[airics]

the inventory may be higher, but the pendings and the sales and the prices (only 1%) are up

[olecapt]

Originally Posted by ClarkGrisowld

You have to be kidding me. You have no idea what my background is. And, sorry, I don't go to engineers for investment advice. But thanks for the completely misguided definition of a catalyst.

But if you want to buy a house you would go to an RE Agent. And you would find an analytical engineering background is in fact useful. Note that, for the vast majority of buyers, investment potential is only a small part of the transaction. I believe, by the way, it is actually getting to be a good time for the long term investor to consider Las Vegas. You certainly have no significant opportunity to flip but one can buy and rent under standard terms and conditions with positive cash flow.

"Catalysts" are most definitely not oversimplifications. It is a term used by professional analysts, and pundits trying to sound professional. Catalysts are real. Easy credit is an obvious catalyst we've seen multiple times in forming of bubbles in multiple asset classes. The good analyst can tell you why that is the case. The simplification is pretending like there is only one catalyst, or that there aren't competing catalysts.

You really think you are in a position to argue the meaning of "catalyst" with an engineer?

"Catalyst" is a buzz word used to explain things after the fact. It is a very nice word in that it means, ala Alice, whatever its user intends it to mean.

Catalyst, by definition, is causal. That whole discourse is a rather poor attempt to dismiss sound analysis. It certainly IS NOT indicative of investment training. Good analysts identify and recognize the catalyst ex-ante The expertise comes in identifying the interactions and what has the dominant influence.

A "catalyst" is unaffected by the process it enables. However the "catalysts" you refer to are often affected by the process. Therefore not catalysts. Simply semantic color to a process variable.

Your entire post is spoken like any number of "bulls" of various asset classes. Short of fundamentals and critical of sound theory when you actually take the time to put down the pom-poms. I mean, do you even understand what the term "decoupling" means? If you are saying Vegas is turning or will turn, but the macro economy is worsening, then you have to have a reason WHY Vegas would decouple from the macro in such manner. No, how far down Vegas goes IS NOT a different issue, it is THE issue (if you think the larger trend is down). And what circular logic - those who disagree "point out the lack of a catalyst"?!? Ummm, no, they disagree with you BECAUSE they see no catalyst. You know, because people actually ANALYZE the market, looking at the fundamentals and forecasting the valuation drivers...NOT relying on some cheap charting techniques to imagine a trend. Your case is apparently based on faith, and very short trends (if you can call it that) in a few indicators. Please, you tell me the market is stabilizing or turning but you can't tell me why? Anyone can look at a few data points and proclaim a trend, I'm asking for something a bit more substantive because, as opposed to your misguided criticism of "catalyst", ex-post people are always able to identify why some data points were false indicators.

I am not particularly "bullish". Been pretty much a "bear" for the last couple of years. Swung to neutral perhaps. It is the mindless bears that cannot see things trending positive because it conflicts with their world view.

My view is actually current reporting. I do hazard an estimate of the next month or two based on leading indicators. Elsewhere I made my only longer range projection which was that May of 2009 SFR pricing would be up over that of May 2008. I have also postulated that 2008 volume will exceed that of 2007. The only real assumption in those is that the RE market in Las Vegas won't totally tank...otherwise they are data which is actually in hand.

"Catalysts" are easy after the fact. Low price, improved cost to income rations, growing economy, increasing population, out of country buyers...and if it goes bad you just reverse them.

Simple question. What is the catalyst? Any analyst can identify one. Time will show whether your analysis was good and sound, or garbage. Volume is indicative of what has happened. It may be correlated with past movements, but says absolutely nothing about the future. This has been a real estate bubble, and you are forming opinions on past indicators that most likely are losing their predictive power in a different market environment. When you have drastic disconnects from fundamentals, as you do both up and down in bubbles, the old "reliable" indicators fail.

You are arguing with the actuals. You are claiming the actuals might not occur? There will an "adjustment". Please.

The new Strip development is over a year away. CityCenter reported AWFUL sales results last quarter. We'll see what next quarter brings. And an increase in supply isn't particularly what I would call a positive catalyst FOR PRICE. You keep talking volume, but how many of your buyers move because of volume, and not price? Only a realtor talks about volume as an indicator of health. For crying out loud, MORE SUPPLY is turning this market? Maybe volume, but buyers and investors care about price.

Encore comes up this year meaning hiring starts in the summer. From there on it is continuous.

I think there is a very strong possibility that these new condo and condo-hotel units will fail. I have suggested to clients they were terrible buys for a least the last two years. I consider them high end time shares.

But that in no way lessen the impact on hiring and population. They will eventually sell and/or be converted to rentals. In any case staffing will take place and job growth occurs. Inevitably that will drive the housing market.

The real inventory...that is single families available for sale is down substantially this year. Last September it was 20,284. In January it was 17,874 and in April it was 15,590. This is the SFR available for sale inventory for the urban area. It does not have BC, Mesquite or outlying Clark County.

Against this inventory we have a 7.5 month supply. So still a buyers market...though approaching a balanced one generally called at 6 months worth of inventory. If you consider that 4,000 of these are shorts which are not truly available it is likely that we are out of the buyers market and into a balanced one. That sort of demand is not conducive to price reduction.

My hands on in the field also indicates a tightening market. REPOs have four or five offers and you have to go to list or nearly so to buy. In a non-impacted aeas like Sun City Summerlin REPOs at good pricing vanish in hours or a couple of days. If the are on the market more than a day it is generally because the seller forced a week of listing before looking at the offers.

Anyway the numbers are the numbers. They plainly indicate a market that is getting better in volume and stabilizing in price. Real inventory is down substantially though that is cloaked a bit in high volume growth and unsaleable short sales.

[Humboldt1]

Clark,

You may have gone a bit far attacking Olecapt. He/She has presented solid data on this forum. Olecapt is a realtor with an engineering background, which makes for good analysis.

I disagree with this analysis, believing that this is a false bottom in Vegas and that prices will be dropping in the next few months as inventories remain too high, but time will tell.

I think now is a much better time to buy in Vegas than last year but next year will be even better.

Regardless of our differing opinions of where this market is headed, I respect Olecapt's opinions and analysis.

[Coop01]

It's a fascinating subject that does not lend itself well to conventional analysis.
This whole subject may be more properly approached with Morphological modeling methods of an ill-defined complex problem that is inherently "non-quantifiable" and cannot be causally simulated.
Which leaves us with Wicked Problems or a hell of a mess.

Musings of another "engineer" with lots of time on his hands and freely admits that his engineering experience applies minimally to this problem.

[Terri B]

Quote from OleCapt:
I am not particularly "bullish". Been pretty much a "bear" for the last couple of years. Swung to neutral perhaps. It is the mindless bears that cannot see things trending positive because it conflicts with their world view.


To Griswold and OleCapt.....

The so called 'bears' or short sellers definitely have an agenda. The media market manipulation is unbelievable IN ALL SECTORS. I am sure fortunes are being made on etfs that short the real estate indexes and stocks. I do not have a problem with shorting stocks, it is part of the nature of the market. Good for them for making money at it but one needs to read between the lines on these constant bear barrages

I have been lurking and posting since late last year on this forum. I am quite grateful for the opines and advice that is offered here.

By no means have I seen an agenda from OleCapt, the awesome thing about his posts is the deciphering of all this data that is thrown at us.

Griswold, I really appreciate your approach toward the real estate market. It seems to be an approach of when to buy in the same manner as to when one would buy a stock such as a REIT, TOL (toll brothers) etc...Also, you want solid evidence of consistent price increases(is this a catalyst??) me if wrong)

One thing I have learned from this forum is when would it make sense to buy a house if one was going to rent it. I think this is what is driving the uptick in purchases in Las Vegas. If one can get a solid ROI and has a long term investment plan one would go forward and purchase a house based on renting it.

Inadvertently, I have become an accidental landlord in Las Vegas (had to relocate for work). I have been very fortunate to get a solid ROI on my rental and will consider putting it back on the market when I see inventories decrease(dramatically 5 months..) and or volume increase (yes I agree with volume being a solid indicator).

I would not consider it a wise investment (in fact foolish) to buy a home in Las Vegas with the plan of flipping it within the next 5 years.

[Terri B]

Originally Posted by Coop01

It's a fascinating subject that does not lend itself well to conventional analysis.
This whole subject may be more properly approached with Morphological modeling methods of an ill-defined complex problem that is inherently "non-quantifiable" and cannot be causally simulated.
Which leaves us with Wicked Problems or a hell of a mess.

Musings of another "engineer" with lots of time on his hands and freely admits that his engineering experience applies minimally to this problem.

This is an intriguing take on the housing crisis.

Long View: Fall in US house prices heralds problems for all
Long View: Fall in US house prices heralds problems for all - Yahoo! News (broken link)

Quote from article:
"Hence a national fall in nominal house prices is a perfect example of a "black swan" - an exceptional event that has not been covered in historically based models. Such events, widely discussed in recent months, can lead to extreme and unpredictable responses in financial markets."

Def of "Black Swan"
Black Swan

So from what I have read and heard the housing crisis is a black swan.

Since this is the case, I personally will try and get as much data and info at the local and national level to try and make sense of what is happening. So far, the local data has been the best indicator of the direction of any real estate market....

[Coop01]

I saw one change hands today. Sold new on 01/06. $244K still owed. Lehman Bros SIV Trust took it back and sold it immediately to Chase for $105K !!
43% of the selling price in 30 months.
Looks like the banks are trading amongst themselves now.
I wonder if Chase "owes" a favor to Lehman Bros. or their surrogate.? Or is the way of the future?
Never appeared on the MLS. Realtors are out of the loop it looks like.
Bet Chase puts a renter in there quickly and holds til the rebound.
I knew those smart bankers would find a way.

[olecapt]

Originally Posted by Terri B

[b]
I would not consider it a wise investment (in fact foolish) to buy a home in Las Vegas with the plan of flipping it within the next 5 years.

I strongly disagree. Flipping in less than two...no way...but there are clearly homes that will flip in three to five years.

Not any home. Not the good rentals. But there are neighborhoods that have shown pretty strong resistance to REPOs and REPO price points.

Now the tricky part is you need to buy a REPO in one of those neighborhoods. I think it is a virtual guarantee of 20 or 30% whenever it is that the REPO thing burns out. And it will. There are few of these and most are above $350K. The lower priced ones do happen but they go in hours.

Saw one a week ago. Easily comps at 750K. Went for $525K. I am not sure there was not some agent collusion involved. But that tract of 15 custom homes sells from 750K to 1.2 million. Hold that puppy until the REPO phase passes and it is an instant 200K profit. And it needed little other than cosmetics. Less than 10K mostly in landscaping and pool and it would be perfect.

Bleeding over that one. I have a buyer for one of those. Went to contingent on a cash sale in two hours. We picked it up in less than an hour and still could not get our client there before it sold.

[bumpercar]

The MLS listing is essentially a formality. The selling agent has it locked up by the time you see it. You're on the outside looking in.

Originally Posted by olecapt

I strongly disagree. Flipping in less than two...no way...but there are clearly homes that will flip in three to five years.

Not any home. Not the good rentals. But there are neighborhoods that have shown pretty strong resistance to REPOs and REPO price points.

Now the tricky part is you need to buy a REPO in one of those neighborhoods. I think it is a virtual guarantee of 20 or 30% whenever it is that the REPO thing burns out. And it will. There are few of these and most are above $350K. The lower priced ones do happen but they go in hours.

Saw one a week ago. Easily comps at 750K. Went for $525K. I am not sure there was not some agent collusion involved. But that tract of 15 custom homes sells from 750K to 1.2 million. Hold that puppy until the REPO phase passes and it is an instant 200K profit. And it needed little other than cosmetics. Less than 10K mostly in landscaping and pool and it would be perfect.

Bleeding over that one. I have a buyer for one of those. Went to contingent on a cash sale in two hours. We picked it up in less than an hour and still could not get our client there before it sold.

[Terri B]

Originally Posted by olecapt

Now the tricky part is you need to buy a REPO in one of those neighborhoods. I think it is a virtual guarantee of 20 or 30% whenever it is that the REPO thing burns out. And it will. There are few of these and most are above $350K.

Well, my house is in 'one of those neighborhoods'. I was able to rent it in 48 hours. Had 3 applications with outstanding credit reports, I was shocked to say the least...

Thanks for the good news on this.....