[Jessey126]

Hi WestieJeff,

Huge thanks for answering, I really appreciate it. And you're right, it is difficult 'trying' to make sense of what's happening...

A couple of things - just bouncing back to you (hope you won't mind too much) - re employment here: I can see from the boards that people are indeed flowing into Vegas (that's a good thing) but 'unemployment' remains a bit of a challenge for some (myself included) - 2 close girlfriends as well - all educated and in different fields and no joy. And being offered 'very low' salaries. Thankfully we don't need my paycheck but that's not the point - I 'want' to work - I just don't want to do a level entry job - ugh.

Anyway, the other point/question I have is re the investors - I know they are cash investors so that does make the housing debt ratio different - but I had read/heard (more than once) that 'at least some' investors borrowed cheap money from the govt, which allowed them to pay cash for the properties here; if that 'was' the case and they couldn't find renters, then they would have to sell I would think?

Hope you'll forgive my many questions - still trying to figure it all out - but as you say 'it's nearly impossible to do so'. I'll admit to having blonde moments but it does get confusing...

Thanks again WestieJeff

[boboluv]

Originally Posted by Jessey126

So how does higher unemployment and low wages equate to a dramatic jump in property prices?

outside money. i bought at the end of 2012 but plan to stay in los angeles for a number of years. our long term goal is to move into our home in henderson eventually but the combination of price and interest rate at the time was too good to pass up so we bought first and will move later. also, we overpaid a bit to get the home we wanted which provided a higher comp to others in the area.

now, even though at the end of 2012 we paid more than the house was worth... it is now worth more than what we paid and we have a 3.125% interest rate locked in for 30 years. it was a no brainer.

[ScoopLV]

Originally Posted by BBMW

You can invest in the market without investing in individual companies. You can invest in index funds, which cover huge chunks of the market. These aren't going to zero or anywhere near.

And how many people have had their real estate investments wiped out in Vegas in the last several years?

Wiped out? Name me a house that fell to zero dollars. The people with oddball financing took a bath. They were betting on real estate going up in perpetuity and they rolled snake-eyes. I have friends that lost six figures and had several foreclosures because they bit off WAY, WAY, WAY more than they could chew. They were investing foolishly. They didn't know their market. And they were following the herd mentality, "Just sign your name real big and don't worry about the balloon payment. You'll never have to pay it!"

I bought just as the market was tanking and I'm still up compared to renting.

[logline]

We're no longer the top state for forclosures. We dropped all the way to #8... not great, but at least it's in the right direction.

10 states hit hard by foreclosures - MSN Real Estate

[aardogfsu]

Originally Posted by ScoopLV

He's getting a basically free house, paid for with other people's money. Sure, there are other investments that pay better. But you can't live in them. Who here, besides Mr. "New Screen Name Every Other Day," would turn down a free house?

Such a simple concept, yet so many don't get it. Fine with me. We need them.

[SportyandMisty]

Originally Posted by ScoopLV

Yes, I have. My index funds are doing better than real estate. I still believe in diversification. ...

^^^ +1 ^^^

The issue isn't "is real estate doing better than another asset class". By definition, diversification means you have a portfolio of non-correlated asset classes. Here is a reasonable set of asset classes, including real estate:



... and here is how they are correlated with one another:



The key to diversification is to have some assets that zig while the others zag, and overall, the value of the portfolio has less risk (less zigs & zags) and goes up over time.

Las Vegas Real Estate has a solid place in that portfolio.

[BBMW]

I'm sure there a plenty people who put 20% down in the 2005-8 timeframe who couldn't float the note, got forclosed on, and lost their entire investment.

And without running the numbers in detail, I find it very hard to believe you can still be down 25% in equity (by your own estimate, after the latest market pop) and still be ahead of renting, especially since you could have walked down your rent as the market sank.

Originally Posted by ScoopLV

Wiped out? Name me a house that fell to zero dollars. The people with oddball financing took a bath. They were betting on real estate going up in perpetuity and they rolled snake-eyes. I have friends that lost six figures and had several foreclosures because they bit off WAY, WAY, WAY more than they could chew. They were investing foolishly. They didn't know their market. And they were following the herd mentality, "Just sign your name real big and don't worry about the balloon payment. You'll never have to pay it!"

I bought just as the market was tanking and I'm still up compared to renting.

[BBMW]

After 30 years. After a significant amount of time/labor. After having to possible deal with any number of problematic tenants who cost you money. After, especially now, having to put down a significant down payment. After possible having to put cash in to make up for negative cash flow if the rental market isn't strong enough to cover your nut. So much for the concept of the house being free.

Don't get me wrong. It can work. I make take a poke at this if I can find a deal that pencils out. But don't underestimate the cost and difficulty.

Originally Posted by aardogfsu

Such a simple concept, yet so many don't get it. Fine with me. We need them.

[ScoopLV]

Originally Posted by BBMW

I'm sure there a plenty people who put 20% down in the 2005-8 timeframe who couldn't float the note, got forclosed on, and lost their entire investment.

Only if they bit off more than they could chew financially. Only if they lost their construction job and couldn't make the mortgage payments. They didn't know their market. They didn't do their homework. They were following the herd. People seem to have forgotten that during the crash, most homeowners (even those who were underwater) continued to make their mortgage payments. The foreclosure rate wasn't 100%. It was more like 1-in-350.

Yes, the Las Vegas house purchased in 2005 lost value. I absolutely agree with that. But what would you rather have? Three houses that cost $1,000,000 each in 2005? Or three million shares of Lehman Bros. purchased in 2005?


As for rent vs own, why on earth would I "walk back my rent." I'm only interested in apples-to-apples comparisons of renting vs. buying. If someone is fine living in a Siegel Suites for $600/month, and then feverishly investing all that extra money so that they can be the richest person who lives in a Siegel Suites, that's great for them. Not so great for me. Pick nearly any house in the valley, and do a rent vs. own back to 2007 and the owner comes out on top.

[BBMW]

Originally Posted by ScoopLV

Only if they bit off more than they could chew financially. Only if they lost their construction job and couldn't make the mortgage payments. They didn't know their market. They didn't do their homework. They were following the herd. People seem to have forgotten that during the crash, most homeowners (even those who were underwater) continued to make their mortgage payments. The foreclosure rate wasn't 100%. It was more like 1-in-350.

Whatever the cause, they bought, and lost it all, I'm sure it was a 5 figure number of homeowners throughout the Valley.

Yes, the Las Vegas house purchased in 2005 lost value. I absolutely agree with that. But what would you rather have? Three houses that cost $1,000,000 each in 2005? Or three million shares of Lehman Bros. purchased in 2005?

I'd much rather have the equivalent value to your Lehman holding in a properly diversified portfolio, or an index fund/ETF. That would have done much better than either.

As for rent vs own, why on earth would I "walk back my rent." I'm only interested in apples-to-apples comparisons of renting vs. buying. If someone is fine living in a Siegel Suites for $600/month, and then feverishly investing all that extra money so that they can be the richest person who lives in a Siegel Suites, that's great for them. Not so great for me. Pick nearly any house in the valley, and do a rent vs. own back to 2007 and the owner comes out on top.

Equivalent house, market rents over the same time period. Do the math. If you do it correctly/completely (accounting for the sunk costs of ownership I outlined previously, I bet you'll find you're behind.