Da Truth wrote on August 23, 2008 05:27 PM: Yeah, here's how you come up with 8 months of supply:

24,000 homes for sale on MLS / 3,000 homes sold on MLS and FSBO

Apples, meet oranges.

Are we to believe that all the FSBOs actually sell every month? Which implies that they have a much higher success ratio than agents, so that 6% is really throwing money down the drain. Wonder if GLVAR agrees with that?

Perfect storm... puhlease!

Doom and Gloom wrote on August 23, 2008 09:45 AM: RB - If you think out of state investors don't exist anymore - you are very much mistaken. And although media makes it sound like it is nearly impossible for people to get loans - it really isn't that difficult. As I stated before, just ask the 3173 people who closed on homes last month...surely they weren't all cash buyers. A lot of people still have a lot of money and can document their income.

And yes, because Las Vegas is such a worldwide destination, the jobs will be filled with those who speak Spanish, and many, many other languages from around the world.

The number of Casino jobs that have been lost in the past year will be nothing compared to those that will be created in the next 15 months...but then we'll also need more doctors, police, firefighters, teachers, grocery store workers, accountants, and on and on and on. Many will not be able to purchase. Many will. Those who cannot document their income or qualify for a loan can rent a home from me and pay off the mortgage. With home prices where they are now, investors can make the rent cover the entire mortgage!

RB wrote on August 22, 2008 10:28 PM: "It is the perfect storm for another run up in prices."

Interesting theory.

Above minimum wage jobs + FHA loans that require 10% down + higher prices(inflation) = perfect storm?

"Encore, Aliante Station, Caesars new tower, City Center, Cosmo, E.S. Cannery, Fontainebleau, Golden Nugget expansion, Hard Rock Expansion, M Resort, Marriott Springhill Suites, and Planet Hollywood Towers" are all hiring and transferring from within and the NEW positions will be filled by those that speak Spanish. The casinos are laying people off right now. In order to get these government back loans they have to have documented income for 2 years. So, see you in 2011.

The previous storm was creating by the FED (Greenspan) with loose lending standards and OUT OF STATE INVESTORS...none of which exist anymore..

Doom and Gloom wrote on August 21, 2008 09:51 AM: Weniki - Keep in mind that the current "comps" in your neighborhood are foreclosures...fire sales by banks looking to get properties off of their books. The "comps" are artificially low because of the distress sales.

I've used the example before, but let's say you live in a community of 100 homes. Regardless of when you or your neighbors purchased, at one time you all believed your homes were worth $400K. Foreclosures hit 10% (for a high, round number) of your community. Banks fire sale those 10 properties for $250K to get them off the books. If I knocked on the door of the 90 other homes in the community and told them I'd buy their home for $250K - how many would do it? What, nobody? Then what will it cost to buy your home?

Now think of the same scenario on a larger scale...the entire Las Vegas Valley...except it isn't 10% of homes that are in foreclosure. So when we eat through the foreclosure inventory, what is going to happen?

I've tried not to mention any new casino openings, because I believe there are a lot of positives happening in Vegas right now, but then take the scenario in my 1:55pm post and add Encore, Aliante Station, Caesars new tower, City Center, Cosmo, E.S. Cannery, Fontainebleau, Golden Nugget expansion, Hard Rock Expansion, M Resort, Marriott Springhill Suites, and Planet Hollywood Towers all opening in the next 15 months! That's a huge shot in the arm, and there will be a ton of people who will move here to not only work in the casinos, but then it all filters down from there. And they'll need to live someplace.

It is the perfect storm for another run up in prices.

weniki wrote on August 21, 2008 07:29 AM: excellent point about the resets and what they are based on doom and gloom. i wish my arm (and it's not subprime or alt-a) would reset now, based on the 6 month libor + 2%, i'd be at 5.13. or 1.245% lower than where i am now. i can only hope that will still be the case in 2011 when my arm will reset, because i'm way underwater based on comps right now. about a hundred grand, so i won't be able to refi into a 30 year fixed. unless of course you are right about the housing shortage, then perhaps we'll all be looking back at this and sighing with relief. either way, i can more than afford my payments, and i bought my house to live in. sure i wish i would have waited till now to buy instead of when i did in 2006, but i didn't and now i just have to ride it out.

Rick wrote on August 21, 2008 03:36 AM:

mark wrote on August 20, 2008 11:05 PM: sorry for error but we bought in march 08

mark wrote on August 20, 2008 11:01 PM: sorry we bought march of 08 not 07

mark wrote on August 20, 2008 10:58 PM: Im not a know it all but I retired in 2001 moved out here and was lucky to buy a home for 330 and then sold it for 705 August of 2005.My wife and I rented untill this March of 07 and bought a home in a better development for 435 the home has over 1/4 acre,, pool, spa , this home was on the market 20 minuets and the asking was 396 a bidding war yes bidding war started and we won at 435. When we closed our president of the HOA was sending letters every week telling us about our infractions weeds,brown grass after just moving in so at the next meeting I told that Im sorry about the grass not being green but it is coming back unlike the 200k she over spent in 06 and to think she is a realtor.

Doom and Gloom wrote on August 20, 2008 10:37 PM: LVHSDREB - I appreciate your response...not too often do I get a reply with some actual substance...

Anyway, I would agree about the inflation concern if we were still talking about home prices where they were at the height of the market.

If those who were priced out of the market starting 2004, were smart and saved some money, they are now finding home prices very affordable...regardless of what they're paying at the pump...Today, $250K REO home with 10% down for around $1650/mo...A couple of years ago, the same house at $350K and 10% down (not that people were putting 10% down!)...around $2300/mo.

Have you seen what kind of house you can rent at $1200-1400/mo? Renters are buying. There are also investors (not flippers or speculators), who will put 20-30% down and make that $250K house cash flow...yes, there are also investors buying Vegas properties right now.

Regarding Alt-A's and ARMs yet to reset...Let's say someone had an ARM...based on MTA with a margin of 3.3%. When it reset 12 months ago, MTA was at 4.9%, plus the margin, means they were resetting at 8.2% The MTA is currently at 2.85% - so today it would reset at 6.15%. MTA is also still heading down. My point is that those ARMs that are currently resetting will not have nearly the huge jump in price. If the Alt-A's were smart and learned something from the sub-prime, they have also been making more than the minimum payment...yes, there will be Alt-A foreclosures, we'll see how many. Those ARMs based on LIBOR are almost 3 points less than a year ago.

We can agree that we disagree - but I see a lot of signs that could be the perfect storm leading to another housing shortage in Vegas.

Read All Comments