[rpachigo]

Originally Posted by KCfromNC

Freddie and Fannie's moratorium on foreclosures has to end sooner or later. Some sources are reporting this ban did end late last month, which should provide that "new vein" of foreclosures for your area to work with.

Fannie and Freddie quietly lift moratorium on foreclosures.

The Washington Independent » Fannie, Freddie Quietly Lift Moratorium on Foreclosures

[olecapt]

Originally Posted by ClarkGrisowld

At the time, there really was no trend other than down besides a temporary bump up, which typically happens because few things go straight down. That was really the argument that I was making, that a few data points was not a trend by any definition and that, absent a catalyst, the macro fundamental didn't indicate any direction other than down.

I wouldn't read too much into "velocity" vis a vis Japan. It certainly would not be surprising that market corrections occur more quickly, which is a trend that is evident in multiple asset classes due to structural changes increasing the efficiency of asset flows and information.

The parallel to Japan that should be concerning or relevant is the macro state. While markets can temporarily diverge from fundamentals, it's always been the case that long run asset prices are driven by economic fundamentals. Here's my point about Japan: the US currently has a 0% fed funds rate and is instituting quantitative easing. While that may have slowed the fall in Japan and eventually led to some stability, it DID NOT spur recovery. And prices in Japan have still not recovered. I'm afraid a "lost decade" in the US has more than a small probability of happening.

If we are off 60% and use Japan as a gauge, then we may be close to a bottom, however that 60% is an average and smart money would be Vegas being above average with further to fall. But that would require some comparisons on the run-up and other things.

The NASDAQ lost 80% of its value after the tech bubble burst. It's a reasonable assumption that the housing bubble will completely deflate and overshoot. A recent article in the Economist predicted home values in Ireland would fall 80%, in real terms, peak to trough. As I said, I'm not sure where the bottom is for the US but perhaps prices of 2000 or 2001. Of course, a year ago I think you tried to deny that there even was a housing bubble,

I have never denied the existing of the housing bubble. I have and still do deny that the housing bubble busted. Such a bust would have been analogous to what happened to NASDAQ. The buyers simply stopped buying and drove the price down.

We were in the classical CA ratchet down with a slow market losing 8 or 10% per annum. Might have gone on for years or stabilized with an increase in population.

What did happen was a market killing manipulation of the price by the lenders to unload their inventory. The simple fact that over 85% of the sales are lender related or approved demonstrates that this is anything but a "free" market. You don't seriously propose that we have reached the point where lender control of 80% of the market is a "normal" one do you?

If the US housing market has further down to go - and by all accounts, it does - then Vegas has further to drop as well. If the average US price bottoms at 40-50% off the peak (which is to say, 10-20% more), Vegas will probably be looking at easily 60-70%, perhaps 80%, peak to trough.

The only positive I see for the Vegas market at the moment is if the stimulus jump starts this economy, and perhaps the stock market is indicating that. But until the economy improves or at least stabilizes, which is a rather optimistic outlook actually, there really is nowhere for Vegas to go but down.

I would not argue that health in Las Vegas requires a recovery of the US economy.

I however have no particular problem with Las Vegas leading an RE recovery. Primarily because it was so vulnerable to the mechanism and hit so early.

And an indication of stability in Summerlin could well be a first step. Maybe only a false positive...time will tell. But such an up this early in the year makes that unlikely. We are clearing going to see record or near record volumes over the next months. Can we do that and maintain a strong price decrease? I think not...

Interesting times.

[tony soprano]

Originally Posted by olecapt

I have never denied the existing of the housing bubble. I have and still do deny that the housing bubble busted. Such a bust would have been analogous to what happened to NASDAQ. The buyers simply stopped buying and drove the price down.

It's pretty clear that the Vegas housing bubble has popped. And it popped because buyers stopped buying and didn't resume buying in earnest until prices corrected significantly. In terms of velocity, you wouldn't expect to see a NASDAQ like collapse in housing prices because relative to equities, housing prices are inherently sticky.

What did happen was a market killing manipulation of the price by the lenders to unload their inventory. The simple fact that over 85% of the sales are lender related or approved demonstrates that this is anything but a "free" market. You don't seriously propose that we have reached the point where lender control of 80% of the market is a "normal" one do you?

Lenders are free to sell their inventory for whatever price the market will bear. Buyers are free to buy lender inventory for whatever they think it's worth. Please explain how that is not a free market? Price manipulation. Classic.

[ClarkGrisowld]

Originally Posted by olecapt

I
And an indication of stability in Summerlin could well be a first step. Maybe only a false positive...time will tell. But such an up this early in the year makes that unlikely. We are clearing going to see record or near record volumes over the next months. Can we do that and maintain a strong price decrease? I think not...

Interesting times.

That is the million dollar question. Certainly in the past Vegas would lead out a recovery. Could that still be the case? Very hard to say, because I think the lucrative convention business will be slow to come back to Vegas and that means local economic recovery is going to take longer than in the past. On the investor front, still a great place to retire but a lot of nest eggs have been so severely crushed that these people won't feel flush to go buy a home on a 20-30% market rally.

CA has been through several cycles, not like this obviously but I suspect that is what will happen in Vegas. Eventually it will again well outperform that national market, and probably have a sharper correction again.

The other question is if investing/speculating in real estate has undergone a fundamental change in terms of mentality. I kind of doubt it because I don't think a lot of the marginal buyers who got burned will really be that material. And the investors that can afford 3-4 or more properties probably will always recognize the value in diversifying beyond the stock/bond market, and with historically low interest rates and 2001 prices it does look like a very attractive investment.

I also think there is a decent probability of another bubble forming in housing in the not-so-distant future. Combined with expected inflation, I think the hesitancy to cut off capital/liquidity too soon and choking off a recovery (globally, not just the US) is going to replicate the exact conditions that led to this bubble in the first place.