[NLVgal]

Originally Posted by SportyandMisty

One of the fundamental characteristics of a bubble is that they are exceedingly difficult to call when you are in the middle of one. Is it a bubble? Or are people doing an asset exchange from appreciated stock/savings to housing? It is only afterwards that you can say it was a bubble.

Moreover, it really isn't clear just what a bubble really means. Are lenders lending too much? Lenders lend what savers save (with a multiplier effect). If lenders are lending too much, does that mean savers are saving too much?

Sometimes it is demographic. The Baby Boom that started not long after GIs returned from WWII produced a cohort that, 20-25 years later started household formation which of course included demand for housing. In the late 1960s and early 1970s the price of housing started to escalate above the inflation rate, and commentators at the time talked about a housing bubble. It turned out it was driven by baby boomers coming of age. The chart below, if scaled for 1980, would show a huge increase during the 1970s. That huge increase, by the way, was underneath the huge increase in property taxes that spawned Prop 13 in California and a tidal wave of activism across the nation. The point is it is very, very difficult to know if something is a "bubble" until after it has "popped."

You present solid fact, and my opinion is based more on a gut level, but I was also here for the last one and it feels familiar. My Dad's little house was on the market for $150,000 with no takers in December. Now he has a full price offer of $185k, site unseen by an investment group. Thats an awful quick jump in equity. I also noticed something on tv where they have a website where you can get offers on your house without it ever hitting the market. That's the sort of thing we saw during the last boom, and it just wasn't sustainable. This isn't California, and we just don't have that much to offer. It was 110 degrees again this week. That makes our market very different from San Diego or Seattle. Again, just my opinion.

[NLVgal]

Originally Posted by BBMW

Given how tight the banks are now with mortgages, I don't think so. In 2006 they'd lend anything to anyone with a pulse, and occasionally to those without. Not the case anymore.

Agreed, but here's the thing, we are seeing an influx in Californicators who consider this place cheap, and a number of Chinese investors as well. It's not like last time, you are spot on about the banks, but the cash is still rolling in. It will be interesting to see how it goes with the giant development they have planned in North Las Vegas, by the beltway. Thousands of new homes.

[NLVgal]

Originally Posted by SportyandMisty

EA, I respect your point of view, and I always learn from your perspective. I suspect that answering you would better be discussed in one of the other forums here -- perhaps Great Debates or perhaps Politics.

Maybe great debates, but the politics board is a cesspool. I need eye bleach after reading that forum.

[ND_Irish]

Originally Posted by lvmensch

Better is better than worse. Every time.

Again there is no indication of a housing bubble. And for the average family things are substantially better than they were 10 years ago.

And the attempts by the Fed to increase inflation have failed miserably. We are running at the lowest inflation rates in decades.

We may well be in the early stages of a massive economic shift where well paying jobs become scarcer and scarcer. And it deals with economic basics not Fed policy.

I would also think LV is poised for a set of very good years. And I expect EA will benefit

So let us not hang crepe to welcome some good times. I think we all deserve it for surviving the last decade. .

The calculation of the CPI is a joke. Statisticians can make the numbers appear as they wish by substituting items in the basket or adjust the relative weights of the items in the basket. Healthcare and housing cost increases have been significant for those in the Las Vegas valley on a year-over-year basis as well as in many other areas. The government has a vested interested in keeping interest rates low given the size of the debt at the national, state, and local levels as well as keeping COLAs low for Social Security recipients. If everyone kept track of their spending on essential items, I suspect it likely would not agree with the BLS's official CPI statistics (i.e., the BLS would be understating the true CPI).

[BBMW]

People paying cash generally don't form a bubble. People will defend their cash investments.

It's people who bought with 5% or less equity, and who's equity has been wiped out by any slight market drop, who will walk away at the drop of a hat (as we saw). That's how bubbles form.

Originally Posted by NLVgal

Agreed, but here's the thing, we are seeing an influx in Californicators who consider this place cheap, and a number of Chinese investors as well. It's not like last time, you are spot on about the banks, but the cash is still rolling in. It will be interesting to see how it goes with the giant development they have planned in North Las Vegas, by the beltway. Thousands of new homes.

[EA]

Originally Posted by BBMW

People paying cash generally don't form a bubble. People will defend their cash investments.

It's people who bought with 5% or less equity, and who's equity has been wiped out by any slight market drop, who will walk away at the drop of a hat (as we saw). That's how bubbles form.

BUT the investors driving up the prices to astronomical levels contributes to the bubble. We can't ignore that aspect of it.

[lvmensch]

Originally Posted by ND_Irish

The calculation of the CPI is a joke. Statisticians can make the numbers appear as they wish by substituting items in the basket or adjust the relative weights of the items in the basket. Healthcare and housing cost increases have been significant for those in the Las Vegas valley on a year-over-year basis as well as in many other areas. The government has a vested interested in keeping interest rates low given the size of the debt at the national, state, and local levels as well as keeping COLAs low for Social Security recipients. If everyone kept track of their spending on essential items, I suspect it likely would not agree with the BLS's official CPI statistics (i.e., the BLS would be understating the true CPI).

Yes it gets modified as things change and the need is modified. Still provides a good directional representation and can be corrected as needed. The attempt should always be to model the current needs of the average citizens...not provide a static standard.

The whole TARP episode and the Fed actions were all designed to create inflation and the standard book expectations would have been that they were highly inflationary. That they in fact offset deflationary trends which came as surprise I think to both Treasury and the Fed. Basically manufactured wealth out of computer entries. So it is obvious that the government was attempting to create moderate inflation but failed. And the interesting thing is why they did not do more of it. Could have flowed the money to the defecit and expanding the economy by say infrastructure improvements.

[electricninja]

Originally Posted by NLVgal

You present solid fact, and my opinion is based more on a gut level, but I was also here for the last one and it feels familiar. My Dad's little house was on the market for $150,000 with no takers in December. Now he has a full price offer of $185k, site unseen by an investment group. Thats an awful quick jump in equity. I also noticed something on tv where they have a website where you can get offers on your house without it ever hitting the market. That's the sort of thing we saw during the last boom, and it just wasn't sustainable. This isn't California, and we just don't have that much to offer. It was 110 degrees again this week. That makes our market very different from San Diego or Seattle. Again, just my opinion.

Originally Posted by NLVgal

Agreed, but here's the thing, we are seeing an influx in Californicators who consider this place cheap, and a number of Chinese investors as well. It's not like last time, you are spot on about the banks, but the cash is still rolling in.

Originally Posted by lvmensch

The whole TARP episode and the Fed actions were all designed to create inflation and the standard book expectations would have been that they were highly inflationary. That they in fact offset deflationary trends which came as surprise I think to both Treasury and the Fed. Basically manufactured wealth out of computer entries. So it is obvious that the government was attempting to create moderate inflation but failed. And the interesting thing is why they did not do more of it. Could have flowed the money to the defecit and expanding the economy by say infrastructure improvements.

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.... I believe that banking institutions are more dangerous to our liberties than standing armies.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

–Thomas Jefferson

Funny how history works that way.

[JonathanLB]

Originally Posted by ND_Irish

While the cost of living may increase slightly due to the things you mention, I doubt it will be as dramatic as Colorado and Washington state. Both of these states have more diversified economies than Nevada currently has and likely will have in the foreseeable future. While I do not necessarily agree with the perception, Nevada is still seen by many as not the ideal place to raise a family which also puts a damper on any significant increase in the cost of living.

It's also one of the best things about Nevada. It's the one place in the U.S. that isn't completely breeder central, so please let it be the most unfamily friendly place, that would be fantastic, I hope all of the families think Vegas sucks for families. That'll keep them away and the rest of us can enjoy better cost of living, great weather, and a minimum of brats running around.

Right now, Vegas is a special place because it's basically the best U.S. city but at prices that are ridiculously low. You can get amazing houses for in the $1M range, whereas those same houses would cost $5-8M in California and even in places like Portland where I live would easily run $2-3M. Only without any of the fun, any of the weather, or the no income tax.

Whatever you do, don't talk about Vegas being a great place to live, better to tell everyone else it sucks. A miserable desert devoid of culture, life, and children, horrible place to move! Stay away! It's getting expensive and scorpions will probably bite you nightly, just a part of living in Vegas. Maybe we can convince everyone to stay away for long enough so that it doesn't become the next miserable, overpriced city.

[Tac-Sea]

Originally Posted by EA

Do you think Las Vegas costs will rise to California levels, or near California levels?

I think legal weed and Raiders will drive up our cost of living along with all the investors snapping up cheaper properties. I was considering moving to San Diego after a recent visit, but I can't even begin to afford it. Everything under 300k is a trailer on a rented lot (800-1000 a month lot rent) An ok house is over 400k. A house like the one I am in now is 600k-1 million.

I know a lot of people in Colorado and Washington. Prices skyrocketed there after weed and it seems to be happening here.

What say you guys?

Ummmm....prices didn't skyrocket because of weed, but because lack of inventory in housing coupled with huge demand due to high income tech workers. It is called microeconomics...