Things are not always what they seem. As you may know, we experienced a price spike in Vegas over that past 18 months.
Today, I decided to go look at a condo. The developer/owner converted the apartment complex into condos, as many are here now.
Anyway, this condo is just outside of Summerlin (THE master planned community in Vegas). IMHO, the area declines slightly in this area, not much but slightly. Mainly because the immediate surrounding blocks have a higher commercial density.
The homes in the area are 95% in the 300k+ range with a few in the high 200’s.
The avg sq ft price for homes inside of Summerlin in this area is about $165 (as of last month) and rising.
Now that you have enough background, let me tell you about the condo. It is a no frills place. No awesome views or anything. The condo is not finished in gold. I looked at a 2bd 2bath model that was 937 sq ft. The HOA is $179 monthly. This condo complex had 3 units left.
Avg Price? $182 per sq ft. That is right. You get to pay $17 more per sq ft to live in an apartment (condo). Buy a home across the street and you actually save money.
Why are they selling out? Because the price of the condos are under 200k. So people don’t mind overpaying because the total costs is much less than a home.
The lesson? When you buy a home in an area, buy on the low end. Area meaning a community, neighborhood, et al and not as in a city as that is too large.
They are selling because people are stupid. That is all. Condos are the worst investments, glorified apartments. Or just apartments converted in condos. Remember a lot of people are buying because they think that their 937 srft crap shack is going to be worth as much as a Manhattan Penthouse. Too much speculation, too easy credit, and too many people with more money than brains. This party is not going to last forever.
I found a guy trying to sell one of the units in the place I saw today. It is currently 20k over the current price. That sq ft price just keeps on chugging.
I just got back from another condo in the area. This one was just outside Summerlin as well but still a good area. The price per sq ft was even higher (approaching $200 a pop).
I can understand why people over pay though. Perhaps the best they can do is a 200k home. Not happening in this area. So a condo at 190k, while overpriced on a per sq ft basis, still to them is better than nothing.
Personally I would not touch those with a ten foot pole. They are extremely over priced. A place netting only 800 a month is only worth about 50K to a fundamental based investor. 200K is extremely overpriced and would be nagative. I would not buy for the sake of buying, then it becomes the greater fool game.
Just read the posts here for your answers – EVERYONE wants to know what the next “HOT” area is going to be! Everyone is looking for the quick buck. I invest near home. Slow and steady will win this race because I have GOOD cashflows on my properties. LOTS of things would have to go really bad to change that!
Like I said, Dan…everyone’s looking for that quick buck, big kill…it’s not for me. I have a plan, I’m sticking to it and “slow and steady will win the race”! Although, the overheated Washington, DC-area was VERY good to us before we left!
I invest close to home…low purchase prices, high rents, some long term appreciation…