[TerpsandHorns]

REALITY versus MORALITY

Spiralling home prices outpaced income considerably during the boom. It became almost absoultely necessary to use every stated income...or "gray area funny numbers" from some desperate mortgage brokers..

Some Brokers were forced into gray areas of morality within loan guidelines.

Typical Debt to Income ratio numbers are 50% for subprime and no more than 42% for most A paper programs.

.......

For example the median household (that is total household not per capita) income in Henderson, NV is roughly 64,000/year. The median home price is roughly 482,500. (I know these numbers might be off...i just pulled them from the website but they are close enough).

Assume this household has 2 small car payments of 600/month combined and credit card payments of 100/month (typical debt load). That would allow a maximum at 42% gross for $1540 a month payment.

Not even factoring in the taxes, insurance, mortgage insurance, and homeowner's assoc dues....

1540 a month gets you a 263,000 loan! Try buying that 482,500 home. it jsut doesn't work. And I used an unrealistic 5.75% rate. Today's rates are a full point higher.

Back out the taxes, insurance, PMI, and Assoc dues...use a more reasonable rate..

And the typical median family could only truly afford a 200K home.

Brokers were almost forced to play around with income numbers to get any loans done.

....

Interestingly enough

No one complained about broker/lender behavior when they were making 25% gains every year and cashing out thousands.

Now that people are losing money. Well it is the lenders/brokers faults.

[olecapt]

That is simply external propaganda by the unknowing. It has always been reasonably difficult it find positions in Vegas. Nothing new.

First off unless you are a high level or specialist nobody will even talk to you until you have moved here. They do not hire entry level or even a level or two up from outside of Vegas.

Second certain desirable jobs like valeting cars and cocktail waitressing require pull. A friend, a relative or sometimes a payoff. The town is heavily networked and you need an in to the network to even be considered for certain positions.

Other things, Police, Fire, paramedics are more straight up. But they often take a lot of time.

The advice to most newbys is get a job that will keep you fed while you dig for the one you want.

[jfkIII]

then again...you can always become a teacher.

[olecapt]

Originally Posted by jfkIII

then again...you can always become a teacher.

Only if well credentialed...and it still may take months.

[SHEPNYC]

Originally Posted by olecapt

That is simply external propaganda by the unknowing.

From KLAS-TV not exactly external propaganda. It comes from a local source.

Originally Posted by olecapt

The advice to most newbys is get a job that will keep you fed while you dig for the one you want.

Won't fuel the purchase of that expensive home that has been languishing on the market for months.

[SHEPNYC]

As the credit crunch worsens and consumer demand remains soft, Las Vegas builders are cutting back on their production of new homes.

For only the second time since January 1992, homebuilders took out fewer than 1,000 permits in a month, according to Dennis Smith, president of Home Builders Research, who expects new-home prices to continue to fall through 2008. In July, 859 permits were issued, bringing the seven-month tally to 10,140. That's a year-to-year decrease of 36 percent, the lowest total through July since 1993, Smith said.

Las Vegas builders have been in better shape than other markets when it comes to low level of inventory, with some estimating a six-week supply of new homes. Smith said evidence that the new-home market isn't overbuilt is that builders have pulled 32,500 permits in the last 18 months, while closing on nearly 36,803 homes.

The price decline in the new-home market is caused by soft consumer demand, an oversupply in the resale market and the increasing difficulty of getting financing, he said.

In July, Smith reported a median new-home sales price of $314,551, almost identical to June. For the year, prices are down more than $20,700, or 6.2 percent, he said.

Smith said that by the end of 2007 he expects prices to be 7 to 9 percent lower than 2006 and wouldn't be surprised if new-home prices fell another 6 to 8 percent in 2008.

In the resale market, Smith said, 2,101 transactions in July brought the yearly total to 16,957, a yearly decrease of nearly 37 percent.

Given that the prices of new listings are declining and inventory continues to rise, Smith predicts the median price of resale homes will have fallen 7 to 9 percent in 2007 and prices will continue to soften in 2008 and possibly into 2009. Once prices stabilize, they will remain flat for a while. Smith said his timetable changes if interest rates are lowered.

[olecapt]

Originally Posted by SHEPNYC

From KLAS-TV not exactly external propaganda. It comes from a local source.





Won't fuel the purchase of that expensive home that has been languishing on the market for months.

KLAS is reporting it correctly. It is still untrue.

Most newbys of the sort that come to Vegas seeking employment are not likely to buy any home for some years.

[TerpsandHorns]

I think what is forgotten...

The slowdown/reversal in housing started late last year. It wasn't tied to any credit mess.

As a mortgage professional, the current dwindling of credit started back in February 2007. It was a minor nuisance only in subprime lending.

In fact, even subprime lending was (bad but intact) until around July 25th of this year. Alt-A was totally fine. I have plenty of mid-July rate sheets that I laugh out now compared to today's rate sheets.

The credit crunch really accelerated only this month of August.

So...all these housing starts, new builds, median prices, etc...Most of them are up to July 2007!!

None of the stats have factored in the credit crunch yet. All indicators are usually compiled for the previous month.

When the August numbers hit in mid September....let's just hope consumer confidence doesn't collapse.

I think August will be the worst month in 20 years. I hope I am wrong. But, maybe just maybe we have hit the absolute worst in the credit market, and we are ready for a slow slow climb out.

[jfkIII]

LV: Most common jobs for males:
Construction (16%)
Accommodation and food services (14%)
Arts, entertainment, and recreation (12%)
Administrative and support and waste management services (6%)
Professional, scientific, and technical services (5%)
Public administration (4%)
Health care (3%)

The most common job for males in Las Vegas is construction. Obviously there is much more construction other than housing going on there...but LV was handling that fine with the number of construction workers they had. So, my guess is that there are quite a bit of unemployed construction workers living in LV, now that construction on new housing has basically stopped. Is that right? If so, how does the problems in the LV real estate market trickle down to other areas, that isn't so obvious?

[olecapt]

Originally Posted by TerpsandHorns

I think what is forgotten...

The slowdown/reversal in housing started late last year. It wasn't tied to any credit mess.

As a mortgage professional, the current dwindling of credit started back in February 2007. It was a minor nuisance only in subprime lending.

In fact, even subprime lending was (bad but intact) until around July 25th of this year. Alt-A was totally fine. I have plenty of mid-July rate sheets that I laugh out now compared to today's rate sheets.

The credit crunch really accelerated only this month of August.

So...all these housing starts, new builds, median prices, etc...Most of them are up to July 2007!!

None of the stats have factored in the credit crunch yet. All indicators are usually compiled for the previous month.

When the August numbers hit in mid September....let's just hope consumer confidence doesn't collapse.

I think August will be the worst month in 20 years. I hope I am wrong. But, maybe just maybe we have hit the absolute worst in the credit market, and we are ready for a slow slow climb out.

Through the first three weeks of August we are running 40 or 50 units behind July on sales of around 825 sfrs. Median price is right at 300K up 5K from July. Does not sound like any significant change to me. Dreadful market just hanging right there.