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That has to happen. Either the heath care industry has to figure out how to function on about a quarter of the money it gets now, or it's going to bankrupt the country.
I wanted to chime in and write down my observation from my perspective. In my line of work I see a lot of people in all walks of life and income levels. What I've been noticing lately is that more of my customers cannot afford to maintain their homes. Either they do not have the money or they are using the money elsewhere. I've also noticed more people moving into town and renting homes and the bread winner does not live in town and is working out of town to make ends meet. With all the new people moving into Las Vegas where are these people working? I do not know if there is a bubble going to happen in the next few years but if people are still using credit to live day to day it might happen again but this time worse than 2008. I'm not an expert on this subject but this is what i've noticed in the last few years.
While I do pay attention to data, it is looking backwards, and I appreciate comments like the one above from AA702. I spend quite a bit of time with homeschooling families, most of whom are making significant financial sacrifices, and I have seen a couple trends over the last several months which I find somewhat concerning. One trend I have seen is that a significant number of families has cut back on activities which involve any sort of fee. If the activity is not free, the family simply will not participate for financial reasons. Those families who are renting have all suffered from higher rents in the Las Vegas area. Another trend I have noticed is that some families have decided to live for the present and are living well beyond their means. For example, they may be stretching to buy a home, which they may not be able to maintain, buying new gas-guzzling vehicles, or signing up for expensive gym memberships. It appears to me they largely are doing this by taking on too much debt.
I have read prior posts trying to discount the notion that housing is not in a bubble. However, I saw an article today where the credit rating agency, Fitch Ratings, noted that Las Vegas housing may be overvalued by about 15%. Here is a link to the article: https://www.reviewjournal.com/busine...unsustainable/. The double-digit increases in home prices in Las Vegas on a year-over-year basis are not healthy. Individuals are not seeing double-digit increases in their wages, and when you include the significant increases in healthcare expenses and other day-to-day living expenses, I simply do not see a good outcome in the not-to-distant future.
Although housing may not be in the bubble it was in nationwide a decade ago, it certainly is in bubble territory in certain US metropolitan areas and other countries such as Canada, Australia, and China. I also agree with EA that other types of debt are in dangerous territory such as credit cards, student loans, and especially automobiles. Stock valuations appear to be stretched as well. Housing could take a significant hit if the stock portfolios of those who paid cash for their homes take a major hit such as during the dot-com bubble.
No one has a crystal ball, but historically the current economic cycle is starting to get long in the tooth. Las Vegas still relies heavily on the discretionary income of tourists and locals. If that discretionary income continues to shrink due to an increasing cost of living or takes a significant hit due to another recession, it is not out of the realm of possibility that the area will see another economic downturn similar in magnitude to the last one given the amount of total debt outstanding.
Since 2008 we've been getting on average 30,000 new residents each year yet we're only building 2,500 new single family homes per year. That's 1 house for every 12 new residents.
We used to build 13,000 new single family homes per year (1997-2007), or 1 house for every 2.3 new residents. We're not building enough.
In addition, people aren't selling their homes because they look at what else they could get in their price range and decide to stay where they are.
It's not rocket science. When demand for an item increases and supply does not keep up with the demand, prices increase.
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That has to happen. Either the heath care industry has to figure out how to function on about a quarter of the money it gets now, or it's going to bankrupt the country.
1/3 of every healthcare dollar in this country is spent is spent on administrative overhead due to the various insurance companies.
Average routine doctor visit reimbursement in Las Vegas is about $35.00 with our major payer. The patient pays about $15 to $20 of that. An MRI is reimbursed at about $350 per service. Allowables are set at about 80% of the Medicare rate for most payers here.
Granted, the LV healthcare market is brutal compared to others, but still.
Sorry. We can't really take any more haircuts. Talk to the pharma companies, the insurance companies, and the for-profit hospital corporations.
I can't speak to LV / NV specifically, but look at doctors' salaries in the US vs the rest of the industrialized world. We're way higher.
That's not to say what your saying is wrong. Everyone involved needs to figure out how to do at least the same, if nor more, with significantly less money.
Prices alone do not make a bubble. Prices may peak out, and even drift downward if the prices are not sustainable. That would not be a bubble pop, that would be normal market fluctuation. Markets are supposed to do that.
2008 was definitely a bubble pop. It was caused by the fact that mortgage originators (banks and others like Countrywide), we're making loans they knew would go bad, so they could get the origination fees, then dump the loans on the secondary market and get rid of them. They were lending to buyers with no equity, on variable rate loans with teaser rates that were guaranteed to go up. There were a lot fo no-doc loans, where the lender had no idea what the borrowers income was. Negative amortization loans, so the principle balance on the loan went up over time, not down. I can go on and on. It was a credit bubble, NOT a housing price bubble (at least not directly, but the easy credit pumped up prices.) And, of course, the originators weren't correctly recording and archiving the loans, so that when they did blow up, they were not in a position to legally foreclose. Even now, there are still likely five figures of houses in Clark County stuck in delinquency limbo, many abandoned, with now way of working them out.
So when the market did top out and start coming down, people with no equity simply walked away, and this stated positive feedback loop of prices going down, more "homeowners" going into negative equity. Add to this that older variable rate loans were coming off teaser rates, forcing the borrowers to pay more, and now on a house that's likely worth less than the loan they were paying. Pop.
Now, AFAIK, none of that is happening now. The banks have tightened up significantly. If they're writing a loan, likely the borrower is qualified. If that's not the case put it out there, because that would be an indicator of a bubble. But what I see the primary issue now is simply supply and demand. If prices are still going up, they simply haven't hit equilibrium yet. As I said before, I think a lot of this is being driven by the LA housing market. When that tops out, likely so will Vegas
Quote:
Originally Posted by ND_Irish
While I do pay attention to data, it is looking backwards, and I appreciate comments like the one above from AA702. I spend quite a bit of time with homeschooling families, most of whom are making significant financial sacrifices, and I have seen a couple trends over the last several months which I find somewhat concerning. One trend I have seen is that a significant number of families has cut back on activities which involve any sort of fee. If the activity is not free, the family simply will not participate for financial reasons. Those families who are renting have all suffered from higher rents in the Las Vegas area. Another trend I have noticed is that some families have decided to live for the present and are living well beyond their means. For example, they may be stretching to buy a home, which they may not be able to maintain, buying new gas-guzzling vehicles, or signing up for expensive gym memberships. It appears to me they largely are doing this by taking on too much debt.
I have read prior posts trying to discount the notion that housing is not in a bubble. However, I saw an article today where the credit rating agency, Fitch Ratings, noted that Las Vegas housing may be overvalued by about 15%. Here is a link to the article: https://www.reviewjournal.com/busine...unsustainable/. The double-digit increases in home prices in Las Vegas on a year-over-year basis are not healthy. Individuals are not seeing double-digit increases in their wages, and when you include the significant increases in healthcare expenses and other day-to-day living expenses, I simply do not see a good outcome in the not-to-distant future.
Although housing may not be in the bubble it was in nationwide a decade ago, it certainly is in bubble territory in certain US metropolitan areas and other countries such as Canada, Australia, and China. I also agree with EA that other types of debt are in dangerous territory such as credit cards, student loans, and especially automobiles. Stock valuations appear to be stretched as well. Housing could take a significant hit if the stock portfolios of those who paid cash for their homes take a major hit such as during the dot-com bubble.
No one has a crystal ball, but historically the current economic cycle is starting to get long in the tooth. Las Vegas still relies heavily on the discretionary income of tourists and locals. If that discretionary income continues to shrink due to an increasing cost of living or takes a significant hit due to another recession, it is not out of the realm of possibility that the area will see another economic downturn similar in magnitude to the last one given the amount of total debt outstanding.
But a bubble is a special circumstance where the market has been driven up by unsupportable external reasons, and that support collapses. Which is exactly what happened in 2008. Just prices going up doesn't cause a bubble.
Very true. That's why it is so darn difficult to tell if you're in the midst of an actual bubble that will predictably pop in the not too distant future, or if you're just in the midst of asset price inflation where no pop occurs.
It is only after the bubble has burst that we can reliably say it was a bubble as we use the term.
Prices alone do not make a bubble. Prices may peak out, and even drift downward if the prices are not sustainable. That would not be a bubble pop, that would be normal market fluctuation. Markets are supposed to do that.
^^^ This. ^^^ Good explanation -- price fluctuations do not imply a bubble.
Quote:
Originally Posted by BBMW
Even now, there are still likely five figures of houses in Clark County stuck in delinquency limbo, many abandoned, with now way of working them out.
I'd love to find a good source for data on this. I hear opinions, of course, but I'd love to find a way to get data.
I wanted to chime in and write down my observation from my perspective. In my line of work I see a lot of people in all walks of life and income levels. What I've been noticing lately is that more of my customers cannot afford to maintain their homes. Either they do not have the money or they are using the money elsewhere. I've also noticed more people moving into town and renting homes and the bread winner does not live in town and is working out of town to make ends meet. With all the new people moving into Las Vegas where are these people working? I do not know if there is a bubble going to happen in the next few years but if people are still using credit to live day to day it might happen again but this time worse than 2008. I'm not an expert on this subject but this is what i've noticed in the last few years.
Actually I'm going to refine this, and state it as a formal definition. In a normal market, a change in price in a particular direction creates a negative feedback, that pushes prices in a the opposite direction. Ie, prices going up makes potential buyers buy less, so supply builds and sellers have to drop prices to stimulate sales (and visa versa.)
In a bubble, a drop in prices combined with some outside effect, creates a positive feedback, which has the effect of pushing prices down even further, feeding back on itself. The situation I described above caused the excessive, poorly underwritten/originated mortgages in the run up to and down the back of the 2008 implosion would be the definitional example of this. I guess it could also be shown in a situation where rising prices feed back on themselves, but I can't think of an example off the top of my head.
Quote:
Originally Posted by SportyandMisty
^^^ This. ^^^ Good explanation -- price fluctuations do not imply a bubble.
UNLV's real estate institute has it. They used to put out reports periodically that had it buried in it as a chart.
Edit: Found it. Latest report is from 2016. They have charts that shows delinquencies and foreclosures
I'd love to find a good source for data on this. I hear opinions, of course, but I'd love to find a way to get data.
Last edited by BBMW; 07-22-2017 at 02:05 PM..
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