Remember, bubbles only exist in markets you are not in. That is why so many people get hurt. I wouldn’t touch Las Vegas with a 10 foot pole! If you didn’t buy three years ago, forget it.
apples and oranges.
10,000 re-sale homes in Vegas is a 3.5 month supply. 10,000 homes in Nowhere, Utah could be a 10 month supply.
A Note on jobs. You can not go by median earnings for Las Vegas and expect to know anything about what people are making. When I was a dealer, over a decade ago, my job paid $6 per hour. That equates to $240 per week, $960 per month, less than $12,000 per year. $12,000 per year is what would be factored in to come up with earning figures. The free meals equated to a savings on food costs too 
So where was the problem? Well, I made at least $100 per day from tips (many times $130-$180), day in and day out. This $100 was tax free and not reported. $100 per day is $500 per week, $2000 per month, $24,000 per year. So you think I am making $12,000 per year, but I was really making over $36,000 per year.
I mention this because outsiders either don’t know this or understand how it all works. That is one of the things that make this place hard to get a picture on from the outside. So you look at median earning numbers and think it is $24,000, when in fact it is much higher. Also because the money is tax free, it has an even bigger bank for the buck. Remember, we are the only state in the Union with a hostile stance towards the IRS. There is so much money under the table here is it insane. It is the only place I know of where you could make $50k+ in tax free money annually.
We have a huge glut of new developments right now and still sell 3,000 re-sales each month. These new developments are being sold one by one and at some point the glut will be back to regular and re-sale numbers will go higher.
In a demand side market, there will be about 7000 re-sales on the market. Realtor.com is not accurate at all though. There are more listings than 10k, it is about 12k right now. Also it does not show you that the property you are viewing is under contract.
Did you look at how many new developments there are, what their pre-sold numbers are, and what new developments are planned? This is a very important part of the story. Las Vegas is a very dynamic place and there are moves going on daily.
Many are being displaced because their apartment is being converted to condos. This means they either must buy the apartment they live in, find another apartment (complexes are disappearing), buy a home, or rent a place. The result will be possibly higher rent, more renters looking for condos and homes, and more property sales.
BTW, I am NOT advising anyone to come buy here. Do or don’t, it is your money. It is a good place to live, it will go up, and it is 100% speculative. So if you are looking for some regular cash flow right now, go elsewhere. If you have speculative cash, as any investor past the lower income levels should, Vegas is one place that could give you a boost.
You have to ask yourself, how is a $300k 3/2 1800sq ft home overvalued? 60% of our new residents come from California, where homes in lesser desired areas are more expensive.
BTW, Qualcomm just broke ground on a 256,000 sq ft facility in North Vegas. Will be open in 2006 and add more jobs. They citied the number of knowledge workers in Vegas (We now lead the nation in migration of these workers) and that they believe Las Vegas is the place to be.
As to bubble, maybe-maybe not. I would only ask someone like say Dan, what do you really know, specifically, about Vegas. Am I blind? Show me please. Anyone can say wages are low, real estate is high blah blah. Need specifics please. I am ready to learn. Like I said, this is speculative as far as I am concerned.
If you are a flipper, go somewhere else. This market is buy and hold. If you try to flip, your home will be sitting on the market for up to a few months (unless you sell it for a very nice discount). It can be a good market to buy because some people are desperate to get out.
Hudson County New Jersey shows 120 listings, it is the most densley population county in the state, population 608K. Only 120 listings on Realtor.com.
What city in Utah is more stable than Las Vegas and why?
I’d like to hear the answer to that question.
I’ve researched Utah & many counties have actually depreciated aprx. 4% in the last 12 months.
Vegas continues to defy logic.
-Infowell
Infowell
Isn’t Vegas full of speculators though? Just that demand could prop it up higher than it should.
“Isn’t Vegas full of speculators though? Just that demand could prop it up higher than it should.”
Spculator’s create volatility–which is good for large returns. However, it works in reverse too…if one’s not EXTREMELY careful. My concern is building permits in relation to estimated population growth in Vegas. You alluded to the supply & demand ratio in one of your more recent posts.
While Vegas is too rich for my blood (I prefer to catch a wave like a surfer…not too soon & not to late)–I’d be more inclined to invest in Vegas than Utah (with the exception of Park City).
I’d like to hear more about why anyone thinks Utah will become an emerging market…I’m all ears.
-Infowell
I see St. George Utah going up still but other then that I could not agree more with the post about it going down in price or very little appreation!
I don’t think anybody said that Utah was going to have any appreciation, let alone “major” appreciation. I just appreciate the aspects of Utah for cashflow properties. This is just my opinion based on what others I know have said. I have no hard facts-yet. When I do-if I do, I will be sure to share. 
On a $300,000 house in Vegas, with 10% down, your negative will be closer to $300 a month. If we anticipate 11% appreciation, thats 33,000 a year devided by 12. Monthly appreciation $2700. So you give me $300 a month and I give you back $2700 a month. I will ask you to wait 2 years before I give you the appreciation, but 11% is pretty low by Vegas standards.
The key to all this is your tax bracket. If you are in Cal, the Fed and State puts you about 35%. So the write off of the negative with the depreciation will save you a bundle in taxes.
Apopreciation and tax write off. Very good investment
LasVegas
You are also counting on appreciation to bail you out of that mess. What if the appreciation is a lot lower or zero or even negative. When you speculate like that you are no longer investing, your gambling. Even though gambling on appreciation is probably a better bet than sticking all your chips on black.
LasVegasNewlist-
Could you elaborate how you come up with negative $300/month w/10% down on 300k purchase? I’m looking at a property in the SW area but after running the numbers I get negative $600 and I’m not sure if it will rent all the time. Curious what your assumptions are in your calculation. I was going on that same thinking (the original premise of this thread–BTW thanks again to everyone for chiming in–great input!) that is considering taking a negative hit each month, writing it off (yes, am in 35% bracket), taking depreciation, and coming out ahead, albeit on paper, through appreciation. Clearly this is not for everyone–just wanted to sample the varied and sometimes strong reaction this strategy evokes. We can debate all day and night about the VEgas market, but in the end it comes down to a gut check. I think there’s a lot of juice left, just need to be comfortable running a loss vs. waiting it out/looking elsewhere.
Thanks
Well, if you put 10% down on a 300k (average) home. You are left with a 270k mortgage. Your PITI on a IO type loan will be around $1700 monthly or as high as $2100 depending on your loan specs.
Let’s look at the $1700.
If you buy your home in a good area, it will probably rent out for about $1400. There is your $300 loss. For 300k, you will probably get a 3/2 1500 sq ft home in a good and growing area (IE SW). The lot size will be small. Because land is at a premium here now and dwindling, developers are trying to cram as many homes as they can into the space they have.
As to appreciation, the area I live in has been going up on average of about 10% for 7 years now. For years homes in Vegas were dirt cheap for no reason. Now they are taking on the value they deserve. How much more? You make the call.
I really would love to hear about Utah from a rental prop side. I was looking at Houston and would like to know if it is better.
so are you including any rental property expenses in your $300 per month negative?? little things like vacancy and collection loss(some tenants don’t end up paying rent), repairs, refurbishing costs for when new tenants move in, reserves (for roof, flooring, appliances, furnace, etc), water, trash, sewer (if you are going to rent out a SFR it’s always a good idea for the owner to pay for water because tenants are notoriously cheap on watering lawns if they have to pay for it. also a good idea for owner to pay for a gardener if they want the landscaping to stay nice).
a negative isn’t always bad in a rapidly increasing market(as long as it continues to increase). however, a negative can be very difficult psychologically in a flat or decreasing market.
I’m confused. You first say “Buy and Sell” while the market is correcting… You then mention taking all the money from the “Buying and Holding”… So is it buy and sell or buy and hold??
Here’s a philosophy.
There will ALWAYS be another property. People are always dieing, getting divorced, going broke, re-loacating… whatever. Wouldn’t you just HATE to find out you put all your resources into a negative cash flow property only to find out the winner was right around the corner???
And you can’t buy it cuz your dough is tied up in a loser.
This was the mistake I didn’t make.
I cash flowed 30 properties with little luck and was getting very discouraged. Property #31 was a guy who wanted to retire and move to Vegas. that was my first property and a great experience.
Just say no to negative cash flow.
Jeff
Yes, but WAY below market while it is correcting, and then sell for below market. That is the best way that I see things. Then after the prices are down, and you have made some cash from buying low and selling, take that money and (or no money even) and buy properties that will cashflow and keep them in your portfolio. Then you can appreciate cashflow AND perhaps some appreciation.
Again, take that for what its worth.
Happy Investing,
Ryan
Vegas is still going up!!! I bought my condo 8 months ago at 157k. Now in the same complex others are going for a little over 200k. mmmmm…I’m wondering should I fold or hold. Cali condos are going easily over 350k. ERRRRRR!!! >:(
i think i’m qualified to answer that. i’m closing on my 6th & 7th houses there next month. so far every single house i booked 4-6 months before closing has atleast 10% equity in it. i’ve invested in various
neighborhoods on SLC - west jordan, south jordan, saratoga springs and herrimen. all on the bad
“east side” which is quite cool actually. low vacancies, good population and job growth.
the ones in Saint George have 25% and are still being built.
you guys are just jealous!!! ;D