[BBMW]

The fact that the LV market is up 30% from the bottom, and houses are still selling below replacement costs, should tell you something. One thing is that replacement cost doesn't count for much in terms of market analysis.

Everything is cyclical. Since 2000, the market went through an up cycle, into a hard down cycle, and now is back on the upswing. If you think that upswing is permanent, you're deluding yourself. The upswing was caused by largely artificial reasons (the Fed depressing mortgage rates, and lots of delinquent houses being kept out of foreclosure. If either of those crack (and mortgage rates are looking like their ready to), the market is going to top out, and head down again.

Originally Posted by ScoopLV

Think about it. If your house burns to the ground, you don't want things to work like auto insurance -- you don't want some dinky check for the price of the home minus depreciation.

YOU WANT YOUR HOUSE BACK. So that's what homeowner's insurance is supposed to do. Put everything back as if it never happened. Real estate, at least in my area, is still selling for less than replacement cost. So why are the gloom and doomers so gloom and doomy?

[logline]

Originally Posted by BBMW

The fact that the LV market is up 30% from the bottom, and houses are still selling below replacement costs, should tell you something.

Yes. It tells you prices went down WAY too far below intrinsic value. It also tells you they are close to fair market value now. I don't think there are too many houses priced below replacement costs unless they are in very poor shape. How convenient for you to mention the 30% rise off the lows, but FAIL to mention how far off the highs we are. Can't both the highs and lows be irrational?

Originally Posted by BBMW

One thing is that replacement cost doesn't count for much in terms of market analysis.

Yes. Emotions, panic and irrational behavior are variables in all markets. That's how I was able to pick up a luxury property for the price of a car. Best deal in my entire life. I couldn't DREAM of building a place like this for anywhere near that price. You can still see the panic on this very mesage board. Replacement costs DO matter... they serve as a telling price point where it makes more sense to purchase a used/distressed home rather than an overpriced new home.

Originally Posted by BBMW

Everything is cyclical. Since 2000, the market went through an up cycle, into a hard down cycle, and now is back on the upswing. If you think that upswing is permanent, you're deluding yourself. The upswing was caused by largely artificial reasons (the Fed depressing mortgage rates, and lots of delinquent houses being kept out of foreclosure. If either of those crack (and mortgage rates are looking like their ready to), the market is going to top out, and head down again.

IF you're right, then you're right. IF you are wrong, you are wrong. You make a few assumptions there without knowing a lot about the history/correlation of interest rates and housing prices. It's not inversely correlated (as has been pointed out on this very board). Saying things like "mortgage rates looking like they're ready to crack" does not make for solid reasoning. You have no basis to make such statements just because they went up recently. They went up because Bernanke hinted at tapering... now he's undoing that irrational panic by going on damage control. What will you say if rates go back down? What if there is another global panic and they go back down again? What IF... what IF... what IF...?

Truth is, no one knows what's going to happen. All we can know is what DID happen and I see a lot of bad info being thrown around here about LV housing history.

[ft_chief]

Originally Posted by ScoopLV

Think about it. If your house burns to the ground, you don't want things to work like auto insurance -- you don't want some dinky check for the price of the home minus depreciation.

YOU WANT YOUR HOUSE BACK. So that's what homeowner's insurance is supposed to do. Put everything back as if it never happened. Real estate, at least in my area, is still selling for less than replacement cost. So why are the gloom and doomers so gloom and doomy?

I was surprised how expensive it is to build a house here in the Valley and thought the home replacement value set by my homeowners insurance co. was too high so they could charge higher rates. BTW, I am not a doom and gloomer. I am a practical person, here for the long haul since 2009.

[oeccscclhjhn]

if anyone really knew what will happen they'd be sipping margherita's (with no salt, no salt...) in the south pacific.

[logline]

Originally Posted by Broker Joe

I know exactly what is happening today and where this phony so called housing recovery is headed.
Stop paying attention to real estate shills, tv pundits paid to promote housing, so called NAR chief economists, Trulia CEO, CoreLogic economists, realtors and greedy homeowners looking for free equity. There is no such a thing as a free lunch, remember that.

Housing is destined to make another all time low. This so called housing recovery is a faux.

Post #1, eh Kevin/TraderVic et al?

Do you change screen names because you have multiple personality disorder?

[strato58]

I also think we are in for another downturn....not only in Vegas but in all areas that had substantial appreciation over the past 12 months. As soon as rates go up a little everthing stops. That is not good nor is it a good sign. Im an appraiser for 27 years and have seen some areas on NJ jump in price so fast that appraisal values cant keep up. This appreciation is only happening due to uber low interest rates that are not sustainable forever. Buyer beware, homes are made to live in and were never suppose to be investments.

[lvoc]

Originally Posted by strato58

I also think we are in for another downturn....not only in Vegas but in all areas that had substantial appreciation over the past 12 months. As soon as rates go up a little everthing stops. That is not good nor is it a good sign. Im an appraiser for 27 years and have seen some areas on NJ jump in price so fast that appraisal values cant keep up. This appreciation is only happening due to uber low interest rates that are not sustainable forever. Buyer beware, homes are made to live in and were never suppose to be investments.

You should stop thinking that way. You are an appraiser from a foreign area and have not the slightest idea what you are talking about. Las Vegas is pretty close to being unique. Check the Case Shiller charts..When you understand how all that happened let us know. Until you do...

[logline]

If refuting those cut&paste rants from zerohedge, point-by-point, with facts... is somehow being a "shill," then I'll gladly wear that title. I seek the truth more than anybody.

You still haven't admitted that there is no inverse correlation between interest rates and home prices... even when I post the graph proving it.

[djslakor]

logline,

With all due respect, enough time has not gone by this go round to say one way or another. The next few months will be telling.

From what I understand, mortgage applications went off a cliff when interest rates rose. In a normal market, this would mean fewer buyers (less demand), shifting the curve to the left. When that occurs, price falls, according to Economics 101.

I think people tend to cheer the side that best suits their own emotional investments. Only time will tell what actually happens.

[djslakor]

Which Americans?

You are aware that many Americans are paying cash for homes at current prices, right? It's not just foreign investors. Many Americans are scooping these properties up, too. I know several, personally. Average joes.

However, I agree that the current situation is not sustainable.

College kids are in debt up to their eyeballs and get very crappy job offers. All one has to do is watch the various job forums to see this. So, _eventually_, who will afford these homes? That's _eventually_. Today, plenty of people can, hence the bidding wars.