On The ‘Back Side Of The Hump’ In Las Vegas
A reader posted this Review Journal article. “A slowdown in the housing market is rippling through Las Vegas, with layoffs by home builders, mortgage and title companies and other real estate-related occupations. Don DelGiorno, president of KB Home’s Nevada division, said the company has reduced its local staff by about 10 percent, though it would be difficult to nail down an exact number.”
“‘Sales are being challenged and different builders are feeling different kinds of pains,’ DelGiorno said. ‘With in-migration and jobs, we’ll move through this inventory when people are buying their homes to live in. Now there’s a concept.’”
“Dennis Smith, president of Home Builders Research, said of the layoffs: ‘It’s normal in this part of the housing cycle we’re in, the back side of the hump. Anytime you have that, there’s going to be some cutbacks. That’s the result of added staff that was put in place on the upside of the hill.’”
“Washington Mutual, a home mortgage company with a large presence in Las Vegas, notified 1,400 U.S. workers last week that they would be cut from the payroll as part of a ‘cost-saving strategy.’ Most of the layoffs were in Washington and Florida.”
“Nevada Title Co. has reduced its staff by about 25 percent since peaking at more than 300 employees during the refinance boom of 2002 and 2003, President Robbie Graham said. ‘We’re a locally owned company. We have to stay lean and mean,’ she said.”
“Another field seemingly poised to shrink through attrition is real estate agents. ‘There’s going to be a lot of them cryin’ the blues,’ Smith said.”
“The Greater Las Vegas Association of Realtors doubled its membership to about 15,000 over the last five years as people from all walks of life saw an opportunity to cash in on the housing boom. ‘It was a new challenge,’ (realtor) Debbie Smith said. ‘It seems like you come out here and everybody’s in the business. Realtors, title companies..everything revolves around real estate and development.’”
“Although sales of new homes in Las Vegas slowed 9.1 percent in April, the median price rose 18 percent to $133,117, statistics from Las Vegas-based SalesTraq show. One major difference that’s keeping new home prices up today from last year is that almost every builder is offering buyer incentives, ranging from a few thousand dollars on entry-level homes to $100,000 on luxury homes, SalesTraq President Larry Murphy said.”
‘Nationwide, home sales are expected to drop 6% this year, and sellers in many markets are already dropping their prices. That may prompt more agents to turn to open houses as a last-ditch effort, Vredevoogd says, after years of avoiding them. ‘In a buyer’s market, if you are a seller you want to try everything.’
‘In many markets, that includes hiring a professional stager to make your home look brand new, or at the very least, tastefully appointed. Gail Mayhugh, a professional home stager and owner of GMJ Interiors in Las Vegas, said she has seen an uptick in her business as the once-hot housing market has cooled.’
‘All of a sudden the agents are calling me for open houses,’ she says, and many are willing to spend part of their commission to make their property stand out. ‘There were 19 of the same floor plans for sale in one neighborhood,’ she recalls.’
OT but have you been watching the stocks of homebuilders? Yesterday they were off about 3% across the group. But today, as they started to tumble again, a strange thing happened. Just as precisely as if someone had thrown a switch, at exactly the same time…10:30…the angel visited and pulled them out of their nosedives. But the angel went away and they started dropping, dropping again. But, once again, the angel came to their rescue and reversed their dives. But the angel’s power seems to be waning. The stocks really want to go down in spite of the angel’s best efforts. Check the charts of the homebuilders and then the non-homebuilders. Such a difference.
Wonder why this pattern happens so often with the homebuilder’s stocks and not the others….
http://tinyurl.com/ovpm8
Let’s just assume, for the sake of argument, that Washington’s economic leaders are tuned in to the risk that the housing market will lead the rest of the economy into a downturn (not a hard conclusion to draw, given that the subject is frequently discussed in major news sources all over the planet these days). Widespread recognition that the housing market was crashing could feed back into a gloomy outlook and a slowdown in the broad economy, as housing is the engine of growth that has fired the US economy since late 2001. If top government economic leaders had a means of surreptitiously propping up the public HBs share prices in order to avoid a clear indication that the housing sector is crashing, then why would they not exercise this windowdressing technique?
The smoking gun is the bizarre tendency of HB share prices to remain bouyant in the face of overwhelming evidence that the air is loudly and rapidly hissing out of the housing bubble. I do not claim to see the gun, or to even know what kind of gun it is…I just see the motive and the evidence that a gun is in frequent use, especially with regards to FNM’s share price.
And please refrain from labelling me a conspiracy theorist, unless you have a convincing alternative explanation for all the gunsmoke (”normal competitive market behavior” is not a convincing explanation for why stock prices go up on bad news releases).
As an often frustrated HB short I think there are easier explanation besides as PPT. I think there are shorts covering and GFs who see a stock “below it’s book value” because they aren’t discounting the land/land options… not too mention “it’s way off it’s highs… it’s a good buy!”
They have gone down in the long run.
For nefarious explanations, I like the share buybacks better. The HBs, as a gorup, have taken to propping up their own stocks. No need for a government agency to do it for them.
Invest accordingly.
“For nefarious explanations, I like the share buybacks better. The HBs, as a group, have taken to propping up their own stocks. No need for a government agency to do it for them.”
If HBs engage in share buybacks while selling off their options in droves, and then the stock tanks (a la Enron), then won’t investers hang them up on a post like Lay and Shilling?
You mean like RYL issuing debt today while at the same time buying back its own stock? The HBs have negative cash flow, even with record profits, and are borrowing to prop up the share price.
I don’t know what investors will do. All of this is publicly visible, unlike Enron so they really can’t say they were hiding anything.
But yes, they are all borrowing money and buying their own shares. I guess that would make sense if they thought business would improve so maybe that’s their defense.
Check the “options” for the homebuilders. Very tightly controlled small group of stockholdrs manipulate the options.
Pulte is number 1 capitalized homebuilder, and it is worth only $7 billion dollars. Not huge in the investment world
That reminds me — does anyone know whether the HBs have engaged in the currently very controversial practice of “backdating” options (aka a very handy way to steal money from your company)?
Plunge protection measures kicked in at 2:15pm ET — the market did not like the Fed’s heightened inflation concerns which became evident with the FOMC meeting minutes release, but the angel swooped in just as the DJIA was on the brink of plunging below its initial level for the day. Once the heavy weight of fundamental reality finally pushes the DJIA below 11K, I predict all hell will break loose. But so far, the PPT has been able to bear the market up before it dashed its foot upon any stone.
KB Home is down 30% year to date. Whoever is protecting this stock from a plunge is not doing a very good job.
“KB Home is down 30% year to date. Whoever is protecting this stock from a plunge is not doing a very good job. ”
Yes, exactly. The HB stocks have been getting murdered since last fall. It’s only been within the last week or so that they stopped freefalling on every piece of bad news. As a group, they’ll fall further, but perhaps not as quickly as we’ve seen since 01/06. A few might even go bankrupt. My first pick for that dubious distinction is WCI.
I hope you are right about WCI. It and BMHC are my biggest put positions currently.
Actually, the HBs have been getting hammered pretty consistently the last few weeks. HOV, TOL, RYL all warned and lowered guidance. Last Thursday and Friday were a bit painful, but it seems like every other day has been an up day for me lately.
Winjr why do you say WCI. I looked at their management and if memory serves they have at least one C level officer who is a second generation big RE player from DC and also at least one C level office that is from a big public accouning firm. They look competent / credentialed
And I can’t see the propping up of the HB stocks as having any effect on the unwinding of the housing bubble. People don’t even know when their mortgages reset let alone the current stock price of the HB’s.
Median price is only $133k? Thats only $1000/month in PITI or so…
I wonder how much of the buble in Vegas was limited to McMansions and Condo towers?
The median price is NOT $133k. I just searched on the las vegas mls and there’s only 101 listings out of 21,000 that have list prices below $130,000.
It’s a typo.
I agree this 133 number is BS
Las Vegas
Homes on MLS: 17,728
Median Asking Price: $369,000.00
Total Asking Price (all homes): $8,632,558,933.00
Census(2000) Median Price: $145,255.60
make that 21,798 if you add in condos (17,728 single family)
layoffs of RE pros ?
dude everyone is in RE when it’s 10% of total employment. A 20% cutback = 2% reduction in employment = recession up the shthole
Has to be a whole lot more than 20% and RE employment has a very high local multiple. Sales at Walmart send money to Arkansas and China leaving low wages locally. Home sales leave the money in the economy and induce appliance sales and all the rest.
Sales at Walmart sends money to China which gets recycled into purchase of US govt bonds and MBS, putting downward pressure on our long-term interest rates (and particularly mortgage rates). But this symbiosis seems to be falling appart as of late, as long-term T-bond yields have taken flight. Not a great time to be long risky assets, as it is hard to justify owning equities when you can get a higher yield on a risk free payment stream.
While I would phrase it in more polite language, I agree with your premise; the shear cutback in RE employment is going to hurt the economy. I look at the number of people in LA/OC who are employed for real estate transactions at it astounds me.
Why weren’t these jobs made more efficient with the internet? When I buy (in a few years) I’ll get my mortgage over the net, my buyers agent will be via the net (to get a refund, I am willing to pay for a “neutral negotiator;” but paying a full 3% would be crazy. We’ve already seen Ameriquest and Ammes (sp?) layoff in this area. I expect more soon.
I strongly believe that due to efficiencies gained in distribution (via computers/internet) that the employment will drop below the 1996 level… Crazy that 40% of all the jobs added in Cali since 2000 have been “RE transaction “related white collar jobs. Just crazy.
Once upon a time homes were a place to live. But I have a feeling they are like boats right now; what are the two greatest days in a Boat owners life?
1. The day he/she buys the boat.
2. The day he/she sells the boat.
Sad that real estate has become the same way…
Neil
Any job that is essentially filling in “template” forms is gonna go the way of vinyl LPs. I have wondered for some time what is propping up the need for “parasitical middlemen” (i.e. realtor) when you can advertise on the internet, show the home yourself, and fill in the forms yourself. 6% to sell your home is a LOT of money.
Long overdue….
You’re wondering why??
Here’s two of many reasons-
1.) Time
2.) Reams and reams of case law.
And in most markets, buying a house is a very tough decision for the homebuyer–the largest purchase of their life that will effect them and their family for years and years and years.
MOST of the time (note that I say “most”) you need a salesman to sell your house, with person to person contact.
Now the 6% thing is another story. Is the job (of a broker) worth paying for? Yes. Is it worth 6%? For a $100,000 house? Maybe. For a $1,000,000 house? No.
1. Time….you MAKE time for the most important financial decision of your life. Having bought and sold doing my own research, contacts, etc. via the internet I KNOW it can be done.
2. Case Law….sorry, don’t buy it. This is EXACTLY why this whole process needs an enema. How does a RE agent (picture the 20-something blonde) help here? If you mean the forms…the entire automated process and associated forms would be verified by RE lawyers every step of the way during setup. That would handle the 95%. Agreed that the “problems” encountered by the 5% would need legal attention. Sadly, lawyers are here to stay.
Seattle-
I’m not saying it can’t be done. As I told a high power attorney once who was bitchin about my fee. “Your sitting here complaining about my fee, How much do you make per hr for consultations?? Him: $1,500.00 Me: So what would you rather be doing answering calls from lookie loo’s and running around chasing paper and showing appt’s for nothing or sitting behind your desk collecting your fee’s all while paying me a fee that’s tax deductible against the fee’s you’re collecting, Him: Asshole, where do I sign”. It’s all relative some people have better things to do with their time or they can’t accomadate buyers and their whims of when they want too see a property. Especially in a down market when your looking over your shoulder too make sure you have a job at the end of the day.
In response to #2 if it was that simple rest assured that zillow would be more than a realtor sponsored billboard.
Seattle
I’m not saying it can’t be done. As I told a high power attorney once who was bitchin about my fee. “Your sitting here complaining about my fee, How much do you make per hr for consultations?? Him: $1,500.00 Me: So what would you rather be doing answering calls from lookie loo’s and running around chasing paper and showing appt’s for nothing or sitting behind your desk collecting your fee’s all while paying me a fee that’s tax deductible against the fee’s you’re collecting, Him: A$$hole, where do I sign”. It’s all relative some people have better things to do with their time or they can’t accomadate buyers and their whims of when they want too see a property. Especially in a down market when your looking over your shoulder too make sure you have a job at the end of the day.
In response to #2 if it was that simple rest assured that zillow would be more than a realtor sponsored billboard.
I would have no problem paying a reasonable ammount — say, a total of 3% — to a real estate agent who is extremely knowledgeable, saavy, hard-working, and, most of all, is genuinely looking out for my best interests as the buyer. The trouble is, I think “Suzanne” is the embodiment of the type of agent most hapless buyers or sells are going to end up dealing with: a harpy looking out solely for the interests of herself, first, and her R/E company and industry, second.
I agree about the boat comments and would like to add:
1. The day He/She buys the boat
2. The day He/She sells the boat - or- it sinks
As for my dad, He had 4 great days with his last boat
1. The day He bought the boat
2. The day the boat sank (while docked)
3. The day He sold the boat
4. The day the boat sank again (with the new owner on it!)
“my buyers agent will be via the net (to get a refund, I am willing to pay for a “neutral negotiator;” but paying a full 3% would be crazy.”
Buyer’s don’t pay commissions. So how do you figure to work this out.
No Buyers Agent, The selling agent gets 6%. If all thats left are experienced agents a refund is not in your future. I for one have and would tell a moron asking for a refund to take a hike. Why pay someone to do business with you? LMAO. By the time you buy, if the market tanks as planned the real sharks will be offering bonuses for good deals why waste time on a moron chiseling you for a refund. Wake up.
Um…I believe Neil was referring to refunds from the buyer’s agent. There are sites and realtors who openly advertise they will give you up to 75% of their commission. Essentially, you find your own house and let them keep 25% of their intended commission for representing you once you decide to make an offer. For me, this is a much more palatable value proposition IMO when I finally decide to buy. By the time the market tanks, I think good deals will be available to be had for everyone who takes the time/energy to look, not just for the ‘real sharks’.
I understand what he was referring too. But those discount brokers will be changing their tune very shortly if they are even in business at all when the real deals appear. I’m witnessing a help-u-sell shutter as we speak.
Example: The builders are already offering 6-7% plus buyers incentives. Trump is offering that plus gold or platinum cuff links I think to get his stuff sold. In order for sellers of resale homes to compete they are going to have to do the same thing. The dynamics of this market are going to change significantly. In order to survive it as an agent. Giving away 75% of your commission is going to go the way of feeding the squirrels for the ex-seller very very quickly.
Income,
I’ll have to respectfully disagree with you on this one. I think that with buyers becoming more educated, the value of RE agents becoming reduced more and more with the internet, and the ever-decreasing volume of sales at current prices, I’d argue that the only way for a buyer’s agent to keep any commission at all is to give a big chunk of it back to the buyer. Of course there will be exceptions to this, but I don’t think there will be enough to get rid of rebate-giving buyer’s agents. In fact, I seem to remember ziprealty reporting relatively high growth/volume %s compared to other companies - and they credited it to the 25% buyer rebate program. I guess only time will tell.
Yea, we can disagree. I really don’t expect anyone to see what I see coming on board. I view the whole situation a lot differently. Buyers have always been educated every few months some consumer advocate beats the drum of what to do when buying a house in some magazine or newspaper. The vast majority just haven’t figured out how to take emotion out of the equation. Untill that happens I see more of the same behavior. After 89 when people were spending the night on the streets in sleeping bags waiting for an opportunity to buy a home in a new development and the market crashed so swiftly. I thought I’d never see that type of behaviour again. Well guess what. It happened again. I’ll say it again especially after attending a bbq this weekend. I’m beginning to seriously doubt the internets impact on buyer behaviour. When you partcipate in a forum or blog like this one sometimes you make the mistake of thinking that everyone is on the same page. Untill you have conversations with people in real life.
Here’s why I doubt your theory about buyer’s agents. We are reverting back to a time when listings are king. With all the product coming on board and the inherent disloyalty of people. It becomes a losing proposition to mess with too many buyers if you want to eat regularly. In the coming years the only agents who will spend a lot of time with buyers will be new and inexperienced.
The best way to describe it. Take this market and do a 360 and you’ll see what’s on the horizon. I see a lot of folks here screaming about fraud. Wait untill the real fun begins and the evening news starts to include images of the F.B.I. raiding Real Estate and Mortgage offices. I’ll say it again for a experienced agent. The last few years have been no fun. The party is just about to begin. And the things you are speaking of are not on the horizon.
“We are reverting back to a time when listings are king”
Couldn’t disagree more. I’d argue listings were king, and now we are reverting back to a time when Buyers are king. What agent wanted to be a buyer’s agent when houses were selling at ever-increasing prices like hotcakes? You would have to be the listing agent in order to guarantee your commission. Similarly, we are going to get to a point where the only way to guarantee a commission is to be the buyer’s agent.
“It becomes a losing proposition to mess with too many buyers if you want to eat regularly. In the coming years the only agents who will spend a lot of time with buyers will be new and inexperienced.”
Unclear as to what you’re arguing here; are you arguing agents shouldn’t go after more buyers? or arguing they should go after more since only inexperienced agents will spend a lot of time with them? Either way, I think I agree with SeattleMoose; I don’t mind at all paying a realtor for truly value-added services. However, I do mind paying them based on a fixed % of gross sales price when this price goes through the roof, and arguably, the work realtors do is the same or even less. Steven Levitt from Freakonomics says it best: Realtors get no money for 95% of their efforts (getting customers, listings) but are then vastly overpaid for 5% of their efforts. What I believe the buyer’s rebates will end up doing is to change the ratio a bit: maybe 50/50, only they may be paid FMV for the time they do represent a client. This is not meant to incite, only to prove a point: the current system is perceived as broken by many many people and now the means to make this process more efficient exists via the Internet. I think the buyer’s rebate agents are just finding a way to meet a market need without completely overhauling the current system. God bless em.
I agree that employment in the RE transaction business SHOULD be much less than it is due to the internet, but you have to give the RE industry credit for protecting their market position. The RE agent should go the way of the travel agent, but they are still hanging on.
Another crazy RE commercial on T.V. (Coldwell Banker?), shows a high tech real estate operations center (emulating a spy type set-up) where the black realtor (boss) is showing the very attactive female realtor all the high tech computers, etc. Then he states, “This all makes it EASIER than ever to buy or sell a home!”. I don’t know why a realty company would be using this as their ad campaign, my only reaction was, “IF IT IS EASIER THAN EVER, THEN YOUR COMMISION RATE SHOULD GO DOWN!” Boy, do they think people are stupid or what?
‘There were 19 of the same floor plans for sale in one neighborhood,’ she recalls.’
And there in lies the problem. Tract homes for custom prices. When the price of one drops the other 18 don’t have a prayer. Smart buyer’s group would pool their funding and buy the first house. Second step, flip it to another in your group at a very, very low ball price (let all neighbors know) and then start purchasing the others at bargain basement prices that will generate a positive cash flow when rented.
Something tells me the DOJ might take an unexpected hard look at your group if you put that strategy into play.
Really? Why? All the collusion between phantom bidders, shill appraisers, look-the-other-way lenders on the way up didn’t seem to bother anyone. Why should this?
Anyway, it’s not like their cornering the market. People outside their group would be free to bid any price they like. And the sellers would be free to reject the bids. Sounds OK to me.
Right. That would not be constructive. Now if you RAISED the price, DOJ might not bother you.
are your forcing anybody to sell to you at rock bottom price? no.
It happened prior to the S&L bust.
Salinasron,
“Tract homes for custom prices”
Thank you. Someone finally said it. Also the product of a building frenzy run amok. I mean if they’re selling themselves as is, why bother making them unique? I call them “remarkably un-remarkable”. When the dust settles in Vegas I’ll take another look but with all of the protectionism surrounding the MLS, listing manipulation (DOM) and cooked appraisals how can a guy not take all of this “personal”.
“start purchasing … at prices that will generate a positive cash flow when rented”
The problem is that these are currently priced at “flipper” prices. They are 50% cash flow negative from a rental perspective. To make sense as a “traditional” RE investment the prices need to be cut in half.
“The Greater Las Vegas Association of Realtors doubled its membership to about 15,000 over the last five years as people from all walks of life saw an opportunity to cash in on the housing boom.”
This is how it used to be in Florida, the old joke was that when you went to the DMV to get a new Drivers license when you moved to Florida, they automatically gave you a real estate license with it.
The Daily Reckoning UK Edition editor sells his house in NYC and writes about it…
http://www.dailyreckoning.co.uk/article/300520062.html
Some highlights:
Signs of a housing bubble in the US
- At 11:15am last Thursday, your Wall Street editor became homeless. He closed the sale of his residence in Westchester County, New York. Now, finally, he may resume breathing normally, sleeping peacefully, and writing about the dismal housing market in the world’s largest economy.
Ben Bernanke and Alan Greenspan both agree that the US housing boom is over and that it will begin an “orderly” decline. We agree that the housing boom is over and that home prices will begin to decline. But we aren’t so sure about the “orderly” part. Many homeowners will find comfort in the present and former Fed Chairmen’s assurances. We do not.
- Home prices might indeed dip serenely, like the oars on a lovers’ rowboat…just like Ben Bernanke expects.
On the other hand, home prices might become as disorderly as stampeding soccer hooligans…just like your New York editor expects. No one can say for certain. But your editor’s recent personal experience provides one unnerving data point…and suggests that the “less orderly” portion of the housing cycle might be fast-approaching.
- Throughout the seven months that prospective buyers streamed through your editor’s home, it became increasingly clear that the prospective buyers were increasingly price-sensitive…and picky…and arrogant.
Before our very eyes, literally, we watched the balance of power in the housing market shift from seller to buyer.
- To wit: the first individual to bid for our home offered only 80% of the asking price - and not a penny more. Your editor, who was feeling more fear than greed, did not dismiss the offer out of hand. But after weeks of attempting to reason with this unreasonable party, he dismissed the offer.
- Fortunately, a second offer arrived…at 90% of the asking price. To which your editor replied, “Sold!”
A home is a wonderful thing to own; but it is also a wonderful thing to sell…especially when prices are slumping and buyers are disappearing…and time is of the essence.
Signs of a housing bubble in the US: Market- timing
- The buyer, however, was pursuing an entirely different
agenda: to buy a nice family-friendly home for the long- term. In other words, the buyer’s primary objective had little to do with market-timing or price-sensitivity. The seller’s objective had everything to do with market- timing and price-sensitivity.
- “Hey, now that I’ve sold my house,” your editor queried a local real estate agent on Friday, “I’ve gotta ask; what’s really happening in the housing market here?”
- “It’s not good…It’s really not good,” came the reply.
- “How does it compare to last year?”
- “There is no comparison,” said the agent. “Last year we had a typical springtime market. This year we had nothing.”
- “So what type of homes are selling?”
- “Not much…A few entry-level homes are selling. But nothing over $1 million. If I were you, I’d rent for a while when you’re out in California. This housing market’s gonna get worse all over the place. So I’d just wait it out.”
- Hmmm…Sounds like a plan.
“On the other hand, home prices might become as disorderly as stampeding soccer hooligans…”
I vote for the stampeding soccer hooligan theory! LOL!!
“Not much…A few entry-level homes are selling. But nothing over $1 million. If I were you, I’d rent for a while when you’re out in California. This housing market’s gonna get worse all over the place. So I’d just wait it out.”
This sounds much like the feedback I received last weekend from a Realtor (TM) I talked with in Lexington, KY. Official announcements from the NAR aside, off-the-record discussions with Realtors (TM) point strongly towards a housing crash.
You know, this makes me wonder if the recent sharp drop in the Consumer Confidence Index has anything to do with the dawning realization of hundreds of thousands of Realtors that they need to look for a job……
I’ve said it before, I have always wondered what David Snere-ah and Les-LIE Applecart-Bung and Linda Rhine-booger have been saying to their loved ones lately about buying a house.
My neighbor is a realtor, and, having lived across the street from her for 18 months, I can say she is a nice lady. When I told her we intend to rent for another year, at least, she nodded knowingly. She also provided a remarkably candid assessment of what she’s seeing in the local (Colorado Springs) housing market: rising inventories, stagnant and falling prices, and a growing wave of distress selling. She and another realtor have a small independent business, and they are clearly worried for the future. I may very well use her when I eventually buy, as she appears to be honest as well as knowledgable about the state of the local housing market.
I found the place for us to build the next great CA RE boomtown. It is, drum roll … … ….. BAGDAD, CALIFORNIA … …. … ..
Let’s see. It is in the middle of nowhere. I have never been there. Have no idea if anything is even there, except a little blip on a map and there is a Bagdad Wy. A train track is there also. Looks like about 40 miles off of I40 in the middle of the Mohave desert. Land might get scarce if we buy it all up. LOL
I’ve been there–it consists of a run down cafe and ancient motel. The only claim to fame is the independent movie from about 10 years ago called “Bagdad Cafe.” The movie has brought in tourists, however, who put maps up in the cafe and note where they’ve come from across the world. That makes it the virtual nexus of society–I’m buying!!!!!!
I’ll buy only if they put up a condo tower.
Not a RE spin, but just some nice lyrics from the movie “Baghdad Cafe”:
A desert road
From Vegas to nowhere
Is someplace better
Than where you’ve been
A coffee machine that
Needs some fixing
In a little cafe just
Around the bend
…
A hot dry wind
Blows right through me
The baby’s crying
And I can’t sleep
We both know
Change is coming
Coming closer
Sweet release
I am calling you
I am calling you
I am calling you
I am calling you
“we’ll move through this inventory when people are buying their homes to live in. Now there’s a concept”
The tone of this builder’s comment is like “how dumb of you idiots to buy for investment purposes” even though the builders encouraged that exact behaviour by saying “we’re running out of land” and “there is a housing shortage crisis in America.”
The builders dupped them into buying and now criticize them for doing so. Too funny!
Speaking of duping and other nefarious RE-related behavior, get a load of this article:
LandAmerica Financial Group, which, as the country’s third-largest title insurance company should behave like a responsible corporate citizen, appears to have a thing about deputy Colorado Insurance Commissioner Erin Toll.
While LandAmerica has settled kickback charges in Arizona, Virginia and California, it refused to join First America Title Insurance Co. and Fidelity Financial Co. in paying $26.6 million in fines for setting up kickback rings involving relators and others who sent business to the title companies. Toll has been investigating the industry for about a year now and her work has won her national acclaim.
Instead of settling the Colorado case, LandAmerica asked Colorado Insurance Commissioner David Rivera to remove Toll from the case. Rivera, who has been strangely in the background of this whole thing, refused, calling allegations against Toll “groundless.” I say strangely because insurance commissioners are normally similar to city auditors, politicians who use their station to garner do-gooder publicity and run for higher office. It’s a bit weird to let an underling take all the heat.
Full article at
http://www.cobizmag.com/articles.asp?id=1046
OT:
http://money.cnn.com/magazines/fortune/fortune_archive/2006/06/12/8379210/index.htm?cnn=yes
This smells like another NAR/NAHB press release with some lipstick on it.
Scare tactics to keep the party going for NAR/NAHB.
Keep going, it will only ensure your outcast status 5 years from now.
looks like the blame game has started.
if you didn’t have massive numbers of illegal aliens demanding to rent and buy housing in orange county, demand would dry up and prices would probably drop quite a bit.
hmmmm….
If the illegal alien work force in the construction industry was deported. We would not be able to count on massive unemployment in the construction industry to lower home prices. Hopefully they do not start cracking down, so construction jobs are lost.
Won’t construction jobs be lost regardless of who builds the homes?
Once all the overbuilding (which wasn’t needed in the first place) stops it seems logical that the demand for construction workers would fall off.
If 40% of homes built last year were for “investment” purposes then it seems there’s already a 40% glut of construction workers built into the equation.
There you go. Regardless of whether the workers leave or not after the job is lost, their wages feeding the local economy are kaput. The effect is the same.
I’m not exactly certain why unemployed illegal immigrants (most of whom are not home owners) would cause the housing bubble to burst. If the jobs dry up, then many undocumented workers lose their purpose for being in the U.S. The last sentence of the article seems to say that the cost of new constuction will rise if citizens are needed to build, but if there is a housing downturn, the total number of houses constructed will fall, which will relieve some of the pressure on building supplies and labor. Can someone explain this to me?
Ah, the power of denial is strong… below are excerpts from RealtyTimes.
LAS VEGAS is a ‘booming’ real estate development ‘hot spot’, both residentially and commercially
keep in mind that land has begun to be more scarce
Is Las Vegas real estate really losing value or does the press not understand our market?
In our opinion, the bubble talk or sky is falling articles you are reading in the press about Las Vegas are wrong
Las Vegas is one of the hottest markets in the nation. We have had an average annual appreciation of 12-24% a year - and a record of appreciation of 24-54% in 2004. …2006 started off a little slow - some areas are experiencing price reductions, but for the most part, Vegas is still appreciating and anticipates another 10-15% appreciation by year end
All together now - “Past perfomance is no indicator of…”
OC, yep, sounds like the same groupthink that comes from Gary “15% in the bag” Watts. Every realtor around OC quotes him like a prophet. He is almost viewed as a god, quite sad really.
The real estate apprciation belief is really a cult, it has most of the qualities to qualify it as such.
The RE gospel is preached by all Realtors(tm) who have a code of “ethics”, membership, and charismatic leaders.
Just hope we don’t have a Jonestown when this all goes pop.
Gary’s remarks to Fortune Magazine
Will the good times last another year? Gary doesn’t hesitate. “Fifteen percent is pretty much in the bag for Orange County in 2006,” he says. “It’s impossible for prices to go down this year.”
IMPOSSIBLE?? Oh please, let this arrogant windbag be proven wrong.
I would love nothing more than to see him have to admit that he was wildly off the mark but prophets like Watts aren’t ever wrong even when they are. He will find a slippery escape from his boastfull prediction with systemic revisions and new ‘unforseen’ events that noone could have predicted that changed the whole ballgame.
He wont twist, he will spin.
Maybe Heaven’s Gate? They could all get together at a tony Rancho Santa Fe home and reinact history…
Is the “Duke’s” old house still available?
Nope. Sold last fall for barely what he bought it for a few years back. (I guess you could surmize that the price had gone up and then gone back down over the time he owned it…)
Pass the kool-aid please.
Articles like this make me want to puke! I swear, what can these people be thinking? That they can “will” a market rally? The press doesn’t understand your market? Aw c’mon already! Dozens of high rise projects have/will be cancelled and there’s like entire sub-divisions largely empty but I guess these are the areas “experiencing price reductions!” Oh it’s hot alright.
The number of homeowners entering foreclosure is recorded in the Nevada Legal News. . It is by subscription, and I am stunned and the number of high end homes are going back to the bank. I am counting 40+ entries every week day, up from 2 a day last year at this time.
I am buying put options on KB Homes and Pulte, since they are still building into this market
Nevad Legal News
I have been astonished at the high analyst’s ratings of the builder stocks. They like the P/E’s around 5 and don’t seem to realize that the earnings will be cut every month. I am making great moneywith put options on KBH, TOL, SPF, MDC, CTX, MTH, HOV, DHI and RYL. My preference is for at the money options three or four months until expiration. The surprising thing is that the short interest is still low and there are still many more calls than puts on most of these builders. Maybe things will change when HOV reports today after the bell and CTX reports next week.
Corus Bankshares (CORS) has been the most agressive lender to the Condo builders around the country. Unlike the builders, it’s still near its all time stock peak. Perhaps high short interest is holding CORS up, but when it falls, it will go down fast.
“I have been astonished at the high analyst’s ratings of the builder stocks.”
It must be hard to argue against a company whose share price always rises on the release of bad news…
I have had puts in all those listed as well, off and on, though I prefer to buy a couple points in the money at the front month and use stops. Check out WCI and BMHC which currently my two biggest positions.
I have CORS, LEND, NEW, PMI, and RDN on my watch list, but it might be a year or two before they follow the HBs.
“A slowdown in the housing market is rippling through Las Vegas, with layoffs by home builders, mortgage and title companies and other real estate-related occupations.”
Sounds like the makings of a labor recession are in place for LV. And we all know from housing pundits that labor market recessions often precede housing market downturns, right?
When you think about all the investulators and flippers who used crazy leverage to turn themselves into Bo Diddly Trumps and who are currently in the process of losing the six figure “income” they were earning just last year on all-time-high levels of home equity appreciation, then you realize the the official level of household dependency on real estate income is the mere tip of the iceberg.
The whole state of Nevada will be in a world of hurt.
Nah. The gold mines are doing well. Move to Elko! Or Battle Mtn!
Battle Mountain has a huge BM on the side of their mountain.
that’s gross!
What? BM for Battle Mountian, and the letters are huge.
My dog Riley left a huge BM on Pikes Peak, but that’s another story for another day….
My kids love that big BM on the mountain side…
I guess nobody told you the gold market is crashing?
No, ’cause it’s not. Up about 25% since the beginning of the year, even after the recent correction–and finding support around $640. Gimme a “crash” like that any day! (And remember, Mr. Ali and Mr. Wang and Mr. Nakamoto are looking at all their dollar-denominated assets and hearing the G-7 talk about a potential 30% devaluation of the dollar… This is not exactly unfavorable for gold.)
I think some of the laidoff RE folks will be able to find lower paying jobs in Vegas such as hotel/restaurant…lol.
Btw, there was an old saying that if grandmother wants to invest in stocks, then you know it’s a bubble.
Now, this is for real. My sister-in-law who’s a chiropractor in Vegas got her RE license and became an agent on the side. She also owns a few (overpriced properties, luckily 1 or 2 were prior to 2004 but she could have taken out HELOC to buy the latest ones). So, the new saying is that if a doctor decides to become RE agent, then you know it’s the top of the RE bubble.
Hotel/restaurant jobs are going bye-bye too. People “rich from RE” will stop going on vacation.
Anyone working in RE or tourism will be hurting. Then it will trickle down, until 7-11 clerk starts looking like a good job.
No more home equity cashouts = no more gambling / vacation spending money. The casino bubble will crash along with the real estate bubble.
God I can’t wait for that. I love going on vacation when places are deserted and desparate.
I was in an “adult establishment” in Vegas a few months back and one of the entertainers was describing her real estate empire to me. When strippers are also RE speculation you know we are near the top - LOL
Beware the dreaded stripper flipper! After a few drinks and a lap dance or two you may walk out $200 bucks lighter and the new owner of her one bedroom condo “investment”.
Bubblefucious say:
Two boobs will turn a man into one.
- What do you call a stripper in Las Vegas?
- A flipper with no undies.
A good way to guage the health of the construction industry is to keep an eye on the average amount of tire tread on those large, four-wheel-drive pickups. Those tires are $100+ apiece, new.
MjM
CNN story on tie-in of illegal immigration and housing bubble.
http://tinyurl.com/mn8px
The upside to the story: Most of the lost construction jobs will only affect the illegal immigrant workers who held them.
Actually, illegal workers could be owning a few properties as well. If they lose their jobs, they will add their properties to the fire sale.
I have an acquaintance. They own a excavation business. Last time I ran into them they were bragging about how much money they were making…How the house they paid $435K to have built was then worth 1 million (But it didn’t sell in the summer of 2004?) Bla, Bla, Bla.
I know they are going to hurt, (if they are not now) and be blindsided, etc. I wish I could feel sorry for them….I’m just not that good of a person. Ya know, deep down.
Who wants to listen to someone bragging. What a bore.
IMHO buildng is about to come to a stand still. That makes the storie moot.
Ahh yes, soon they wont have to worry, they’ll be legalized, and qualify for the Earned Income Tax credit due to their low wages, essentially paying them a bonus for being here. These new neighboorhoods will have higher demand for social services with declining tax base. But hey, cheap labor is good for all of us right?!?! Until your schools have 40-50 kids per class where half don’t speak English and all the teachers time is spent getting them up to speed instead of teaching the class. Where hospitals close down because the only one foolish enough to pay the hospital bill was you.
Is it even worth it to be a US citizen anymore?
My family emigrated from Spain in the 20’s and it was hard work, now I wonder if it was all worth it?
We should petition our government to allow us to “opt out” of our citizenship… when and if needed… It would be nice to go back to school and not have to worry about paying medical insurance.. Funny how we DO have socialized medicine in the United States.. Only not for our working aged citizens. We are the ones who pick up the tab thru our “taxes”… In this case it is our employers who pay the tax (affecting our wage increases) by paying our insurance premiums.
If you renounce your US citizenship you are still liable for income taxes for ten years after you leave. No matter who pays it. No matter where it is earned. No matter where you live. No matter where it is spent.
East Germany had a wall around it too.
Damn Mexicans! They have it so well here. I guess we should just learn to habla espanoal.
Yes, but since they don’t go after anyone for it, at least not the illegals, it is unlikely that they would do anything about it. I mean, what are they going to do, fine 25 million people and deport them. HAHAHAHA
The government is only scary to honest people who actually pay taxes.
Psuedointellectual liberals always oversimplify things, you think it is anti Mexican sentiment?!!?!, there are people from all walks of life that are greatly opposed to illegal immigration, most strongly from recent legal immigrants.
When companies exploit cheap labor, they drive down the standards of living for everyone, guess someday when you need to get to the emergency room (if there is one opean at all) and have to wait for 12 hours to get in, you might feel a bit different
Psuedointellectual liberals always oversimplify things, you think it is anti Mexican sentiment?!!?!, there are people from all walks of life that are greatly opposed to illegal immigration, most strongly from recent legal immigrants.
I think you misunderstood me. I meant the wall was to keep us IN via taxation like the East German one was to keep people in physically. My point was we CANNOT leave the US taxation system even if we want to.
I was not referring whatsoever to the proposed wall to keep people out. I’m pretty indifferent on that one though I do think there are probably easier solution.
Government is the enemy are all decent and intelligent men.
When the housing bubble pops, the gov’t will run out of money and the welfare state will collapse before our eyes, just like it did in the USSR.
My family has had nothing but trouble with immigrants ever since we came to this country….
Funny, we could do it legally, why is that such a hard issue for you open border types to swallow.
Illegal immigration is an insult to the millions who have worked their butts off to get here legally and follow the rules. In case you hadn’t noticed, it is a challenging process.
Closed borders are an insult to the founders of the USA. They knew that more people equals more strength. The current residents and citizens are the ones who created the welfare state that steals the money thru taxation from working people. Other people who are immigrants aren’t the ones doing the stealing, but the government is.
Why don’t we just annex the 10 states of Mexico? If we don’t give them welfare, it won’t cost anything, but we’ll gain a lot.
I would be fine with that, I’d rather spend 100 billion dollars to invest in Mexico’s infrastructure than blow it on the Iraq war. Unfortunately we’ve blown a quarter trillion dollars bringing Freedom(tm) to Iraq when we would have gotten 1000% return on our investment turning Mexico into a real first world country.
I am totally with you about annexing Mexico, however, we still need to maintain our borders. Perhaps the annexation would alleviate some of the problem in the near term, but there is a quarter of billion people in South America that would be here tommorow if they thought there was no restriction at all. There is a limit to how much we can absorb at once.
Can you imagine how shitty these homes were built.