http://markp.cbvegas.com/blog/archive_201002/sort_entrydatetime-desc/ The S&P/Case-Shiller home price index came out this morning. Unfortunately it is so popular that the site crashes and I have just obtained the data. We do observe seasonality in prices in Las Vegas so I like to use the seasonally adjusted indices. Interestingly, the most current observation, December 2009, registered a month-to-month increase in all price tiers. A positive change has occurred for both November and December. Was this a purely organic increase? Probably not. The tax credit has been a relevant motivator of purchases and we have probably brought some demand forward. Nevertheless, pricing has appeared to reach an inflection point away from declines. This is encouraging, even if we do skip along a bottom characterized by positive and negative month-to-month changes. As we have noted before, there are several encouraging characteristics of today's market that point to a good time to purchase homes. The tax credit does provide a lot of folks the necessary financial buffer to make the downpayment outlay hurt less. Yes, you fork out some cash now but if you are qualified you get a check in several months. Further, the tax credit buffers any posible price declines. If you buy a $120,000 home, that home could decline in price by 6% au are still net positive. But that is not a reason to buy but is an offset in risk. There are other reasons to buy. Mortgage rates are low, however many mortgage market observers are predicting rates to increase, especially after the completion of the Fed's program of purchasing mortgage backed securities (if they spiked prices could decrease, however a massive spike is unlikely). Go with what you know and not with what you hope. You know rates are historically low so wishing for lower rates is probably going to lead to disapointment.In addition, you can often buy cheaper than you can rent. The decision to buy may not be a consideration for everyone since some households are still in a transitory position, unclear of their job prospects or where they would like to spend a significant portion of their lives. But for households that choose to make Las Vegas their home for a longer-term, purchasing may be a reasonable option. Another feature of the Las Vegas residential market is the high returns that you can get on rental properties. Returns this high should not be sustainable and implies that sale prices are way out of wack. While we see a softening rental market, sale prices and rental prices should move to where these returns are lessened. Part of that will likely come from appreciation. Significant appreciation may not happen tomorrow or even months from now but for investors; they can get positive cash flow, then appreciation later on. Would I tell everyone to buy a home? No, because renting make sense for some people. However, for stable households or investors, the data points to a really opportunistic time for buying. Buying this far below trend is another attribute that makes this era encouraging for home purchases.Source: Standard & Poors. http://markp.cbvegas.com/blog/886/s&p-case-shiller-update/ Tue, 23 Feb 2010 12:11:54 -0800 Modern locomotives are diesel-electric hybrids where a diesel drive motor powers a generator that in turn powers electric motors at the drive wheels. Regional economies are dynamic motors that power the locomotive...the United States. While each wheel, the regional economy has its own motor, there is a drive mechanism at the top, chiefly monetary policy and with respect to Las Vegas's regional economy, national employment can be thought of as a drive engine. In Las Vegas we really seek a broad national recovery and a return of disposable income. While several local indicators show improvement, we have yet to experience a conclusive rebound and much of this is geared along with a weak national rebound. Thats exactly the reason why I like several real estate asset classes in the Valley. Its back to buy low, sell high instead of buy high, sell higher, which was unsustainable. A popular article in CNNMoney reported the findings of PNC Financial Services and IHS Global Insight in which they estimated that Las Vegas was 41.4% undervalued (this is deeper than my own estimate of -28% undervalued but it depends on the weights you give each metric), number one for the most undervalued. Conversely, Atlantic City was pegged as the most overvalued. In overvalued cities in the midst of a recession, or at best a weak recovery, buying homes looks risky. I would probably be a renter in those markets unless I found a deeply below market deal. In Las Vegas we have seen levelling in prices due to first-time buyer demand and from investors. The tax credit has served as an artificial support but I think their is real organic interest here. When employment turns around and household formation re-ignites, we could be looking at some good absorption. The 20-City S&P/Case-Shiller index still appears to be above trend. Las Vegas appears deeply,deeply below trend. I think its more comfortable to buy when it this deep below trend and that the reward-risk ratio is out of balance on the reward side.CNNMoney Story - Click Here http://markp.cbvegas.com/blog/872/some-notes-on-valuation/ Wed, 17 Feb 2010 09:56:52 -0800 Seeking Alpha has a good article today regarding bond market expectations of inflation. The author notes that 4.7% yields seem massive in today's low interest rate environment but 30 year bonds are still selling poorly. The weak investor appetite for these bonds implies that market participants are expecting inflation since 4.7% yield in a deflationary market would be supurb. If this author is correct about inflation expectations, what does that mean for real estate? My take is at these low interest rates, I would not mind owning more real estate, especially income producing. Something that could be expected to rise with inflation but still covers costs like taxes and insurance, with enough left over for that sometimes elusive feature called positive cash flow. If you buy smartly, this can be done. Factor in your purchase price a much higher vacancy rate and lower lease rate and if it covers the note at those levels, there is good chance you have preserved some upside for yourself. As always, there are no certainties and you must do your homework. Nevertheless, opportunities are abundant. Also note: The Fed's program of buying MBS is near conclusion. Higher mortgage rates could be on the horizon. Click for the article cited. http://markp.cbvegas.com/blog/867/bond-market-and-inflation/ Tue, 16 Feb 2010 09:20:13 -0800  STEVE ROSS TO SPEAK AT COLDWELL BANKER PREMIER REALTY Steve RossLV City CouncilWard 6The Centennial Hills office of Coldwell Banker Premier Realty welcomes Las Vegas City Councilman Steve Ross to it's weekly business meeting on Thursday February 18, 2010 at 8:30AM.Councilman Ross represents Ward 6 on the LV City Council. Ward 6 is the fastest growing area of Las Vegas and encompasses the far northwest and Centennial Hills. This area has doubled in poplulation in the last 6 years. Mr. Ross will be speaking about growth, development and other real estate related matters relevant to the northwest and Centennial Hills area. This event is open to all real estate & related professionals interested in learning more about this dynamic area of Las Vegas. The presentation is scheduled for approximately 1 hour. The event will be held at the Centennial Hills office of Coldwell Banker Premier Realty. The office address is: 6628 Sky Pointe Dr. Suite 200 LV 89131. To RSVP please call: 702-987-5600.   http://markp.cbvegas.com/blog/857/lv-city-councilman-to-speak-at-cbpr/ Thu, 11 Feb 2010 01:59:53 -0800 Congratulations to Ron Opfer, CCIM for receiving one of the first ESRI/CCIM Institute grants for his proposal to create analytical tools for the distressed asset market using ESRI's analytic software.  Ron has been a successful commercial real estate agent in the valley for many years, always at the forefront of acquiring innovative market analysis skills and industry-leading technology tools to  assist his clients and his company in this ever changing marketplace.  We are proud to have him on our team!  Great job Ron!Read more about Ron's national grant to assist banks with distressed assets http://markp.cbvegas.com/blog/848/coldwell-banker-premier-realty-agent-receives-federal-grant/ Fri, 05 Feb 2010 01:35:19 -0800