Vegas Rental Market Is In Trouble... Saturation Point? (Las Vegas: sale, real estate market)
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Moving season is about to begin so there will be a lot of traffic in the next 4 months. I dont think inventory saturation will be evident as a problem until then.
I only wish it were the Banks actually holding the loans and losing their shirts. It would be poetic justice at it's finest. As it stands now, the only losers are the people who did nothing wrong. The banks don't really pay a price, and the people who walk and turn around and rent or re-purchase for cash don't pay, except for a credit ding. It's the rest of us who have paid dearly for other people's folly.
Are you serious? The people who bought during the bubble did nothing wrong? THEY BOUGHT DURING THE BUBBLE!!! That's what they did wrong! Anyone with half a brain should have known that it was a bubble. A house doesn't triple in price in only 3 years without it being a bubble. These buyers were greedy. They were hoping to get rich quick by buying a house with nothing down and then flipping it for a huge profit in a couple of years. These greedy people got exactly what they deserved. Since I have more than one brain cell, I stayed far, far away from the real estate market during the bubble. Now that it's crashed, exactly as I expected it to, I'm now ready to buy.
The banks don't pay a price? Let's see, they lent someone $500,000 but only got back $200,000 when they were forced to do a short sale or foreclosure. I'd say the price they paid was $300,000 on each and every one of these deals in which the irresponsible homeowners walked away from their commitments (i.e., mortgages).
What about all the people who actually made some pretty good money in the bubble? Were they wrong also? I know of at least 8 people where the housing bubble changed lives for the better...income wise.
Are you not aware of the fact that people who bought their homes way before the bubble started have lost all the equity in their home. I am not necessarily talking about people who bought at the top of the market. There are people who owned their home for ten years or more who have been adversary effected. We are at levels (especially condo's) that haven't been seen for 15 years. I own a condo for instance in Phoenix. I owned it for 35 years, and remodeled it several times. It is now worth less that I paid for it back then.
So, it's not just the greedy investors or flippers that were to blame. I don't argue that valuations did get out of hand, but many people bought before it got so crazy with the intention of buying a home for their family. And yes some bought during the bubble afraid that if they didn't they would never be able to afford to buy in the future. Just like what happened in California. Average people just got priced out of the market.
The problem started with sub prime mortgages to people who could not afford these homes and should have never been given a loan. Loan applications were forged, incomes were being falsified by the mortgage company , with no verification required.
Yes there were flippers and investors out there, but there were a lot more families out there who wanted to experience the American dream of home ownership but didn't have the income or the credit worthiness to afford these homes, but were told they could, and they were urged to buy "Bad credit? No problem. No down payment? Call Jack." Remember that?
My sister got a loan for a $150,000 without a steady job and no where near enough income to maintain it with high taxes and cost of living in this Fl. community. She was your typical irresponsible person who would always take the carrot if you dangled it in front of her. Void of mathematical common sense. And there are millions of people just like my sister in this country.
I think you most likely experienced more than your fair share of flippers there in Vegas. I know the luxury high rise condos in Miami were going nuts.
So it probably is reasonable for people to assume the flippers were the problem. Actually flippers also had a positive effect on neighborhoods, by buying often distressed and neglected property in need of a serious face lift, and investing their money into making it a desirable home, both inside and outside. Investors come in only when they see opportunity.
The problem stemmed from banks making fraudulent loans to people who could not afford nor qualify for these loans (the untapped market) then turned around and sold these loans off to Goldman Saks and the rest of them, which were then bundled up in complicated indistinguishable derivatives, and sold to pension funds, the public, towns and cities in both the US and abroad. It was all done in an effort to disguise the ticking time bomb. That is what caused the real estate market to explode. Suddenly there was a whole new supply chain of people created, so the demand for homes became greater and greater and prices escalated.
The investors and flippers are only a byproduct of a situation that was perpetuated by the banks, lenders and wall street. The public had no idea what was going on until the sh.t hit the fan. There is no shortage in the US of unsophisticated buyers, and there always will be. That's why we had regulations, and criteria that had to be met before a lender would make a loan. That was all being ignored and mortgage brokers were making astronomical money making loans to these unqualified buyers. A whole new segment of society entered the real estate market. That is what caused the bubble.
Last edited by modhatter; 03-27-2012 at 09:04 AM..
I know a handful of people who flipped homes during the bubble, easily made hundreds of thousands of dollars, but got caught holding the bag with 5 or so homes left when the market started tanking.
But that wasn't a problem, they just shorted or foreclosed anything that was underwater and kept all their profits.
At least one I know, he dumped all his underwater properties, his credit score is back over 700 and he kept all his cash.
Gotta know how to play the game, apparently.
Quote:
Originally Posted by von949
What about all the people who actually made some pretty good money in the bubble? Were they wrong also? I know of at least 8 people where the housing bubble changed lives for the better...income wise.
Moving season is about to begin so there will be a lot of traffic in the next 4 months. I dont think inventory saturation will be evident as a problem until then.
Willy702. What is your thinking here? Are you saying that when school is out and brand new set of homeowners are planning to walk?
WestieJeff. I don't agree with this practice of walking away, when there are other alternatives. You made a commitment, and you need to live with it. He probably could just as well rented these properties out, unless he couldn't get sufficient rent to cover the mortgage etc.
I am very turned off by people who are financially solvent, who have good jobs and the ability to make their payments, who elect to just stop paying their mortgage, and sit in their home for years getting every last free month they can until D Day arrives. Some people call that smart. I don't see it that way.
Last edited by modhatter; 03-27-2012 at 09:18 AM..
There is no shortage in the US of unsophisticated buyers, and there always will be.
Do not underplay the role of the real estate industry...
EXAMPLE:
In 2005 Kendra Todd (a real estate agent) was the winner of The Apprentice Season 3. In September 2006 she wrote in a real estate article:
"You can't go anywhere without hearing people talk about the real estate bubble, such talk drives me to distraction, and I'll tell you why, it's because there is no real estate bubble. Bubbles are for bathtubs."
In the fall of 2007 she wrote:
"I disagrees with those who say there has been a bust for real estate, what's dropped in some areas is market expectations more than market values"
She also wrote a book in which she listed Las Vegas, Phoenix and Florida real estate markets as "bulletproof".
Willy702. What is your thinking here? Are you saying that when school is out and brand new set of homeowners are planning to walk?
WestieJeff. I don't agree with this practice of walking away, when there are other alternatives. You made a commitment, and you need to live with it. He probably could just as well rented these properties out, unless he couldn't get sufficient rent to cover the mortgage etc.
I am very turned off by people who are financially solvent, who have good jobs and the ability to make their payments, who elect to just stop paying their mortgage, and sit in their home for years getting every last free month they can until D Day arrives. Some people call that smart. I don't see it that way.
Moving season is just when renters are out in force looking for a new place. A few years ago I had a property to rent start of June and I got 20+ people looking and 3 people begging me to let them rent it. Same property had to go back on the market in October and I got 2 couples loking
Are you not aware of the fact that people who bought their homes way before the bubble started have lost all the equity in their home. I am not necessarily talking about people who bought at the top of the market. There are people who owned their home for ten years or more who have been adversary effected. We are at levels (especially condo's) that haven't been seen for 15 years. I own a condo for instance in Phoenix. I owned it for 35 years, and remodeled it several times. It is now worth less that I paid for it back then.
So, it's not just the greedy investors or flippers that were to blame. I don't argue that valuations did get out of hand, but many people bought before it got so crazy with the intention of buying a home for their family. And yes some bought during the bubble afraid that if they didn't they would never be able to afford to buy in the future. Just like what happened in California. Average people just got priced out of the market.
The problem started with sub prime mortgages to people who could not afford these homes and should have never been given a loan. Loan applications were forged, incomes were being falsified by the mortgage company , with no verification required.
Yes there were flippers and investors out there, but there were a lot more families out there who wanted to experience the American dream of home ownership but didn't have the income or the credit worthiness to afford these homes, but were told they could, and they were urged to buy "Bad credit? No problem. No down payment? Call Jack." Remember that?
My sister got a loan for a $150,000 without a steady job and no where near enough income to maintain it with high taxes and cost of living in this Fl. community. She was your typical irresponsible person who would always take the carrot if you dangled it in front of her. Void of mathematical common sense. And there are millions of people just like my sister in this country.
I think you most likely experienced more than your fair share of flippers there in Vegas. I know the luxury high rise condos in Miami were going nuts.
So it probably is reasonable for people to assume the flippers were the problem. Actually flippers also had a positive effect on neighborhoods, by buying often distressed and neglected property in need of a serious face lift, and investing their money into making it a desirable home, both inside and outside. Investors come in only when they see opportunity.
The problem stemmed from banks making fraudulent loans to people who could not afford nor qualify for these loans (the untapped market) then turned around and sold these loans off to Goldman Saks and the rest of them, which were then bundled up in complicated indistinguishable derivatives, and sold to pension funds, the public, towns and cities in both the US and abroad. It was all done in an effort to disguise the ticking time bomb. That is what caused the real estate market to explode. Suddenly there was a whole new supply chain of people created, so the demand for homes became greater and greater and prices escalated.
The investors and flippers are only a byproduct of a situation that was perpetuated by the banks, lenders and wall street. The public had no idea what was going on until the sh.t hit the fan. There is no shortage in the US of unsophisticated buyers, and there always will be. That's why we had regulations, and criteria that had to be met before a lender would make a loan. That was all being ignored and mortgage brokers were making astronomical money making loans to these unqualified buyers. A whole new segment of society entered the real estate market. That is what caused the bubble.
So what you're saying is that there were people, such as your sister, who did do something wrong during the bubble? That is, they bought a house they couldn't afford. That's what they did wrong. It's really not that hard to figure out what you can afford to buy and cannot afford to buy. Why is it that you don't see a Ferrari in every driveway in America? It's because almost everyone with even just a 3rd grade education knows that they can't afford one. Why is such simple logic thrown out the window when it comes to houses?
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