Paul Francis - Las Vegas Real Estate & Summerlin Homes

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