topic Re: Rock bottom in Las Vegas

Rock bottom

wheaten — Mon, 30 May 2011 08:45:44 GMT

Have home and condo sales in Vegas hit rock bottom?

Re: Rock bottom

bdiez — Mon, 30 May 2011 18:00:22 GMT

Hard to predict the market, but the majority of sales are distressed properties (foreclosures/short sales) and the majority of buyers are doing so in cash. Median home sales price is down 13% from last year.

Re: Rock bottom

Lizard — Tue, 31 May 2011 06:55:40 GMT

wheaten wrote:
Have home and condo sales in Vegas hit rock bottom?

NO!!!

Ignore your real estate sale person's "advice" to buy now or prices can't get lower. They've been singing that tune for years and all we've had are lower prices. Expert w/o agenda are saying another 25% lower for LV houses. Worse yet is there is no to low appreciation predicted for the next decade.

As we wait for "recovery" the consumer's habits change and LV will never return to its boom time self. Were $25 martinis and $300 steak dinners every sustainable?

Re: Rock bottom

john72 — Tue, 31 May 2011 14:57:30 GMT

Lizard wrote:
wheaten wrote:
Have home and condo sales in Vegas hit rock bottom?

NO!!!

Ignore your real estate sale person's "advice" to buy now or prices can't get lower. They've been singing that tune for years and all we've had are lower prices. Expert w/o agenda are saying another 25% lower for LV houses. Worse yet is there is no to low appreciation predicted for the next decade.

As we wait for "recovery" the consumer's habits change and LV will never return to its boom time self. Were $25 martinis and $300 steak dinners every sustainable?

I agree with you, but I also will note that theres another factor at play in the Las Vegas real estate market that MAY make it a buy situation for those seeking a low end place. That factor is that prices are so low in some instances, it may not make sense to wait to purchase due to what a person would be paying in rent. For instance, if someone wanted to buy a house that is currently $100K and knew FOR CERTAIN that the house would cost $75K 4 years from now, it may still be best to buy. Such a house would likely cost $800-1000/mo to rent. So over the period of 4 years that person would pay $37-$48K in rent over that time(note the mortgage interest deduction likely would be so low as to not apply). So IMO, this situation is a push. The mitigating factor is that there may or may not be a better supply in the future, as currently this person would likely be competing with cash investors to purchase a home.

Note that this is a VERY limited demographic. I would think it mostly applies to early retirees...someone 55-60years old....who has maybe a government pension, or maybe a couple with a small private pension + social security who have a savings, or maybe made money on selling their home elsewhere and want to move to Las Vegas to retire for the rest of their lives. This doesn't work at all for someone who wants to sell in a relatively short time frame.

Re: Rock bottom

Lizard — Tue, 31 May 2011 22:20:46 GMT

john72 wrote:
Lizard wrote:
wheaten wrote:
Have home and condo sales in Vegas hit rock bottom?

NO!!!

Ignore your real estate sale person's "advice" to buy now or prices can't get lower. They've been singing that tune for years and all we've had are lower prices. Expert w/o agenda are saying another 25% lower for LV houses. Worse yet is there is no to low appreciation predicted for the next decade.

As we wait for "recovery" the consumer's habits change and LV will never return to its boom time self. Were $25 martinis and $300 steak dinners every sustainable?

I agree with you, but I also will note that theres another factor at play in the Las Vegas real estate market that MAY make it a buy situation for those seeking a low end place. That factor is that prices are so low in some instances, it may not make sense to wait to purchase due to what a person would be paying in rent. For instance, if someone wanted to buy a house that is currently $100K and knew FOR CERTAIN that the house would cost $75K 4 years from now, it may still be best to buy. Such a house would likely cost $800-1000/mo to rent. So over the period of 4 years that person would pay $37-$48K in rent over that time(note the mortgage interest deduction likely would be so low as to not apply). So IMO, this situation is a push. The mitigating factor is that there may or may not be a better supply in the future, as currently this person would likely be competing with cash investors to purchase a home.
Note that this is a VERY limited demographic. I would think it mostly applies to early retirees...someone 55-60years old....who has maybe a government pension, or maybe a couple with a small private pension + social security who have a savings, or maybe made money on selling their home elsewhere and want to move to Las Vegas to retire for the rest of their lives. This doesn't work at all for someone who wants to sell in a relatively short time frame.

What we are seeing now are middle class areas becoming a collection of lower income areas where renters dominate. You can see it in some neighborhoods where landscaping, painting, cleaning goes neglected. Plenty of junk cars parked on the street or in driveways. Renters don't have a pride of ownership and owners who rent out want to milk the property for cash flow. These areas will take decades if ever to appreciate and create a solid ROI. Why risk it? As for retirees moving to LV for what? Those $25 martinis, $150 shows? Get real.

Re: Rock bottom

KCinLA — Sat, 04 Jun 2011 15:23:40 GMT

I am one who has at least considered trying to move to Vegas to take advantage of the lower cost housing. When compared to LA, where prices are 5x -8x the ones in LV, depending on location. At least from an affordability standpoint, LV is attractive. I was planning to rent for about a year, get a feel for a neighborhood(s) and if everything works, then look at buying in a nice home - $200K can buy a lot. You would only get a shoe box for that in LA - if you could find it. This would be an investment in a home that I would be staying in for a reasonable amount of time - at least 5-10 years. If I got a nice place, price appreciation wouldn't be a requirement, although it would be nice. Another + is that NV has no state income tax. While not a reason in itself to go, it doesn't hurt.

I agree that there is more room for prices to decrease and most people agree that is the direction of prices in LV and the rest of the nation. I haven't made up my mind yet, but it is high on my list of thing to consider later this year (after the summer heat in LV is over). Till then I will continue to rent in LA. Lets see if we are any closer to a bottom in the LV RE market 12 -18 months from now.

BTW - there will always be the extremely high prices (drinks , shows, meals, etc) on the LV Strip, but that is not where everyone lives. Tourists, conventioneers, and weekenders will keep paying the price.

Re: Rock bottom

Lizard — Sun, 05 Jun 2011 01:45:02 GMT

KCinLA wrote:
[snip]
BTW - there will always be the extremely high prices (drinks , shows, meals, etc) on the LV Strip, but that is not where everyone lives. Tourists, conventioneers, and weekenders will keep paying the price.

KC

KC, the "Tourists, conventioneers, and weekenders" are no longer coming like they used to and those that do make the trip are spending less. That's why so many projects have been scrapped, developers gone BK and I-beam shells of started then stopped hotels dot the landscape. So many are waiting for a recovery back to the bubble days but how can you recover to a bubble and call it a recovery?

LV could be a cheap place to retire and RENT but I would not own. They have an almost endless supply of homes for working people.

Re: Rock bottom

KCinLA — Tue, 07 Jun 2011 17:12:35 GMT

I agree in general. My point was that there will always be people willing to pay higher prices for the 2-3 days that they are in town, even if the number drops. Vegas will never revert to a low cost entertainment destination. I agree that the town is overbuilt. The supply far exceeds the demand for homes.

As for the rent vs. own: It seems to be a good alternative for living. A nice 2 BR rents for $800-1K+ / month. and most homes are in the 120K range(median) for a 3 BR. This is a $500-700/ month mortgage, depending on rate and down payment, and that is before tax savings(but not including ins. and prop tax - so close to a wash). Of course there is downside risk (probably a certainty near term), but overall owning appears to be attractive compared to renting if you are buying for a primary residence, & plan to hold for 5+ years. The main advantage of renting is flexibility(which I am enjoying now in LA). I am just considering my options moving forward. Rent would be the my initial option, but once there I would explore the buy option.

Many homes are now selling below the cost to build new due to the oversupply. Not many builders will build new until this reverses. It will be interesting to see where the situation is a year from now.

Re: Rock bottom

john72 — Thu, 09 Jun 2011 15:32:39 GMT

Lizard wrote:
What we are seeing now are middle class areas becoming a collection of lower income areas where renters dominate. You can see it in some neighborhoods where landscaping, painting, cleaning goes neglected. Plenty of junk cars parked on the street or in driveways. Renters don't have a pride of ownership and owners who rent out want to milk the property for cash flow. These areas will take decades if ever to appreciate and create a solid ROI. Why risk it? As for retirees moving to LV for what? Those $25 martinis, $150 shows? Get real.

Getting largely off topic, but most non strip locations are relatively inexpensive and there are still lots of low cost entertainment options throughout the valley.

Discount GOOD buffets(such as theTuesday Seniors special at Orleans buffet), drinks, and food are available in abundance as is free or low cost entertainment.

Going out to a locals casino, or downtown, you can do dinner for two, drinks, and live music for under $50. Thats the most rock bottom price I know of anywhere.

Re: Rock bottom

crl — Fri, 10 Jun 2011 17:30:32 GMT

Hi KC in La,

I had the same thought process as you,except I live in orange co ca. I took the plunge in late march and bought in Inspirada, Henderson, NV. Great community surrounded by parks and mountains, and only 15 mins from the strip.

In Inspirada Henderson you can buy a brand new really nice KB or TOLL brothers home and trick it out for $200,000.

Good luck , interested if you take the leap.

Re: Rock bottom

crl — Fri, 10 Jun 2011 17:54:34 GMT

KC,

That's actually what made be buy I figured if I could buy much cheaper than I could rent, I'll probably make some money eventually, but more important I'll have a decent house, I enjoy owning in an attractive neighborhood.

I suspect before housing begins to firm, a mechanism that allows for a greater degree of flexibility in the mortgage approval process will have to arise. I have an 810 fica and offered to put 80% down and was declined, no worries I paid cash, but the housing market would be greatly helped if it was made easier for people willing to put a high % down to own. It also stands to reason someone putting down in excess of 50% will probably not default and if they do a lot of the risk to the lender is mitigated.

CRL,

Re: Rock bottom

crl — Fri, 10 Jun 2011 22:19:43 GMT

take a look at inspirada henderson about 98% owner occupied , immaculate condition.

Re: Rock bottom

LasVegasBankREO — Mon, 13 Jun 2011 22:37:31 GMT

The prices are still soft, but the chance for interest rates to rise from the lowest in 50 years will be much more

expensive if you wait and buy when mortgages start hitting 6% and more

David Cooper- Las Vegas

Re: Rock bottom

Lizard — Wed, 15 Jun 2011 14:55:43 GMT

LasVegasWinner1 wrote:
The prices are still soft, but the chance for interest rates to rise from the lowest in 50 years will be much more
expensive if you wait and buy when mortgages start hitting 6% and more

David Cooper- Las Vegas

You are missing 50% of the equation.

I agree rates will rise but in the process it will make homes LESS AFFORDABLE with the higher mortgage costs so by default prices will have to come down so people can continue to qualify and afford a property.

Personally I prefer higher rates and a low home price. If property taxes are based on the purchase price of your home, like in CA, then it becomes an easy decision.

Let rates go back to the 6% level and watch as home prices drop another 25%. That's when I will come to LV to buy a property. No rush.

Re: Rock bottom

crl — Thu, 16 Jun 2011 01:27:30 GMT

If real estate falls another 25%, that would mean that the banks or FNM would have negative equity on their recent loans assuming the buyer put down 20%.

I exect that would make them even more reluctant to lend, perpetuating a further decline, which would also have the effect of increasing unemployment further. So I suspect that housing needs to either stabilize or edge down just a bit, or things could get very bad.

Re: Rock bottom

Lizard — Thu, 16 Jun 2011 06:26:25 GMT

crl wrote:
If real estate falls another 25%, that would mean that the banks or FNM would have negative equity on their recent loans assuming the buyer put down 20%.
I exect that would make them even more reluctant to lend, perpetuating a further decline, which would also have the effect of increasing unemployment further. So I suspect that housing needs to either stabilize or edge down just a bit, or things could get very bad.

So housing prices need to stop dropping just so FNM can stay a bit less insolvent? You are kidding right?

Re: Rock bottom

crl — Fri, 17 Jun 2011 00:11:12 GMT

No just stating a fact, until either there is slightly more flexibility in loan approval or securitisation comes back giving the banks an alternate source to off load their loans other than FNM , bringing enough buyers into the pot to stabilize housing will be a long shot.

Re: Rock bottom

wheaten — Mon, 20 Jun 2011 01:22:48 GMT

When will interest rates rise?

Re: Rock bottom

crl — Mon, 20 Jun 2011 01:51:44 GMT

I expect there are 2 reasons why interest rates may rise, the first being a stronger economy which included lower employment in which case we may be waiting an eternity, or an increasing reluctance by our own citizens and foreign investors to buy our treasuries, to accept such a paltry interest rate when we are continually devaluing our currency by printing more and more money instead of cutting programs we can no longer afford, if we ever could.

Re: Rock bottom

LVhouse — Thu, 23 Jun 2011 04:04:54 GMT

A lot Chinese are buying houses in Vegas now.