expect the price drops to come next. The banks will drop the price to get the non performing assets off of the books because empty houses sitting there cost the bank money in more ways then one.

Sales have certainly picked up in our area ---> http://www.lvrj.com/business/18721109.html

Quote from the Las Vegas Review Journal ----------

For the first time since September 2005, sales of single-family homes in Las Vegas rose from the same month of the previous year

---------- End Quote--------

That statement right there tells you just how long it took to get where we are today. (As for the rest of the article, you can form your own opinions about prices, etc...the only reason why I am referencing this article is because of the fact it states that sales have increased.)

The key part to the story is the fact that sales increased for the first time on a YTD basis for the first time since September of 2005. As I've referenced before, the C/S Index is going to continue to show price declines for several months in Las Vegas and that's because the price drops took place in November of 2007 and January of 2008.... I don't need this report to show you that prices are less today then what they were a year ago.

So... the prices have been dropped to where they need to be to sell... and as we know, if homes are not selling, the prices need to be reduced. That's why Foreclosures have an impact on home values -- Banks are not going to sit on homes for 6+ months waiting around and will eventually take a loss.

Apply the concepts of inventory, % of sales and foreclosures coming available to any market. If inventory has gone up, sales percentages are down and foreclosure start to pile up, expect price drops to come next.

It all creates a domino effect --- precisely why you see the Govt. now getting involved to try to head it off since it's spreading outside of the "areas that had the high appreciation rates".

For us, sales slowed down at the end of 2005 and all of the headlines you get to read in the national media about the price drops in Las Vegas (and other areas) are all because of something that started long ago. - Sun May 11 2008, 12:01

Trulia Roger,

Thanks for pointing that out and it certainly changes the perspective when you look at it that way... but the dates are all out of order so when the hot topic hits and is discussed it's kind of hard to follow that way.

This question is going to go for another 1,000+ anwers..... What's the record? - Thu May 8 2008, 13:17

I think it's safe to say from following this thread for the past two weeks that there are some obvious flaws in the way Trulia has set this up -- unless they are only interested in running up the hit numbers.

It would be really nice if the person asking the question could select the best answers (or the highest rated answers) and keep them handy in a sidebar for reference because the thoughtful answers with good references have been buried. I certaily can't blame anybody for rehashing the same answers that have already been discussed.

Anyways -- it has been entertaining to follow. Nice job by Realtyexecpro on finding the seeking alpha post concerning the WSJ article.

I'm also quite intrigued concerning the WSJ article after reviewing this --> http://www.secinfo.com/d14D5a.tjth.htm

Too busy to really dig into it but it but I do see some things on the first page that show an interest with the authors hedge fund firm in housing related stocks and as we know, the WSJ has generally always been perceived as a good source for unbiased information.

Anyways -- I thought of this post and dug it up ---> http://sadbastards.wordpress.com/2008/03/27/mainstream-media…

with what we read in the mainstream media and it is a good reminder that many of the mainstream sources are set up for advertising revenue. - Thu May 8 2008, 13:02

Wall Street Journal article ---> http://online.wsj.com/article/SB121003604494869449.html

Interestingly, written by a managing partner in a hedge fund firm and it is an opinion but it does have good information and it does point out that much of what we are seeing today actually started a couple of years ago.

Real estate as pointed out several times is not a market that quickly corrects... it takes time... - Wed May 7 2008, 20:54

Realtyexec,

The rental index market is something we keep a very close eye on in our areas of specialty. We are seeing an increase in available properties for lease from investors picking up properties on the cheap and available for rent less then apartments when comparing apples to apples.. $ per square foot, zip code, amenities, etc.. etc..

One particular site I like to use for apartment rental prices in a particular zip code is ---> http://www.everyaptmapped.com/ -- (no registration and collecting users information like all of the other rental sites trying to collect referral fees.)

From what I've seen in zip codes we track, they are pretty much right on from actually stopping in and verifying from the actual offices in areas we keep a close eye on.

Marcus and Millichap provides extensive reports on rental markets with trends of the local economy and here is their 2007 report ---> http://www.marcusmillichap.com/Research/reports/NARR/AptResR…

My contact with a local M&M executive has provided more extensive research on current Las Vegas information so I suggest you find one in your area and build a relationship with. (My contact specializes in selling apartment buildings, I have clients that can buy them.) They have very extensive reports specific to the local economy.

Interestingly, I'm now coming across individual units in Las Vegas that are less to purchase then the door cost for multi-family units.

TransparentRE.com (Pat) just released this info. in your neck of the woods --> http://transparentre.com/2008/05/05/193-san-francisco-comple…

The commercial guys in the Multi-family business (and the people involved in buying and selling these) are much savvier when it comes to real estate so IMO, these deals are important to follow in your local markets. From some of the latest reports in our markets, the occupancy % for apartments are running around 92 to 94% occupied.

Once again, I am coming across individual condominium units that are less to rent then apartments in the surrounding areas and are actually nicer so tough to say how long this is going to continue. Especially since we are taking out a couple of former renters and putting them into condos that are cheaper for them to buy then it is for them to continue renting in the same area.

So... the good news in the bad news is that people that could not have bought anything with traditional financing is that they can now buy which I particularly find more satisfying then working with speculators looking to make a quick buck in an industry that was never really intended for instant gratification.

Synthia touched on a little bit about demographics that I brought up long ago... concerning Baby boomers, Gen X and Gen Y (echo boomers are a % within Gen Y). Apply the age groups and numbers and apply it. Both of the buyers mentioned above are Gen Y and first time home buyers.

According to http://en.wikipedia.org/wiki/Generation_Y, Gen Y is over 70 million which puts it in line with the power of the Baby Boomers in terms of the influence this has as consumers... (Umm... anybody notice how all of the candidates are spending a lot more time on college campuses then in the past? Campaign managers are pros when it comes to demographics and certainly understand the importance of understanding this information....)

A lot of information but apply it to what is going on and maybe it will make sense. A good book (even though somewhat bizarre) that put everything together for me in terms of economics, history and the marketing classes I took in college is a book called "The Fourth Turning" --> http://www.fourthturning.com/ that I believe was written in the early 90's and has been pretty accurate in some concepts discussed. They have a series of books here --> http://lifecourse.com/ concerning the economic impacts of generations.

Apply all of the concepts and it all makes sense to what is going on in the "big picture" in terms of the economy and housing. All of these concepts put together are nothing that you are going to read in a trade magazine and get an answer for on a post --- as evidenced with the number of answers to this question.

As far as markets that did not have big appreciation swings... you might want to check some of the national new home sites and check out the inventory available for sale in these markets keeping in mind that many of these are just listing the floor plans available and not the total lots to build on which is a much bigger number.

That's an eye opener and as supplied earlier, research the new home permits that were issued (public information) that were issued between "03 and "06.

Long and winded I know, but it's a very complex issue that even award winning economists are having issues dealing with. Even the Kruger interview in Fortune Magazine supplied earlier missed some concepts going on such as inventory when commenting about home prices... - Wed May 7 2008, 13:17

An interview in Fortune Magazine with a Princeton Economist in the March Issue:

http://money.cnn.com/2008/03/14/news/economy/krugman_subprim…

Quote:

How far do you think home prices will fall?

My preferred metric is the ratio of home prices to rental rates. By that measure, average home prices nationally got way too high. We'll probably basically retrace all that. So that's about a 25% decline in overall home prices. Only a fraction of that's happened so far. Of course, it varies a lot. In places like Houston or Atlanta, where home prices have not risen much compared with underlying rents, the decline will be relatively small. In places like Miami or Los Angeles, you could be looking at 40% or 50% declines.

-------- End Quote

I've been mentioning the rental index since page 2 of this thread... and it can be done in Las Vegas with little to nothing down. (Obviously not on everything..)

Pre 2002, Rent vs. Buy calculations were expected to be known and we did them all the time --- for whatever reason, that became a lost art. There are plenty of bashers on here that can form their own opinions as to why...... But don't make generalized statements that it is not possible because you are incorrect. - Thu May 1 2008, 12:07

Something else to consider that has not been mentioned, If you want to buy but are worried that home values are going to continue going down, you may want to consider exploring Leases with the Option to Purchase.

Obviously not for everybody but they are something to consider... - Wed Apr 30 2008, 16:18

The herd mentality has been mentioned which is an important concept in value investing. You can get a taste of the concepts and philosophies of the great investors here --> http://www.buffettsecrets.com/mr-market.htm

Just a thought, but if you provide an opinion from something you read, please provide the link to the source for reference. Some of the best answers on here have provided some really good sources to information for everybody.

Keep in mind some other important developments taking place such as local governments raising taxes to cover the budget shortfalls created by the housing slump -->

http://seekingalpha.com/article/74641-higher-property-taxes-…

"Memphis Mayor Willie Herenton has proposed a 17% increase in the property-tax rate to close a budget gap…"

Ouch!

The City of Chicago recently raised their transfer tax to over $10.00 per $1,000 -->

http://windycityguide.blogspot.com/2008/01/fine-print-on-cta…

Taxes do have an effect on what people can afford in housing... Keep that in mind as a record number of a certain demographic (baby boomers) decide where they want to live on a fixed income...

(By the way, in reference to the VISA/MC answer... Unless something has changed with Visa/MC -- Visa and M/C collect transactional fees and are not actually lending money, they just provide the system to create the transaction. I could be wrong because I'm not following stocks at the current time but I was when Visa had their IPO.) - Wed Apr 30 2008, 08:49

Hmm... I remember coming across this ---> http://www.forbes.com/home/2008/04/17/debt-homeowner-cities-…

Debt obviously has a big impact on stability of a real estate market. While I found the report interesting, they do not use debt to equity percentages but it's still worth reading.

As far as future releases of the Case/Shiller index... for Las Vegas that's going to continue showing declines until November and that's because our big drop in asking prices took place at that time so the news stories of "price" declines are going to sound like a broken record for the next few months.

I can pull up the median sold prices for April and compare it to April of '07 and it's going to be a decline... I don't need to wait until the Case/Shiller index comes out in June to tell me that.

In other words, the Case/Shiller index is telling us what already happened... Predicting that prices are going to continue to decline based on data a couple of months ago and comparing it to what's available today does not take a PHD in economics....

My opinion, but Better predictors of where prices are GOING to go for individual markets would be reports on debt to equity ratios, percentages of home owners that owe more then the home is worth, etc..

Why is this important? Well read this --> http://seattletimes.nwsource.com/html/businesstechnology/200…

and pay particular attention to this paragraph:

"By then, lenders such as WaMu had shifted away from simply collecting interest on loans they held. Their new business model was to collect fees for making the loans and resell many of the mortgages on Wall Street, where investors snapped them up as mortgage-backed securities."

In other words, a shift took place in what was once a long term investment into instant gratification and we are now seeing what that created.

You've got to know why home prices went up (or remained stable) before you can speculate on where they are going to go.... - Tue Apr 29 2008, 09:28

If anybody can find me a loan where I can write off the interest or depreciate the asset, please let me know so I can invest it in the stock market.

Investing in real estate is beneficial due to the concepts of leverage... comparing it to the stock market does not tell the whole story.

As far as saying now is not a good time to invest in real estate, well that depends on what you consider an investment. If you are buying real estate solely based on predictions of appreciation -- technically that's called speculation.

If you can leverage rental property properly and want somebody to pay off your mortgage for the next several years -- well that's not a bad investment if done properly..

Yes... it does take work and you do have to have an understanding of what an investment is to begin with.

Just saying it's a bad time to invest in real estate right now is like saying it's a good time to invest in real estate when appreciation rates were going through the roof.

The buyers picking up properties in Las Vegas right now are much savvier then the "investors" buying Las Vegas real estate a couple of years ago and for the most part have an understanding of leverage, depreciation and cash flow. - Mon Apr 28 2008, 15:15

Richard,

Just to clarify something in your answer -- I don't know of many transactions where an individual agent collects 6%. - Mon Apr 28 2008, 08:16

Well... here is a new thread similar to this one -->

http://www.trulia.com/voices/Market_Conditions/what_is_your_…

There are actual prices, rents and tax information on this one for Glenview which is a desirable area in the "North Shore" suburbs of Chicago... can it break 270 answers? - Sat Apr 26 2008, 18:44

Trulia and or Ryan,

Is there anyway Ryan can add his last comment as an update to the original question so we can stop getting redundant answers? - Sat Apr 26 2008, 10:26

Nice graph Paul,

Do you have anything current to provide? - Sat Apr 26 2008, 07:18

Ryan,

Your question and following this thread and all of the answers for the past week have been trulia enlightening on mentalities from all sides and the cases provided.

When it comes to residential real estate, emotions are as important as trends on why people want to buy or not. If nobody buys, prices will not go up and will continue going down and that is certain.

Back when the market was red hot, emotions took over and drove prices higher then where they should have gone and it appears some of the checks that had previously been in place to control it, were not there.

http://seattletimes.nwsource.com/html/businesstechnology/200…

From what I remember when I followed the stock markets closely, After the dot com bust in March of 2000, there were trillions of dollars in cash sitting on the sidelines waiting to be invested somewhere. I think it's safe to say where a lot of it went.

Regardless, it took several years before trust went back into the stock market. Stocks that truly were a good buy were undervalued just because they were in the tech related category and were clumped together. I think it's safe to say that Trust for stock brokers and financial advisors were pretty low in 2000.

The same thing is happening right now as evidenced by some of the answers on this post including yours. Non REALTORS do not appear to have any trust in the National Association of REALTORS with their advertising campaigns which I understand why. I highlighted the reasons for this in this post I did back in December --> http://lasvegasrealestate4u.com/2007/12/17/home-sales-to-reb…

Mentalities are very important right now -- nobody wants to lose money and as long as we have the negative trends being reported, the hesitation to buy will continue. The recent poll in AOL Business showed that 59% of the respondents thought it was a good time to buy but 60% said they definitely will not buy in the next two years. --> http://lasvegasrealestate4u.com/2008/04/14/real-estate-menta…

In these uncertain times, I'm going to stick to the Rent vs. Buy calculations that any REALTOR with experience should be able to perform to come up with the definitive answer to buy or not. I can think of three potential transactions this year that we've gone through where it made complete sense to buy at asking price but the buyers did not buy simply because of what they read somewhere.

Somebody else ended up buying them. One of them was a $224,000 bank owned home in a guard gated golf course community in Las Vegas with a rental market value of $1,500 a month. Anybody who can run calculations should be able to determine that this particular purchase made complete financial sense and was cheaper then renting.

Unfortunately, nothing like this has come up since so this buyer missed out on a great opportunity to buy below market value --- all because they read somewhere that prices were going to keep going down and despite our advice, they put in a ridiculous offer that was easily outbid. ($100 more then the asking price.)

With current mentalities, overall prices probably will come down. But... the really good deals such as the one I mentioned above are out there and are going to get snapped up by investors that understand what a cash flow analysis is and these are going to be the same people that sell when the equity percentages make more sense to cash in and put the money somewhere else.

The areas of Chicago you've highlighted are desirable areas to live in and prices are based on emotions as much as anything. You've taken information from Trulia to show only 1 sale but Trulia does not have all of the listings and data that MLSNI (mulitple listing service of northern Illinois) has.

In other words, you need a REALTOR that specializes in these areas to help you out that can provide you with solid and complete data including the number of homes currently in contract. Homes currently in contract are a very good indicator of mentalities turning around and what the asking prices were that triggered the buy. (Price points to create a buy/sell.)

I've certainly learned a lot from following your answers along this thread and it basically falls into the line that you are part of generation Y that knows how to pull up trends from all over the internet.

In other words, you fall into the first wave of this generation that is going to be a very important segment for the real estate industry in the years to come.

REALTORS better understand this if they want to stay in business because the days of generic statements such as interest rates are low, inventory is high, etc.. will build no trust in the near future.

You, along with the next 70 million generation Y's coming up in the buying ranks know how to easily use the internet for research -- just make sure that you are using the right information to make your decision. - Sat Apr 26 2008, 04:41

New home permits nationally --> http://www.census.gov/const/www/C40/table1.html

You'll notice the big drops from '05.

Your state should have new home permits posted somewhere since permits have to be pulled before construction begins.

Building materials have also gone up. Vegas and Chicago have had an increase in thefts related to everyday building supplies such as copper, aluminum, metal, etc..

http://lasvegasrealestate4u.com/2008/04/22/interesting-story…

I don't think anybody is going to argue that costs for materials are going up.. - Fri Apr 25 2008, 08:41

I actually found the new Business Week article interesting --->

http://images.businessweek.com/ss/08/04/0418_housing/index_01.htm

For the mere fact they are using Asking Prices instead of Median sold prices. - Wed Apr 23 2008, 23:36

Hugh,

"Too bad you were not moving to Vegas" was in reference that if he was, I could give him specific reasons to buy in Las Vegas.

What I was suggesting is let's hear some specific reasons from Chicago real estate agents why Ryan should get off of the fence to buy in the Chicago area instead of the generic references to low interest rates and it's a buyers market...

No offense, but I suggest everybody go through and read all of the answers (I know it's long but there have been some great thoughts --- Pros and Cons --- for the past 4 days from people who have participated from the beginning).

In other words, the low interest rates, all real estate is local, blah, blah, blah has been stated 90 times already. (And if you read Ryan's comments along this post, you would know what he thought about the generic statements.)

As far as Las Vegas vs. Chicago -- well.. I can speak about that as well. As stated long ago, Chicago is a phenomenal city to live in... I am licensed there as well but I only know one sub market so I'm not on top of what is going on except that sales are really down in Chicago as well and foreclosures are skyrocketing in certain sub markets in Chicago also.

For Ryan's price range -- Well.. I could give a really good debate in comparing the two cities in what you could buy and where. Obviously, Chicago was the hands down winner two years ago but I would have to question that with today's prices in Las Vegas when you take in the whole picture such as taxes, cost of living, etc..

Sorry your experience in Las Vegas has not been pleasant... it's certainly not for everybody. - Wed Apr 23 2008, 09:11

Sadly, nobody from Chicago has given Ryan a really good reason to buy. Last time I checked, there were over 40,000 real estate agents in the Chicagoland area....

Too bad you were not moving to Las Vegas... - Tue Apr 22 2008, 22:53

Ryan,

Something tells me you've had your share of Philosophy studies...Anyways....

I found this blog post concerning the herd mentality very well written ---> http://www.luxurymortgageblog.com/2008/02/physcology-of-rece…

Apply the concepts to markets and you'll get an understanding of what creates buying and selling opportunites. Emotions play a big part when markets swing from one extreme to the other...

The trick is trying to figure out when it's gone too far and emotions have taken over from sensibility... Something that takes a lot of experience and education...

As you've pointed out, the days of "Interest Rates are Low" and you've got to buy now are over with... - Tue Apr 22 2008, 11:17

Ryan,

Your last comment and sentiment is nothing new. I touched on this subject back in December:

http://lasvegasrealestate4u.com/2007/12/17/home-sales-to-reb…

You'll find a lot of the same sentiment on ActiveRain and many of the actual REALTOR blogs out there. Probably why the Case Shiller Index studies get more attention then the NAR nowadays.

The tranparency in real estate is certainly changing. - Mon Apr 21 2008, 16:55

Chandler,

Asking prices and Market values are two entirely different things --- And...what somebody paid for a product means absolutely nothing in a current market evaluation.

I mentioned why sellers would sell below market value -- precisely why I suggest that somebody uses an area specialist that understands foreclosures and new home builder incentives.

As far as the rent vs. buy -- not true in Las Vegas. There are properties where it is cheaper to buy then rent -- and that's without even calculating the tax advantages.

Back to Asking Prices vs. Market Values.... I can ask for whatever price I want for my Google Stock that I paid $410 for... but if I want to sell it tomorrow morning when the markets open, the current market value suggests I'm going to get $539 if I want to put in a sell order.

Now, let's say it was trading at $350 the day I need to sell that same stock that I bought for $410... I'm only going to be able to sell it for $350 on that given day.... nobody looking to buy it at the current market value ($350) cares that I paid $410 for it.

I hate using stocks as examples because the liquidity option is SO much easier then Real Estate so let's add some zero's and pretend it's a home..

I paid $410,000 for a home and let's say it was a seller's market. Recent sales within a 3 mile radius suggest a market value of $539,000 and there is nothing else available for sale. I can probably push the price and ask $550,000 since everyody has been reading about how great the real estate market is and they need to get in now because prices are going up and interest rates are low... heck, I might even get multiple offers for it! (Sound silly? Ask any agent in Vegas when the market was hot how silly this reasoning was....)

In other words, you submit an offer for anything less then $539,000 and I'm just going to write a big "Rejected" on it and send it right back your way.

Now, let's say I changed my mind about selling it because real estate prices always go up :) and I'm going to wait it out for a year or two because heck...I read that appreciation rates were 20% last year. If I wait another year I'll be able to get over $650,000 for it. (It might sound silly but it was happening.)

Fast forward to today's Buyers market.... I have the same house I paid $410,000 for. It's a buyers market and $350,000 suggests today's Current market value according to the latest three sales within 3 miles of similar sized homes and there are 30 other properties available for sale.

But... ouch... a life changing event happens and I need to Sell ASAP. I don't have time to wait it out. Homes are sitting on the market forever, buyers are scarce and geez... everybody says prices are going down. So... I price it Below market value ($350,000) at $325,000 and offer incentives such as buying down the interest rate for a buyer, etc. etc..

A buyer comes along and offers me $315,000 and wants me to pay a point to lower their interest rate. I need to sell and move on so instead of writing rejected on the offer... I'm probably going to accept it so I can move on.

Sadly, I lost money on this deal but what I did not mention was that I found a killer 4 plex that's a bank repo being offered for $300,000 that's generating $2,600 a month in rent :). - Sun Apr 20 2008, 22:23

Chandler,

Good point about the generic interest rate answers. I was going to touch on this but my posts have been long enough.

Interest rates go up, buying power goes down. Qualifying someone for a loan is based on what they can afford on a monthly payment. Rates go up, what they can afford on a monthly payment goes down which is precisely why so many ARMs with teaser rates were used during the boom. (Creating an increase in prices.)

Put interest rates at 8% right now and I think it's safe to say that real estate prices would be lowered even further.

In other words, interest rates and real estate prices are relative. It's very easy to make the argument that real estate prices went up during the boom because interest rates were low and because of the availability of easy money.

The lax lending standards have been corrected from what I see. Yes... it's a lot harder to get a loan today then it was in '04 through '06 but I don't see it any harder today then it was in '00 or '01.

Interest rates can be used in negotiating strategies... We've got a new home builder out here in Vegas where their mortgage company is offering 30 year fixed motgages and some really low rates. (30 Year Jumbo at 4.95% for example) in addition to lower prices on standing inventory... pretty safe bet on the futures of those communities where buyers are taking advantage of it because it will equal stability.

In the current buyer's market, you can also negotiate the seller to buy down points on the interest rate. Try doing that two years ago with a new home builder in Las Vegas and they would have laughed at you.

Interest rates are just a piece of the puzzle.

A Buyers market means the buyer is in control in negotiating and basically means if you can't put together a (realistic) deal that makes you feel good, don't buy.

As far as short term goals that apply to Ryan's situation... if you can get a good deal at a great interest rate, who says you have to sell it if you move? Turn it into a rental property which brings up the earlier point I made about a Rent vs. Buy calculation. If it's cheaper to buy then it is to rent... then the property you buy can be turned into a rental property down the road if it's still a buyers market... and you can sell it when it's a sellers market down the road.

Chicago is a phenomenal city to live in with a very healthy economy compared to other cities in the Midwest and I don't see anything that's going to change that anytime soon... especially if they win the bid for the 2016 Olympics. (Lower those property taxes and the prices would go up IMO.) - Sun Apr 20 2008, 16:23

Ryan,

To answer your question about when Indices are reported -- the big one getting the most attention by the media nowadays is the S&P Case-Shiller Home Price Indices --> http://www2.standardandpoors.com/portal/site/sp/en/us/page.t…

---- "The S&P/Case-Shiller Home Price Indices are calculated monthly and published with a two month lag. New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month."---

Instead of writing out a long post as to what it means, I posted a blog about it here in response to a buyer who read the March report in the newspaper ---> http://lasvegasrealestate4u.com/2008/04/06/prices-for-las-ve…

The same fundamentals can be applied to any real estate market.

If prices have remained stable but nothing is selling... well.. you make your own opinion on what's going to happen. Real estate prices in markets don't react on the same day (or even month) such as bad news (or good news) for a stock. It's a little easier to get out of the stock when you find out that the CEO has been using company money to fund $5 Million dollar birthday parties.... - Sun Apr 20 2008, 12:42

Hey Ryan,

There is an old saying with investors -- "You Make Your Money When You Buy" and that's true with real estate as well.

Basically it means buy smart to begin with and find something below market value which is certainly Very possible in a buyers market.

There are sellers out there that can't wait for the average market value at the average days on market and need to sell ASAP. It could be divorce, relocation or their payments being re-adjusted and they need to get out now and that means pricing their property appropriately.

New Home builders need to get rid of standing inventory and Banks have to get non-performing assets off of the books and they'll price accordingly. (Empty homes cost new home builders and banks more then it does for your average seller due to higher interest rates on construction loans and lost opportunity costs such as lending money to somebody who's going to pay their mortgage.)

These opportunities do not come along during a normal or sellers market.

You state that the average market value in the area of Chicago you are looking in is around $500,000. Find something that is $400,000... it's probably out there in the area of Chicago you are looking in and I would definitely look for an agent that understands new homes and foreclosures.

I don't think Chicago is as far along as re-adjusting prices as Las Vegas is (from conversations with Broker/Owners I know in the Suburbs of Chicago) but I think it's coming since they are now teaching their agents to handle short sales and foreclosures. Something that we handle on a daily basis in Las Vegas nowadays. (Over 4,000 short sales on the Las Vegas MLS right now.) I am licensed as a Broker in Illinois but I only know one sub market of about a gazillion for Chicago.

Anyways-- here is a Perfect example of a buying opportunity in Las Vegas-- A foreclosure in Las Vegas priced at $424,900 where the owner originally paid over $750,000 for it brand new back in 2006. (Obvious speculator since the home was never lived in and might as well be brand new.) Current comps suggest a value of around $600,000 for this neighborhood so I think it's pretty obvious that this is a good deal. Especially since there are homes in this neighborhood where people paid over $900,000. In other words... it's the cheapest home available EVER in this neighborhood. You probably know what Progression and Regression means so keep those terms in mind when it comes to values and their effect.

These deals are getting harder and harder to find in Las Vegas in comparison to January since the Las Vegas market is starting to show signs of life again and the low prices are drawing a lot of interest from people all over the United States.

All markets run in cycles. Gold would certainly have been much appealing to buy four years ago in comparison to today but Gold traders will certainly tell you now is the time to buy it. Just like new home builders were telling everybody three years ago the next phase is going up in price so you have to buy now!

You stated that you could rent for $1,200 a month for a home that is comparable to buying a $500,000 home. In Chicago where the property taxes on a $500,000 home would easily be 3/4 of that $1,200 payment, that's a pretty good deal... if in fact that rental is comparable to a $500,000 home which (no offense) seems hard to believe. But then again, there were people buying $400,000 homes in Las Vegas as "investments" even though they would only rent out for $1,200 on the rental market. (Even then, that makes more sense then a $500,000 home in Chicago renting for $1,200 since the property taxes in Las Vegas are so much lower then the counties that make up the greater Chicagoland area.)

What I would really like to know is what area of Chicago you are looking in and have specialists in that market give their case for you to buy with real life examples.... - Sun Apr 20 2008, 12:20

Ryan,

My thoughts, but it certainly makes much more sense to buy (in our area anyways) now then it did two years ago and a lot of other people do to according to a poll I posted a blog about here -->

http://lasvegasrealestate4u.com/2008/04/14/real-estate-menta…

As the herd mentality goes, many who have an interest in purchasing real estate (such as yourself) are waiting to see what is going to happen and are waiting for a magic headline in the media so here is one of my favorite quotes:

“I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading ‘Now is the time to buy.’ ~ Peter Lynch

There is a ton of truth to that quote and it applies to all markets, whether it's stocks, commodities, etc..

My biggest suggestion I can tell anybody right now is to find real estate agents in your area of interest that know how to at least perform rent vs. buy calculations tailored with your financial criteria, have access to foreclosure information and is very familiar with what the new home builders are doing in terms of pricing and incentives. (Obvious values to using an area specialist.)

For some buyers it makes sense, for others it does not. Speculating on future real estate prices is precisely why there is so much chaos and confusion going on today. (Let's face it, there were a lot of people buying Las Vegas real estate in '05 on the basis of '04 apreciation rates and hoping to refinance exotic loans in a year or two. There is a reason why professionals use historical appreciation rates. Professionals also understand the forces in play that cause prices to go up... or down. Easy access to money, employment factors, community amenities, future developments, etc..etc...) Just quoting something out of the paper/media is generally a really good sign that an agent has less experience in real estate then the journalist reporting the information...

For the Chicago real estate market, you might want to check out http://www.chicagobusiness.com/ for clues to what is going on in Chicago -- in combination with the advice of an area specialist more interested in your long term business (and your referrals) then a quick commission.

By the way, I'm also licensed as a Broker in Illinois - even if I knew your specific criteria and financials -- it depends on the area of Chicago you are moving to. Unless I know that area of Chicago (which is an incredbily huge market full of sub-markets) I could not tell you with absolute certainty if it's a good time to buy or not... In other words, opinions from all over the United States are probably just going to confuse you even more.... - Sat Apr 19 2008, 02:02

Enough Said:

http://activerain.com/blogsview/1088277/las-vegas-short-sales-

My mom is the VP of lending for a regional bank and I know EXACTLY what the guidelines are for a short sale. I currently have five escrows in progress that are short sales approved by the lender.... - Sun May 24 2009, 07:12

We have a short sale listing that has been approved by the bank if you are still interested. Obviously we know how to work with the banks since we know how to have them approved in the first place. ;)

Paul Francis, CRS http://www.LasVegasRealEstateHome.com
702.592.3058 - Thu Sep 11 2008, 05:32

Fun.... from my experience of representing buyers in purchasing, I'll give you two night and day examples of the techniques used by a couple of the top REO Listing Agents in Las Vegas (one is the top agent last I checked in closings... and the other one just has a ton of REO listings):

Let's start with the good Example:

Agent #1 who has been in the REO business for awhile -- has the properties cleaned up, minor repairs are often made and in the bad cases, new cheap carpet and paint, multiple photos (decent to good) on the MLS, utilities turned on, priced right on the numbers to start off, does not hold properties off of the market to collect both sides, properties always have a lockbox on with a key, systematically reduces the price with time on the market, staff is receptive when submitting offers and has the courtesy to let you know they received the offer and have submitted the offer to the bank.

I love to show their listings due to the amount of games played is minimal and are handled professionally.... and other agents I talk to tend to feel the same way.

Properties tend to sell faster at a fair price. Sometimes the hot ones pop up and they do get bid up a little. There are always buyers that let the emotions get the best of them.

Last I checked... he had the most closings.

Now the bad example....

Agent #2 - Newer to the REO business... maybe a couple of years of experience, Has a ton of listings... bad photos (or should I say photo), usually ridiculously underpriced and if they don't get enough offers, they will lower the price even further in the attempt to create a bidding war. I always loved (notice past tense) getting that phone call two weeks later after an offer is submitted "To put in your Highest and Best Offer". Utilities are rarely turned on, properties might be trashed out but not cleaned, repairs rarely made. Inspection? Good luck getting the utilities turned on in a decent time frame. In fact, buyers agents are better off putting them in their name for the inspection. Forget about being reimbursed for any minor repairs needed to just perform an inspection.

You'll notice "Loved" because the listings are hardly represented by a professional and when the new ones come up on my radar, I rarely forward these listings to buyers on my search list because most of the time, it's a waste of time. I know several other agents that certainly feel the same way.... which... I've noticed more and more of their properties sitting around at low prices...

And yes... there are plenty of agents wondering how they got the REO business to begin with...

Big tip... follow REO Agent #1 and something to throw in.... collect up the agents e-mail addresses doing the business. (Especially the ones working with investment buyers) In my listings, I have/save the business cards of agents stopping in and see who is out there looking... (After a while... you see the same cards over and over...)

Send them an e-mail with the listing information AFTER the property has been prepared. Somebody has been doing that with me (and other agents) with the brochure view from the MLS the day the property is listed (and ready) on the MLS --- nothing fancy and Agent information screaming "look at me" is not plastered all over it --- which I love because I can just forward it to my list of buyers in the category of home that it falls in.

The agent is not running around trying to do "both sides" of the deal, holding properties off of the MLS, and building a good reputation with buyers agents... which truly is representing the best interest of their client in getting the best price in the shortest amount of time.

Hope that helps.... - Sat Mar 14 2009, 20:52

Interesting Answers to this thread... read Len's last answer...

Specifically:

"You mentioned that there is a pattern of LV agents giving positive and hopeful advice and all other agents saying that these situations are not possible. Yes, there is a pattern! Do you want to know why? Because Las Vegas is the nation's leader in foreclosures. We have such high volume of these situations, most of us here have great knowledge of them. Plain and simple. So who should people believe, the people that see a situation like this every now and then or the people that constantly see these situations everyday (and also do business in the same area as the original poster)? I would go with the locals that see these situations everyday."

Well Said Len...

And as John answered... Probably one that I would pass on also. Short sales get a bad rap because of agents failing to qualify the sellers, advice from "friends" who have never done one... or advice from some of the answers I see on here. (Particularly one non-local answer that is REALLY bad...)

Just my thoughts as I stumbled across this....

No two short sales are the same... and just when you think you know everything... something new comes along... - Sat Mar 14 2009, 20:00

If recent activity on our listings is any indication... it could be time to buy. Several of our listings have now gone into contract with 4 of them going into contract in the past two weeks.

Activity has been very strong... not exactly science but I don't have time to make hypothetical predictions. I think the 20% of the agents doing 80% of the business in Las Vegas would concur...

However... you have to watch out for certain sectors of Las Vegas that seem to still be dropping ... Some areas have held up pretty well but it's tough to say if that will continue when there are some really good deals in other areas that have been decimated in value.

Also.. a couple of communities we track seem to have taken a recent hit in value with the uncertainty of once proposed area entertainment and shopping centers of ever being built...

For Investment purposes... there are areas in Las Vegas that easily cash flow...

However... the job market is not that good and the tourism numbers are showing no signs of improvement. That's the wild card right now... Otherwise I would say buy, buy, buy... - Sat Mar 7 2009, 20:49

"Home ownership is an overated thing and right now you can rent for half the cost of actually owning the same house."

That was true two years ago but today I can find properties left and right that are cheaper to own then if you were to rent. Performing a simple Rent vs. Buy calculation in a particular area makes more sense to me then following predictions/speculation on where the market is going to go.

Funny... pre 2002 people bought in Las Vegas because it was affordable -- the historical appreciation rate was 3% for the prior 15 years before the silly speculation started. I don't really remember too many buyers before then that were obsessed with predictions/speculation on where the market was going.

They were buying because it was more affordable then where they came from, no state income tax, low property taxes and loved all of the cheap entertainment/ having a life options. - Wed Jan 7 2009, 14:16

Jessica,

Did you ever buy? It's interesting to go through old questions and reading the answers. - Sat Apr 26 2008, 13:04