Las Vegas Real Estate Market....

this is the camp I am in.... the RE market unwinding has to continue until liquidity loosens up. the irony that LIBOR is incredibly low and banks are not lending has people pulling their hair out

it would be very prudent and wise to make sure all offers are based on extremely high cash flow metrics and to take in the consideration of risk...

must factor in RISK.

I know, it's a bad, bad, bad word....

unemployment data correlates highly with the renters market so be prepared in your calculations to carry the notes/costs if need be. How much are you willing to pay for the property relies heavily on how much risk you are willing to assume

You could be right. I think it depends on area though. I know that whenever there is a smoking deal out here in Colorado Springs, there are always 10 different offers on it almost immediately.

Since my experience in Vegas / Phoenix is just word of mouth, I'd have to rely on a trustworthy Realtor to steer me to the good deals down in those areas... And those 2 words don't usually go in the same sentence haha..

- Hakrjak

Who cares? If your not planning on selling in the near future it doesn't matter. Its impossible to predict the bottom; prices could go up!

As I always say a good deal is a good deal. So what if it drops another 10%, you will more than make it up when you sell 10-20 years from now.

All I know now is that property is cheap, and money is cheap. So now is the time to get greedy as hell. If it gets cheaper in the future great, get even more greedy. If it doesn't well, than it was good that you bought!

Actually that house deal and one subsequent deal have fallen through. We're back to the drawing board but still looking!

Today rates were climbing again. I locked in for one of my mortgages. Actually because of the yoyo with mortgage rates, one of my rentals has a lower rate then my personal house, another is almost a point higher then my personal. Go figure.

That fannie mae change to 75% LTV refinance is also hurting folks a bit.

This post got me interested in looking outside my area, after looking at over a thousand vegas properties over the internet with a map by my side prices are on a downward trend and for a 3 bed 2 ba home standard.

Saw houses from $40k to homes to 20 million, very unusual for only 1.4 million residences (population). All these homes are relatively new from a boom that fueled relentless building. However the number of vacant houses and empty pools is staggering (from pictures).

Yet you have extreme opulance in specific areas, saw a gutted house on golf coarse with 7000 square feet with counters, fixtures, and plumbing removed as if vandalized and bank attempting to sell for approx 1.5 million down from a sale in 2006 of $2.7 million. This is a glimpse of a bigger picture. The shell is an albatross - the albatross factor. The bank should be liquidating for $80 per foot if lucky.

My deep feeling at looking at this theme is that there is a reason they call it sin city. Something is clearly amiss not just from a jobs standpoint and the overbuilding. Its appeal is warm weather for retires and significantly lower prices than California on their border, no income tax, etc.

Without actually visiting the neighborhoods personally, it would seem these prices would be propped up even minimally but the sheer numbers of vacant properties indicate it was the speculative capital of the US because of the sheer volume of building of planned communities with homes where 3 bathrooms are the norm!

I am seriously thinking of buying something with petty cash to look into the area over the next few years although I believe the culture is more than just a recessionary drag!

The valuations are decent for a predictable rental market, the question is - is what type of rental market exists?

I think that it's very dangerous to believe that in 10-20 years whatever you buy today will be worth more than what you paid for it. I think that this attitude is what got most people in trouble except that their timeframe was 3-5 years in the future instead of 10-20.

Real estate does not always go up. Purchasing poor real estate just because it's cheap doesn't make it a good deal. You have to look at the big picture.

Examples:

Friend of my dad's bought 40 acres in California in 1975 for $100,000. I took a look at it in 2004 when the market was going crazy. They wanted to give it away. Still not worth it, 40 acres in the desert in 1975 is still 40 acres in the desert in 2009. This is up near Lancaster.

Friend of mine bought a condo in Houston in 1990-92 for $75,000. Sold in 2004 for $65,000. Today still worth about $65,000.

The condo I bought in Scottsdale in 2004. Built in 1980, sold for $60,000. Sold again in 1994 for $30,000. I paid $72,000 in 2004. Sold in 2006 for $165,000. Worth $120,000 in 2009. Person who bought in 1980 had a 14 year timeframe and still lost $30,000.

Real estate doesn't always go up. Even during boom times, some real estate won't move.

This is true, although I do know a lot of guys who made a lot of money in the short term off of appreciation, most of them fell ass-backwards into it and didn't even know what they were doing.

The only appreciation I have ever got off a property I have owned (And I've been in this business now for 8 years or whatever) -- has been appreciation I forced by rehabbing the property to make it the best house in the neighborhood. You always have that option if things are stagnant in your area - just be sure to buy at 70% of FMV or less.

Cheers,

- Hakrjak

Why did they fall through? financing not available? couldn't agree the price with the bank? somebody else offered more than you? properties did not pass inspection? appraisal?

I'm trying to understand the current market conditions... so it would be great if you can mention what happened in these cases.

Well I was talking about a good deal and not trying to time the market. Like most of us I don't bank on appreciation because you can't predict it. Unless its forced...

I think anyone who is investing in real estate today by looking at the market over the last 20 years and expecting the next 20 to be similar will be in for a nasty surprise. Here is a history of US home prices. We could drop a lot further.

Did houses during the great depression even come with electricity in them? haha Much less granite countertops, central AC, and a whole host of other bells and whistles?

Just shows you that our market now is still driven by WANT, and not by NEED like it was 60-70 years ago.

- Hakrjak

My point was not to time the market.

Las Vegas seems to be getting hit far, far worse than my local market so what I know probably doesn't apply. Around here things are not so bad, and actualy picking up.

See

Lasvegasthecollapse.com

Does anyone know about the water status in Vegas and surrounding areas? In speaking with an Arizona resident, he mentioned that Lake Mead was running low. Hence a future water shortage in the upcoming years!

Any truth to this? Is water the next gold?

Water related stocks, WTS, AWR, ION, CUNO, WTCO, PNR, MIL, PLL, ITT, ESE, WTR, SWWC, CWT, UU, SZE, CWCO,