According to Larry Murphy, President of SalesTraq, in the In Business Las Vegas, "There never was a bubble, and there isn’t a bubble now. We don’t see a bubble in the future." "In Business" describes SalesTraq as monitoring real estate trends. However, on the Salestraq website, the company describes itself as follows: "It’s like an MLS for new homes!"
Murphy cites rising prices in Las Vegas as proof against the bubble. The new home median price at $337,250 is up nearly 13 percent for the year. The message that new home prices still going up in Las Vegas flies in the face of the bubble (conspiracy theorists). stated Murphy.
Mr. Murphy’s thesis that a price increase precludes a bubble is less than convincing. What would have been more convincing is if prices had been stagnant. Bubbles have a front and back side- prices go irrationally up before they come down. Prices have continued to rise in many markets across the country, as sales have dropped off. This has generally been a phenomenon caused by entry level buyers being priced out of the market, and larger homes being sold.
When the inventory increases along with the prices, the law of supply and demand starts to kick in. The excess inventory starts to exert downward pressure on prices.
The rush to buy those pricey homes in Las Vegas is slowing, as inventory is rising. According to numbers from Bubbletracking Blogspot, there were 23,155 listings in Las Vegas as of 7/24- a record number for the area. The previous record was set in 1995 with 20, 217 listings.
As listings have gone up, sales have declined. Sales dropped in June to 3097, down from May’s 3,161. For June of last year, the figure was 4,079 for a 24% decline year over year- this combined with the rising prices is following the trend of other bubble markets around the nation.
Not everyone in Las Vegas real estate wears "bubble free" glasses. Eric Woodsen, a local realtor, gives this assessment:
As of July 19, 2006, 16,295 single family homes were actively for sale in Las Vegas, North Las Vegas, and Henderson. 1,987 single family homes went under contract. If no new homes were put on the market, it would take about 246 days for a home to "absorb" the market, or just over 8 months to sell a house. (16,295/1,987=8.2 x 30 days in a month = 246 days) What does this mean to you, the consumer? People have to wait to sell the house, or lower the price to sell it faster. I believe we will see a general price reduction throughout the valley which will definitely impact the overall market in the next 6 months. There were 3,969 condos/townhomes for sale and 502 went under contract in the last 30 days. So, it takes roughly 237 days to sell a condominium in Las Vegas, or about 7.9 months.
Note that Woodsen said these sales times assume that no new homes come on the market- given all the ongoing construction in Las Vegas, those times are bound to lengthen.
Another realtor who does not seem to equate bubble talk with conspiracy theorists is Deborah Zupancic. Zupancic describes the current sales trend in Las Vegas:
Single family home sales decreased 1.1 percent from May and nearly 24 percent from a year ago. Condos and townhomes sales slid 22 percent to 592. However, prices jumped 5 percent in June to $315,000 based on 2,527 sales. Another 4,630 condos and townhousess are listed for sale an 82.7 percent increase from a year ago.
It’s becoming increasingly harder to deny that Las Vegas is a typical bubble market, but that has not stopped some like Larry Murphy from trying. More real estate professionals are recognizing that they lose credibility by denying the obvious trend.
Join the dark side and embrace the bubble Mr. Murphy. Bubble talk may seem like a conspiracy now, but in the end, you will see that a business model based on actual market conditions is better for the market, and better for Las Vegas.
Business Week – page 32 – LAS VEGAS ISN’T FEELING SO FLUSH. . .. showing signs of slowdown. . .Home sales donw 39% this year, cancellations up 89% and unsold inventory up 26.5% this year. . .and attendance is down 5% this year . . .and THAT is Business Week saying this!!!
good thing Mr. Murphy has set things straight for the rest of us. I kinda figuredtwo REO’s and one pre-foreclosure on the same street may be a sign of trouble. Clearly I’m mistaken. It is very normal to have three foreclosures on one street, that’s how it should be!
Because Real Estate Never Goes Down (TM)!
Prices have Nowhere To Go Except UP UP UP UP UP (TM)!
(During the last crash, 1/3 of the units in my 30-unit complex ended up in foreclosure and/or HUD Section Eights (welfare bums). We even had squatters paying cash rent under-the-table to the foreclosed owners and a dealer setting up in the front breezeway. While all this was going on, the crooked HOA got more and more snobbish about “This Is A CONDOMINIUM! WE CAN’T HAVE THE WRONG KIND OF ‘PEOPLE’ HERE!” Apparently drug dealers, slumlords, and welfare bums were “the right kind of people” so long as they paid extra squeeze to the HOA…)
The analysis presented in your blog is overly simplified. And, disprespectful.
A bubble requires a lack of demand, not just excessive supply.
The key is that demand is still very strong in Las Vegas.
First, Nevada has led the nation in job growth 13 consecutive quarters (and Las Vegas is 71% of Nevada’s everything). If you want to judge the health of a housing market, the first statistic to look at is JOB GROWTH!
Second, we have continuing in-migration of 100,000 people per year.
Third, we are becoming one of the retirement capitals of the US primarily because our prices are LOWER than places like California and/or areas in Florida.
Finally, you’ve completely overlooked such simple things as E* (new urban villages), rising land prices and a whole lot more.
It’s not the contradiction in your blog that bothers me as much as the tone.
Simly stated, you might want to offer some respect to a man who has been calling this housing market correctly for the last four years.
Mr. Bottfield-
We have been in a bubble for the last five years. “Bubble” is not synonymous with “downturn.” It has a front side, and a back side. We have hit the top, and are starting down the backside.
All kinds of speculators and investors have correctly predicted the market going up for the last four years. However, to deny the existence of a bubble, given current conditions is irresponsible sir, and misleading.
It is always my intent to treat my fellow man with respect. However, many Americans are facing financial ruin, or will shortly, because they believed real estate professionals who told them “There is no bubble!” “Real estate always goes up!” It is those statements I ridicule- they are falacious- and it is my intent to prove them as such.
There are other “Bubbleheads” if you will, that ridicule the “flippers.” These “flippers” are in general not institutional investors- they are regular people who took out HELOCs, or used their good credit to buy investment properties- on the advice of folks like Mr. Murphy- and now they are in over their heads.
I don’t have the heart to ridicule those people. I hear from them- they put up posts, they write emails. Because they believed people like Mr. Murphy- they are facing foreclosure and financial ruin.
I am well aware of the strong growth experienced by both Phoenix and Las Vegas, as well as other cities across the nation. I also am weary of a real estate industry that wants people to focus on only half the picture- sales.
Inventory is growing at an astounding rate- in Las Vegas as well as across the country. This is happening because sales are failing to keep up with demand. The big issue here is EFFICIENCY- the ability of the market to liquidate inventory.
Cite for me any number of how STRONG the Las Vegas market is sir, and I will cite an inventory number that is STRONGER.
I have been grateful for real estate professionals, such as the Las Vegas realtors I quoted for the article. They recognize that the secret to dealing with this market is to acknowledge the problems and deal with them.
I happen to love Las Vegas Mr. Bottfield- I visit several times a year. Instead of enjoying the lovely view from my room on the Strip last time though, I was horrified at the rate of construction that continues in Las Vegas.
I was horrified, because at the moment, every unit built cheapens the value of every existing one.
The demand is not there for the number of units being built- hence the problems with projects like Spanish View Towers. You can argue that Rod Yanke isn’t as seasoned as other developers in the area- but he wouldn’t have had the funding and completion problems had he started one year earlier.
Mr. Murphy has been successful at what he does, and people have made money listening to him. If they believe his “no bubble” comments though, they won’t make money now. Mr. Murphy will only hurt his credibility if he continues to deny current market realities.
Remember, Twist, this is Vegas.
Casino Town mentality: Put Your Money In The Slot, Pull The Handle, And GET RICH! (JACKPOT HAS TO COME UP! IT HAS TO! IT HAS TO! IT HAS TO!)
(My parents made the mistake of retiring in the Bullhead/Laughlin area; what I didn’t see about casino towns for myself, I heard from them.)
Ever wonder how those casino hotels are able to offer such cheap rooms and buffets? And why they have suicide-cleanup businesses on speed-dial?
Mr. Bottfeld,
I have been in either mortgage, commercial real estate, real estate appraisal for over 15 years. I also lived in las Vegas from 2003 thru 2005.
Las Vegas has experienced much growth, I will give you that. However, 95% of the growth has been at the low end of the pay scale, jobs that pay minimum wage or just slightly better. Most of the people working in casinos are uneducated (as is common in a service economy). Many are also from third-world countries. While these people do have jobs, they are effectively priced out of the market for the typical home in greater metro Las Vegas. Thus the limited/diminished demand part of the formula does in fact exist.
Many of the people that move to Las Vegas have low incomes to start with, and then there is the large number of criminals who hide out there to evade arrest in other states. In a two-year period, there was a murder across the street from me, two murders around the corner (home invasion) and multiple people killed within three blocks of me (due to drivers high on crystal meth). And I lived in one of the top five neighborhoods. There are not enough police to go around the suburbs. And without good police enforcement, property values always go down as crime goes up – see South Central L.A. and most of SoCal for an example of the change just a decade makes (1990 to 2000).
I have personal evidence of the lack of disposal income (of the lower wage earners). I have a few friends in the insurance industry. They are practically bankrupt and will soon be giving their homes back. Why? Because the average Las Vegan cant afford life insurance, so when the cost of living goes up, the first thing the few people that did afford the insurance do is to cancel. Keep the car, the home and keep trying to impress others with money you dont actually have, but cancel the things that actually protect your family – this is how almost all of the inhabitants of the Southwest have been behaving for the past four years.
And while there is a large migration into Las Vegas, just as my family did, most people leave within five years and go elsewhere, so there is about an 80% migration out as well.
There is nothing but desert between Las Vegas, SoCal and Phoenix, so there is plenty of available land. Anytime the U.S. needs more money, they just sell off some more BLM land. Since there is no shortage of land, then there is no increased demand for the existing housing, since any new population growth can be met with new, cheaply built homes.
The sad truth of the matter is that the interest rates have been made artificially low since 2002, which is when the current cycle should have ended (for proof see the SEC’s tracking of real estate cycles since year 1921). All cycles last between 5 and 7 years, unless there is specific meddling by the Federal Reserve.
You appear to either be dishonest or lacking in knowledge of the above issues, and maybe you shouldn’t be holding yourself out as a real estate professional.
Mr. Culpepper-
You made several excellent points. The Las Vegas boom did generate, as you say, more low paying jobs than those at the top of the scale. A high percentage of people do move on, and there is a transitory element in Las Vegas that creates problems for the city.
The “no more land” issue is a red herring. They were using that one in Tokyo as an excuse why home prices would only go up- but prices fell for 15 years after their bubble burst.
It sounds like you had a horrible experience in Las Vegas, and that can influence your view- I’m sure it would mine. I would like to say a couple of things though, to beat the rush to defend Las Vegas and Mr. Bottfeld.
Las Vegas has some great neighborhoods- my friends in Las Vegas have all loved living there. Crime rates are not out of line with other cities it’s size.
http://www.infoplease.com/ipa/A0004902.html
Phoenix, like Las Vegas, has a high percentage of people who move on (I believe the figure here is about 30%) There are a number of factors that work into that. Certainly there are those that don’t like the heat, and the newness of both areas means a lack of family ties- jobs change, people move on. Net migration, as I’m sure Mr. Bottfeld would point out, remains strongly positive.
As for Mr. Bottfeld himself, his name is well known in Las Vegas development circles. He is mentioned in the above article, along with Larry Murphy. I did not quote him though. He is executive vice-president of Marketing Solutions- which provides research and does consulting in the real estate market. He is frequently cited when people mention Las Vegas real estate.
That being said, Mr. Bottfeld’s comments were disingeneous- a “Las Vegas sleight of hand” if you will. Demand in major western cities, although declining, remains at historically high levels. It is however, insufficient to move the massive inventory that has been accumulating. What puts downward pressure on a market is when supply EXCEEDS demand- no matter how high the demand number is, and that is regardless of other factors. Other factors may ameliorate, or slow the downward pressure, but cannot completely counteract it.
Mr. Bottfeld is a well educated professional, and is aware of this fact. I would say he was guilty of well- downplaying it.
In his line of work he encourages growth and development in the Las Vegas area. Analysts in the pay of their industry, promote their industry – and that is something that consumers shouldn’t lose sight of.
Thanks again for your post- I’m sorry Las Vegas didn’t treat you and yours well.
Debi AKA Twist
Glad to see my response generated such heat.
First, never, but NEVER extrapolate from your own experience. It is the first rule of research.
Now, I’ll grant that numbers are NOT always reliable, but in this case you have overlooked sales of NEW homes, which are still at RECORD levels. Will this continue? Probably not … but at least until the first of the year. In other words, we’ll beat the 38,000 new homes sold in 2005 in 2006. Now, that’s an accomplishment.
The resale market sold about 55,000 units last year and will sell about 50,000 units this year. That’s the third best level in history.
The key here is that through the first half of the year, we have dropped (depending on your source) 7-8% in new home permits (which means new home inventory is, indeed, beginning to fall). If you want to understand what is happening in the resale market, check the new home market FIRST.
Second, the number 25,000+ in inventory on July 24 came from where? GLVAR? Was that the whole county or the Vegas Valley? Just what are you measuring? And, what is the source. Because, frankly, I can’t find it. The fact that I’m in Paris on assignment may have something to do with that … but I still can’t find that number. WHAT IS YOUR SOURCE?
Third, and most important, the salary information mentioned by one of your blogsters overlooks one of the critical components of the Las Vegas marketplace — the shadow economy. Someone who parks cars for a living can make $150,000+ annually. If you want documentation, I can give it to you. A cocktail waitress can net $125,000+. Chances are if you live in a fancy neighborhood, one of your neighbors is one of those “low end” salaried people.
Fourth, the newspaper story to which you referred barely touched the entire analysis, which took us some two hours to present.
The point I’m making is simple: Some areas within the community are, indeed, having difficulty. But, a bubble impacts an entire market (just ask anyone who lived in LA from 1989-1995) — not just sections of a market.
Real estate is getting soft all over the USA. But, right NOW, Las Vegas AS A WHOLE is doing reasonably well. It will be the third strongest sales year in our history. It will also be a record new home sales year. THAT IS DEMAND with a capital “D.”
Just for the record: Las Vegas has the highest percentage of college graduates in its in-migration of any city in the USA as of the last census. And, the figure that 80% leave is … balderdash. Get me a source for that number.
In fact, what I’m pointing out as disrespectful is the fact that you are questioning opinions offered with facts to back them up with opinions developed with suppositions.
Give us your facts and then we can make a valid assessment. If I’m wrong, show me.
Mr. Bottfeld,
Time will tell …
Tracking Las Vegas/Clark County
Population 2005: 1.8 million
04/04: 2,992
04/05: 10,493
07/05: 13,276 (3,937)__07/04: (4,177)
08/05: 13,722 (4,145)__08/04: (3,977)
09/05: 14,289 (3,654)__09/04: (2,922)
10/05: 14,925 (3,226)__10/04: (3,159)
11/05: 14,784 (3,042)__11/04: (3,140)
12/05: 14,368 (3,024)__12/04: (3,074)
Population 2006: 1.89 million
1/30: 15,744 (2,233)___1/05: (2,426)
2/28: 16,978 (2,271)___2/05: (2,508)
3/31: 18,418 (3,167)___3/05: (3,864)
4/30: 19,871 (2,807)___4/05: (3,649)
5/31: 21,168 (3,161)___5/05: (3,847)
6/30: 22,479 (3,097)___6/05: (4,079)
7/10: 22,755
7/20: 23,057
7/31: 23,221 (2,501)___7/05: (3,937)
8/03: 23,211
the inventory numbers from ziprealty and include SFR/condo/MFR/land parcels. (sales volume) from lasvegasrealtor.com
Mr. Bottfeld-
It is somewhat difficult to answer your concerns, as you seem to have hybridized Mr. Culpepper’s remarks and my own. As I hope you noted above, I did not agree with Mr. Culpepper in every particular, any more than I agree with everything you said. I feel no more obligation to defend his numbers, than I do to defend yours. (You posted here too, remember?)
In fact, what I’m pointing out as disrespectful is the fact that you are questioning opinions offered with facts to back them up with opinions developed with suppositions.
What you seem to be offering as my “suppositions” are Mr. Culpepper’s views on the economy and move out rate of Las Vegas. The only fact you seem to be disputing from my original post is the listing numbers. (You did not agree with my conclusions, but I believe that was the only fact.) As that number came from ZipRealty, and therefore the MLS, I am not guilty of “opinion based on supposition” as you seem to imply.
I will leave it to Mr. Culpepper to defend himself, if he chooses to do so. My views are not universally popular-therefore I rarely waste my time in personal defense. The odds of you and I reaching a meeting of the minds on this forum are remote- and argument a waste of everyone’s time. I will show you why I believe that all your numbers of new home sales strength merely demonstrate that Las Vegas is still on the front side of a speculative bubble- they do not demonstrate that there will be no backside. I offer this not by way of argument, but by your request.
First- as a research scientist, I can tell you that the first rule of research is not “Don’t extrapolate from your own experience.” The first rule is to not rely on analysis provided by others. Be assured, I don’t. However, I am not a realtor; I do not have access to the MLS, other than the info available from Realtor.com and ZipRealty. I am therefore sometimes forced to use secondary sources.
The resale listings number I used came from Bubble Markets Inventory Tracking- It gives me kind of a “one stop shop” for inventory numbers. If you want to use their sources, you can go to ZipRealty. Current number from ZipRealty is 23,515- this includes entire Las Vegas metro- including Henderson. For sales numbers, LasVegasRealtor (also a source used by Bubble Tracking) is an excellent resource as well. (I’m sure you have your own sources, but others will undoubtedly want to double check these figures.)
For other statistics, I found the following quote from Barron’s interesting:
The latest housing numbers certainly suggest that the end (of the bubble) is getting nearer in Las Vegas. Sales of local homes fell nearly 24% in June from the same period in 2005, while the number of listed homes rose nearly 32% from a year earlier, to a record 20,026, according to the Greater Las Vegas Association of Realtors. The statistics on condominiums and townhouses are even more telling, with listings up in June nearly 83% from a year ago and sales down 22%. “We’ve got a dramatic increase in inventory,” says Jack Woodcock, founder of the Las Vegas realty brokerage Prudential Americana Group.
“We’ve got 400 to 500 houses in the $500,000 to $600,000 price range that have never been lived in and are sitting on the market for over a year.” In fact, a full 40% of all the area’s homes for resale aren’t even occupied, according to First American Title Co. That’s usually a sign of a market that has been inflated by speculative fever.
I’m assuming the 20,026 number varies from mine for two reasons- one they are using numbers from one month ago, and two- numbers are probably not including Henderson, etc.
The article brings out a couple of interesting points. One is the large number of homes that have never been lived in. It sounds suspiciously like a large number of new homes were purchased as investments, and the market has failed to absorb them- indicating the likelihood of a new home slowdown in the near future.
The other is the disconnect between what are strong new homes sales (as you correctly stated) and the cooling resale market. As the pool of buyers has dwindled, resellers are unable to compete with builders like Centex, who can offer incentives to keep their market share. The number of incentives being offered by builders is also an indication of weakness in the market- builders weren’t being so aggressive back in 2004- they didn’t need to be.
As to the population issue- the Barron’s article also addresses that:
At first blush, population trends would seem to bode well for the Las Vegas economy. The Center for Business and Economic Research at the University of Nevada, Las Vegas, estimates that about 7,000 people a month move to the area, whose current population is put at 1.8 million by the county planning department. But the research center’s numbers reflect only the influx of people, not the outflow. And by some estimates, nearly one of every three people living in Sin City eventually moves out.
I checked the new sales numbers for Las Vegas, and your new sales projections for 2006 appear reasonable. Let’s consider the implications of those numbers though. Let’s assume that 7000 moved to Las Vegas in June- assuming that no one rented, no one bought a resale home, and no one moved out (which are rather unrealistic assumptions, don’t you think?) then with sales of 3,764 units, that would be .54 homes/person. A remarkably low ratio, given the average American household has 2.59 people.
Let’s consider another scenario- one that is still optimistic, but a little closer to reality. We won’t use Barrons 30% move out figure, let’s use a more conservative 10%. That leaves 6300 net move ins, and we’ll assume 25% are renters (probably a low figure, but we’ll use it for these purposes) leaving 4725 people. In June 2,510 single family homes were sold (We are assuming no one buys a condo either, or that all condos belong to tourists.) While I imagine some of those people were families, let’s say that all of them were single (allowing them to buy the maximum number of houses.) That leaves 2215 people to buy those 3,764 new homes, for an average of 1.7 new homes being purchased per person. Given that people DO live in families, and there ARE permanent residents in condos- that 1.7 new homes/person undoubtedly significantly underestimates the ratio.
By any number you care to name then, immigration is insufficient to keep up with the building boom in the Las Vegas market. It is apparent that sales of new homes are continuing to go largely to speculators. Rampant sales to speculators in Phoenix have resulted in a Phoenx vacancy rate of 44%. Barrons gave a number of 40% for Las Vegas. If that figure is accurate, we are dealing with similar numbers.
I am puzzled that you would claim that to understand the resale market, you must check the new home market first. Your indication that building permits are just beginning to fall, and that you expect new home sales to remain strong through this year, (In spite of a slowing resale market) would indicate that new home sales are a lagging indicator of the resale market, and therefore not the place to start.
As to your concerns about level of education, salary, six figure cocktail waitresses- I’m afraid that discussion will need to be saved for Mr. Culpepper. I have made no claims as to the per capita income in Las Vegas, and have used the more conservative 10% move out figure, when I suspect the number to be closer to 30%, as per the Barron’s article.
This is the bottom line as far as I am concerned- this is a crisis of excessive inventory–an inventory that cannot be cleared quickly regardless of income, area desirability or any other factor. That is true for Las Vegas, for Phoenix, and for the nation.
We can throw numbers back and forth all day Mr. Bottfeld- and undoubtedly neither of us will have any satisfaction. I agree with John’s comment above- “Time will tell.” You are welcome to come back in January- if prices and sales haven’t dropped off significantly- you are welcome to have your own post to gloat.
with it taking an average of over 8 months to sell one’s property and billions of interest-only mortgages adjusting (and amortizing) over the next year, there is only one answer. bubble trouble. just ask yourself this, how many of your friends could afford their homes with traditional mortgages taken out today on the current values of their respective homes?
Mr Bottlefield must know that just now mainstream press has spread the word of declining sales. We on the blogs have known this was occurring, and even flat price stability is a loss due to closing costs, inflation, etc.
So then, real estate as an investment in Las Vegas, bubble crazed Reno where 350 houses sold in July and we have 6 thousand on the market, Sacramento where buyers are “on strike”, is a BAD investment. It is like buying a stock that stays at 10 dollars for five years. Better to buy a bond and invest in that stock in the 4th year. That is exactly where real estate is now. And the knowledge is spreading like wildfire and the crash is on. Any investor who continues to throw good money after bad will end up just like the guy who bought dot com stocks on the way down.
This news makes its way even into stronger markets. When we see the bubble bursting in Sydney Australia, one of the most expensive cities anywhere, where houses are now worth 40 percent less than they were worth in 2003, and when we see what is happening in Miami and San Diego, can San Francisco or Orange County be far behind? Investors will run scared. It puts a damper on all of them, and if it doesn’t they are incredibly stupid. The fundamental imbalances that are causing the crash are being joined by the psychology of fear that will exacerbate the crash. It is inevitable.
The Merrill Lynch economist who says that we will revert to the mean no doubt understands the psychology and the economics of the current market. And what is the mean? Well, it could be the start of the bubble in 2001 or it could be the start of inflationary price increases that go all the way back to 1992. Depends on the fear and on the economics. Mr Bottlefield, with due respect to you and the rest of the real estate shills, be afraid. Be very afraid.
Very interesting blog, I got the link from the story in the reviewjournal. I live in Las Vegas and we moved here in December 2004. We sold our home on the east coast and decided to rent as well as look for something to buy. We are still renting! I pay 1500 dollars for a home that a flipper brought for 550K. I have done the calculations many times but it is not advantageous to buy. In addition, prices are falling and I seriously doubt that the homeowner can even recoup what he paid for. In addition, there are houses for sale everywhere and in open houses agents are desperate to tell one that ‘any offer will be considered seriously’. A home in a gated community nearby was listed 2 months ago for 1 million 50 thousand and sold for 850K. I am just an ordinary person but I see the market crashing. And the realtors, the National Realtor associations and people like Larry Murphy are to blame for false predictions to drive up sales for their own interest groups. I am sure at some point, there will be lawsuits against these unscrupulous characters who obviously misled everyone. I say this because we (as ordinary citizens) knew that there was a bubble in 2004. How could they have missed this?
Mr. Culpepper:
I am not sure where you live, but if it is in one of the top neighborhoods, then someone seriously sold you swamp.
I live in a regular non gated neighborhood in the NW part of the city. We have had no shootings near us, no home invasions near us, no drug arrests near us and that I got from the LVMPD crime search. The most is some family fights and maybe 2 stolen cars (but that happened even when we lived in Idaho).
I suggest you move to another neighborhood.
As long as Las Vegas has jobs, people will come. We did. And there are many professionals that move here, not just minimum wage earners. This is why in most cities, 100% of the population do not own homes.
As long as it is more affordable than California people will come. I met someone the other day from Oxnard that spoke of what a great deal it would be to move here.
The current house glut is from too many permits (greedy builders, to many flippers trying to dump and a bunch of greedy people trying to make a 300% profit. I had a neighbor who bought their house for $180,000 in the end of 2003 and refused to sell it for less than $420,000. Gee you wonder why it wont sell.
I remember trying to buy a house in the beginning of 2004 and the builder sales reps looking over at me above a newspaper, with their feet on the table saying they would only put us on their list if we got approved by their lender (which is illegal). So now I have noo problem with builders losing money.
Supply will at some point return to normal and even if the market average drops 25%, many house prices will still be higher than they were pre 2004. Those that bought at the height (which was about 40% investors) may go upside down. That is the reality of life and I dont feel sorry for them either. It is like playing the stock market. Dont bet what you cant lose.
The only people in trouble now in Vegas are the flippers who bought 15 homes (there was a lady that did that) and the poor folks that actually do have to move for a reason and cant sell due to the glut.
As for the rest of us Vegas homeowners who bought in 2004 with great rates (5.375% fixed 30 year)and steady jobs, we live in our homes and consider them a place to live and not a money makers.
Most everyone have hearty attacks about bubble this or bubble that are investors who cant sit out the next 10 years in their house(s).
Linus:
I dont really see a true “crash” here. Just a hissing with a lack of appreciation for the next two years. The hissing is the sound of overpriced homes. Even with price reductions many of those homeowners (except for the flippers caught at a bad time)would still make a “profit” in the end.
Instead I think you will see houses pulled off the market and a settling of the prices (low appreciation). You may even see forclosures for stupid people that bought 15 homes (some lady really did, got ARMS, 100% financing or took out $200,000 in equity when they got greedy.
Yes builder prices have gone down in cost per square foot, but take a look at the lot sizes. Where homes were on .15 to .25 acres, most new homes are now on .04-.09 acres. Land is still the cost in Vegas more than building materials.
But I think you will probably never see pre December 2003 prices again sadly enough. Wait anouther year or two and I think you will see the new bottom of home prices.
You also know what I think is funny?
Speculators are the ones who drove up prices in Vegas/Phoenix etc, making houses less affordable for those of us that had to move for jobs and find places for our families to live.
Now the same speculators are the ones whining and worrying about the “bubble” because they cant all dump their houses and are worried about their profits.
My thought? It is justice.
We bought our house to live in and grow in while we work for the next 20 years. I dont care if the prices go down and then go up a few percentage points a year for the next 10 years.
All the investors who are going to lose their shirts because prices go down 15-20% over the next two years? I laugh at the payback.