The Grass is Always Greener….
Not if you’re looking to buy or invest in Las Vegas right now! The grass is definitely greener on your side of the fence. If you’re trying to sell your property right now, trust me, you’re feeling the pain – at the very least you are frustrated. While this manifests as doom and gloom in the press, it can be the opportunity of a lifetime if you can filter out the noise.
What is the noise? It is record numbers of foreclosures, short sales, limited financing availability, bank owned properties and a number of other things that are alarming to the market in general. These are the things that the media is focusing on. You don’t hear much about the buyers of properties that are 10, 20, even 30% below what was paid for them less than two years ago!
How can a house drop in value that fast and not be afraid of it? First off, there is a very mechanical process that happens during the foreclosure process now – elimination of the second mortgage. With all of the 100% financing that was going on, the bulk of those transactions had a 20% second mortgage in place to eliminate PMI. When the foreclosure becomes final and the property becomes bank owned (REO), the second mortgage is effectively eliminated – overnight drop in value of 20%! This is causing a real problem for those who are looking to sell their properties in a traditional manner. It is this problem that is being focused on in the media, doom and gloom.
Why shouldn’t I be afraid of this type of property? Simply because others’ pain is your gain. Look back at some of my past market reports (if you can’t find them, contact me and I’ll get them to you) and you’ll have my clear opinion on what the Vegas economy is setting itself up to do. When the local market strengthens it is those that had the foresight to buy when everything was on sale (right now!) that will be left holding the bag of money. Keep in mind that the focus is on the creatively financed properties that are now in trouble. Fear is that these properties will sink the market permanently. Remember that we are only talking about 5-7% of the homes. While this 5-7% of the market is DEFINITELY having an impact on the rest of the market, it will be resolved when these ARM’s find resolution through refinancing, foreclosure and resale or renegotiation with the bank. The vast majority of the homes out there have conventional financing and are in good standing. Remember all of these people bought their homes at market value, and are not inclined to sell 10, 20 or 30% under what they paid. They will continue to live in their homes until the market strengthens and will participate when values come up.
It is my belief that we just need to work through these troubled properties and we will find that value will be buoyant back to what it was before this crash began. What this means is that when you see a property significantly below traditional market value, buy it because you stand a very good chance of seeing your property regaining the lost value. Many millionaires have been made through real estate in this valley and many more will be made in the upcoming years.
If you are looking to purchase a primary residence, what are you waiting for? This market is better for this than it has been in a long, long time!
If you are looking to pick up an investment property, what are you waiting for? Your financing options have changed, but we can talk about that to give you a clearer picture of where you stand. Rents are getting stronger for the investor right now anyway!
In summary, this is a temporary problem with the housing market (exactly how long this will go on is unclear), but as a society we keep making more people and we all need a place to live. Right now those dwellings are on sale!
It would be my pleasure to help you with your real estate needs. If you would like to contact me, please feel free to call me directly at 702/496-4710 or shoot me an email at scottmeservey@cox.net
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