[Robustus]

Originally Posted by dynimagelv

98 pennies on the dollar? STILL Pennies on the dollar.

Yeah. Though somehow I think the word "pennies" was initially chosen for sensationalism, as opposed to intended interpretation under a literal technicality.

[TheGreatCurve]

Originally Posted by ScoopLV

How is it irrelevant? There is a market for Las Vegas houses. Hundreds of them sell every day. There is a LOT of capital out there.

The market is self correcting. If prices drop more, people will buy more houses (I know I certainly will). And that will reduce supply.

For houses to drop much more, it would signal that people don't think Las Vegas is going to make it as a city. Otherwise, they'll snap up the bargains and rent them out. Which is pretty-much what's happening now.

But buyers were snapping up houses back in 2008 and 2009 also. But that didn't stop prices from continuing to fall, did it? Despite the demand for houses in Vegas over the past 4 years, prices kept falling. Why? Because the supply overwhelmed even this high demand. Don't forget that there's a flood of foreclosures that have yet to hit the market. Not everyone yet has defaulted on their mortgages. The foreclosures won't stop coming until just about everyone who bought a house in Vegas between 1992 and 2007 with a mortgage has defaulted on their loans.

[TheGreatCurve]

Originally Posted by Robustus

This analogy is pretty silly. CRT prices drop because there isn't demand for them. There is still plenty of demand for housing in Las Vegas, as evidenced by population increases.

Do you have any hard evidence of this population increase?

BTW, there is indeed demand for 37 inch tube CRT TVs, albeit very low. There are people out there that are willing to pay $20 for a brand new one. The problem is that it probably costs $300 to manufacture one.

[Robustus]

Originally Posted by TheGreatCurve

Do you have any hard evidence of this population increase?

No. Here's the best I can do without spending more than 30 seconds googling: Metropolitan Las Vegas Economic Overview from CBER@UNLV . Regardless, the population merely needs to stay the same (or grow in proportion to new construction minus demolitions, which is trivial) in order for demand to remain stable, which is my point.

Originally Posted by TheGreatCurve

BTW, there is indeed demand for 37 inch tube CRT TVs, albeit very low. There are people out there that are willing to pay $20 for a brand new one. The problem is that it probably costs $300 to manufacture one.

I don't follow your point here... There's trivial (aggregate) demand (across all price points, ie, the integral of the demand curve) for CRTs. This is what I'm saying.

[fishordie]

Originally Posted by ScoopLV

I base my opinion that "things can't get much lower" (note, "much" not "any lower") based on the fact that houses already cost less than replacement cost.

People who are buying houses in Las Vegas are essentially getting the land for free, along with a 20-40% reduction on what it would cost to build the house.

Further significant reduction in Las Vegas house prices would mean that people lack confidence in Las Vegas as a functioning city -- Lake Mead shriveling up, gambling prohibition enacted by Congress, complete meltdown of the world's financial system (and presumably going to a Mad Max economic system of trinkets and body parts).

Perhaps Scoop you should look at Detroit where you can get a Mansion for almost nothing. To my knowledge they are still making a few cars there. I am in Vegas right now and am seeing prices on mid range and higher end homes still falling. Lots of folks here in Vegas but the overwhelming majority are not looking to own, are here as tourists or cannot qualify. It will get worse once the banks get past all the new regulations for foreclosures here.

FOD

[Robustus]

Originally Posted by TheGreatCurve

But buyers were snapping up houses back in 2008 and 2009 also. But that didn't stop prices from continuing to fall, did it? Despite the demand for houses in Vegas over the past 4 years, prices kept falling. Why? Because the supply overwhelmed even this high demand. Don't forget that there's a flood of foreclosures that have yet to hit the market. Not everyone yet has defaulted on their mortgages. The foreclosures won't stop coming until just about everyone who bought a house in Vegas between 1992 and 2007 with a mortgage has defaulted on their loans.

I believe I adequately addressed these points, but to be clear, I'm positing the following:

1) The real-estate collapse of '07-'11 was a fairly (ie, twice a century, maybe?) unique period of deleveraging with various causes ranging from new financial credit instruments, easy monetary policy, gov spending, etc.

2) Due to the fact there was tons of stuff attenuating the underlying supply/demand curve, linearly extrapolating the '07-'11 trajectory much further is not correct. This is indeed the same mistake made by those who forecast perpetual YoY double-digit growth in the real estate market by extrapolating '01-'05 data.

3) I agree that the foreclosures won't stop for several years, but I suppose I'm implicitly stating that I don't think they'll accelerate tremendously. They'll likely stay about the current level for a few years, and I'm saying that the churn in the market will mostly continue to consume them, roughly keeping prices in line. Sure, maybe another 15-25% fall from here, followed relatively quickly by a similar bounce once foreclosures finally begin to wane, but the vast bulk of the declines are done (again, barring the semi-catastrophic global debt bomb scenario that's out of scope for this discussion).


But if you disagree, this *is* Las Vegas after all, so here's $20 betting that mean sfr sale price for the Las Vegas Valley for Q1 2017 will be higher than mean sfr sale price for Q1 2012. I believe MomMom has offered to act as an escrow agent when I've posed these sorts of wagers to other board members in the past. Not sure what her fee structure is, though. :-)

[ScoopLV]

Originally Posted by fishordie

Perhaps Scoop you should look at Detroit where you can get a Mansion for almost nothing. To my knowledge they are still making a few cars there. I am in Vegas right now and am seeing prices on mid range and higher end homes still falling. Lots of folks here in Vegas but the overwhelming majority are not looking to own, are here as tourists or cannot qualify. It will get worse once the banks get past all the new regulations for foreclosures here.

FOD

You're proving my point for me. You can buy a palace in Detroit for a pack of gum and a case of beer because people don't have faith in Detroit as a viable city. They're talking about knocking a third of the city down and turning it into parks. Because parks are preferable to vacant buildings that look like something out of "Escape from the Bronx."

For Las Vegas prices to go down much further, people would have to feel the same way about this city as they do about Detroit.

[Robustus]

Originally Posted by ScoopLV

For Las Vegas prices to go down much further, people would have to feel the same way about this city as they do about Detroit.

Yes, thank you, this sums it up nicely. [where "much" = >25%]

[Tantamount]

Originally Posted by 007 license to sell

Your next landlord in Las Vegas could be a hedge fund

"The Journal says McKinley’s model is to buy a house for $100,000, put $10,000 to $25,000 maintenance into it, rent it for $1,200 per month and then see annual returns of between 8 and 12 percent. Given the current economic volatility, this is an outstanding investment."

This is very far fetched. My current and previous experience tells me this is overly optimistic.

[TheGreatCurve]

Originally Posted by Robustus

No. Here's the best I can do without spending more than 30 seconds googling: Metropolitan Las Vegas Economic Overview from CBER@UNLV . Regardless, the population merely needs to stay the same (or grow in proportion to new construction minus demolitions, which is trivial) in order for demand to remain stable, which is my point.

Thanks for that link. It looks to me from that population graph that the population growth in Clark County has pretty much flattened out since 2007. Don't forget that Vegas is full of old people and retirees who die at a fast pace and since they are such a larger percentage of the population, this puts downward pressure on population growth even if new residents move into Vegas. More people have to move into Vegas every month plus new births than the number of of people dying and moving out in order for the population to grow.

Originally Posted by Robustus

I don't follow your point here... There's trivial (aggregate) demand (across all price points, ie, the integral of the demand curve) for CRTs. This is what I'm saying.

My point is that the market price of a product is set by the market and not by how much it costs to make or build that product. If you're in a business in which the price that customers are willing to pay for your product is less than it costs you to make that product, you won't be in business for very long.