I just got a copy of the Greater Las Vegas Association of Realtors (GLVAR) third quarter report. Move over Newton and Einstein- we’ve discovered a new law of the universe- according to the GLVAR, UP is now DOWN. Check out their table featuring their fourth quarter trends:
For every single category, if the numbers are down, they say the trend is expected to go up. If the numbers appear to go down, they say the trend is up. I was puzzled by their predicted trends, so I decided to scroll down to the articles by the experts for enlightenment.
The first article is "Failure to Communicate" by Ken Fears, Manager of Regional Economics. According to Fears:
Currently demand has been driven to the side lines as buyers wait for mortgage rates or prices to moderate and bring monthly payments in line with what they can afford. But with interest rates high, 6.41% in September of 2006, and unlikely to fall further, prices must come down further to entice buyers back to the market. If this stalemate between buyers and sellers takes too long, buyers could leave the market all together, which would require further concessions b y sellers to corner the remaining buyers. In short, a pin prick now is better than worse later.
If I am reading Fears correctly, he is saying the prices must come down for sales numbers to increase. However, according to the chart, prices will go up and so will the number of sales. Is this a "Twilight Zone" moment, or am I missing something?
I’m not getting anywhere with Fear’s article, so I turn to "The Forecast" by Lawrence Yun- he’s the Senior Research Forecaster- perhaps he can clear things up for me. He states:
Our forecast is for prices to begin increasing in many U.S. markets from mid-2007 if not sooner- primarily due to price reductions in combination with job gains.
I see… price reductions will cause prices to begin increasing… It looks to me like these guys studied economics under M.C. Escher.
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The country is now 300 million strong and overseas well healed people are still coming to America. The baby boomers will continue to accumualte wealth either by cash out of 401k’s at 59.5 or by inhertience money.
I remember in Cal when homes were at 500k in the 1980′s and everyone said watch them go broke nobody is going to buy these homes but somehow homes sold and resold the sheer numbers of people were there to buy.
At this time and place concessions of resale and new homes in terms of price will happen just to reduce inventory like a car dealer reduces its inventory. The big question how much? does a dealer reduce the car from lets say 50% to 60% off to move inventory most likely not.
A mfg and the banks would rather go out of buiness then fire sale the industry because they all know unless the product is a safety no matter where nobody wants it even for free the sheer number of people in the market for a car will evevtually buy and thus the inventory will correct.
Yes in housing it works the same way, banks and contractors all want their money and a person who has invested time and money in their resale home also wants to be paid. The big question is how much reduction does one expect to get the market moving.
What is reduced in Topeka doesn’t mean it will happen in Malibu?
Look at what you can afford, don’t look at property beyound your reach and budget, hoping for a BMW at a Chevy price it doesn’t work that way.
Many people are trying to offer on homes that is not in their budget, what you should be doing is offer on a home in your budget and make a deal, they are out there.
As for the expensive priced homes in this country there are about 5 million people at any given time who are not worried about price they want to live in prime areas and their concern is that their investment is safe and sound in a secure location.
I keep stressing that interest rates are still low and banks want to sell homes, the job market is still good in most places and if you live where the jobs are hurting then you shouldn’t be looking at any thing good or bad just stay put and hope your prospects get better.
A real crash in housing is dangerous, the housing industry piggy’s back and crossover into many a jobs and industries.
Investors your done in this market, this post is for people who want a home not a investment to turn a huge profit you had your fun and if you are stuck now no problem, just look at what you really paid and work up from that what is wrong with making 6% on your investment still better then a 5% cd you and the buyer will both be happy.
Our forecast is for prices to begin increasing in many U.S. markets from mid-2007 if not sooner- primarily due to price reductions in combination with job gains.
Absolutely priceless! He expects prices to go up due to prices going down.
These guys have become caricatures of the classic sideshow huckster.
NVmike-
Life must be easier when you don’t need logic to make your points- I don’t know how they can say this stuff with a straight face.
What passes for “logic” with these guys:
(1) If prices are going up today, they have “momentum” and will continue going up tomorrow
(2) If prices are going down today, they must turn around and go up tomorrow
(3) If prices are stable…
Well, you get the picture.
What should be important to all of us is not what a bunch of real-estate hucksters are saying, but how the real-estate people who matter are putting their money where there mouth is.
Case in point: the homebuilding companies. The number of homes these companies build are *real-money* bets on where the market is going, and not just hot-air predictions that are biased in real-estate agents’ favour.
And you can be sure that the homebuilding companies have hired very capable, *non-biased* business analysts which guide them on these mega-million dollar decisions.
Considering the awful tumble in housing starts by homebuilders this past week, it is no secret where the homdbuilding companies think the real estate market is headed.
So, don’t fall for the Real-Estate-Agent hype!
Oct report from Las Vegas: down, way down …
“Home sales in Las Vegas, which have tumbled by double-digit percentages in recent months, fell again in October. Sales for new homes and existing homes both dropped sharply. There were 2,934 resales in October, down 35.7 percent from the same month a year ago, Home Builders Research reported. It was the seventh straight month the number of sales has fallen.”
[ http://tinyurl.com/yduegu ]
NVmike -
Thanks for that find. Author Hubble Smith has mentioned Doom and Twist a few times in the past.
NVMike-
Well that should make prices go up for sure! : )
Thank you to Tracy, who emailed me this link. This is an editorial that originally appeared in the Review Journal. It was one of the better articles I’ve seen on the Las Vegas market recently. It had been on the sidebar, but the news comes at us so fast, things rarely stay there more than a couple of days. I actually Googled Neil Schwartz to send him a fan letter- something I don’t often do with realtors!
http://www.knowledgeplex.org/news/215009.html
Go back and read the 1st and 2nd qtr reports, they are even funnier. All along they keep predicting higher prices, lower inventories, and few days on market. Total comedy.