(Originally posted on January 2, 2008)
The economy is the key
It's confusing, no doubt, to read the newspapers or watch TV and see all the gloom and doom about real estate and what a terrible time everyone is having. The truth is, it's not everyone. It's a very small percentage of people who mainly bought between 2004-2006.
Out of that group of people, it's the folks who paid little or no money down AND took out a sub-prime loan which had an interest rate that ticked like a time bomb. It was a variable interest loan that was incredibly attractive due to the fact that rates were so low. Nobody imagined the economy turning, and in turn, those rates going through the roof. That made the mortgage payments, in some cases, double or almost triple. No wonder there are so many foreclosures!
It's the bank's fault, not mine
Unfortunately, many folks don't want to take responsibility for their decisions and blame their lender. Is this unfounded? Not necessarily. There were many lenders who were, shall we say, sneaky - and the buyer was duped. That's very sad, considering how devastating it is to lose your home, especially with a family.
For the homeowners who owned their homes before 2004, some of them also fell into an easy trap. Tapping their home equity. With the "values" of homes skyrocketing, a lot of folks were sitting on a giant piggy bank. With every ad on TV talking about no cost/no fee home equity loans (Countrywide Home Loans ring a bell?), people started tapping into their equity until it was gone.
Once the "values" returned to normal, they owed more than the house was worth. Who these folks blame for that, I don't know. I'm not pointing fingers, I'm just stating facts. With 20/20 hindsight, it's not a surprise Countrywide ended up in the financial condition it did.
A diamond in the rough
Because of these two events, the turmoil that real estate is in now is not surprising. The goal is to see things for yourself, not for the country. Las Vegas is an anomaly - and you have to look at the economic indicators to see where things are going. Last week's New York Times had an excellent article entitled "Las Vegas Wins Big" - talk about eye-catching! You can read the article in its entirety here:
The best quote in the article is, "And then there is Las Vegas, which just goes to show how much it continues to defy its prophets of doom." If you tie the information presented here, along with all the construction underway on the Strip, this is your sign!
There are going to be 39,000 plus jobs being added to the Las Vegas economy over the next year and a half. These people have to live somewhere, and they've already started to arrive. The glut of homes we have now will not last forever. In fact, I'm betting that come Spring, we are going to start seeing the changes begin.
We're number one
Yet another major, positive headline is that Nevada is again the number one growing state in the nation. We lost that honor last year to Arizona for the first time in 19 years, but we've got it back again. The crazy thing is, our growth has slowed down due to the lack of any casino/hotels opening. Folks, next year we have a ton of new openings, and they continue for years to come. Consider that another sign. Here's the link to the article:
A small voice in your head
While I don't have the circulation of major newspapers or CNN, I'm in the trenches every day. If you're in the market to buy a home, start looking now. That window of opportunity is getting ready for movement, and when it's gone, you'll kick yourself. Waiting for the big headlines will be too late. At the very least, we can watch the indicators together. Just remember, Vegas is not the country at large, so local news and events bear more weight than national news.