Is now a good time to buy in Las Vegas

Hello,
I've narrowed my search down to Las Vegas and was able to work out a loan. I want to buy a SFR for about 120k as an investment property and put down 60k. I want a 3 bedroom, 2 bathroom. I want to know if this is a good time to buy in Vegas. I read on the Money magazine website, as well as a few others, that prices in Vegas are predicted to drop about 30% over 2010. Should I wait to buy a home, or does that prediction of such a big drop in prices seem unrealistic. I'm worried that if I wait to long, all the foreclosures will be gone and prices will go up. Thanks in advance for taking time to read and answer my question.

Edited: 06/26/2010 at 12:09PM

Richard Warren

Real Estate Investor · Las Vegas, Nevada

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Mar 22 '10, 12:08 AM

Predictions are likeâ€¦well, anyone has one anyway. Based on sales in the market I doubt you will see such a drastic reduction from where we are now. A couple of months ago the median home price rose for the first time in 39 months. Inventory is also a concern. Some of the biggest complaints I hear from agents in the REO market are that there isn't enough inventory and competition is fierce. There have been bidding wars and unless you are a cash buyer you will have a hard time competing. That doesn't seem to indicate a market that is going to drop another 30%.

On the other hand, approximately 70% of homeowners are upside down and the number of walkaways is likely to increase. The number of commercial foreclosures is expected to rise as well. So an additional price drop is certainly not out of the question.

:cool:

Edited: 06/26/2010 at 12:09PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 22 '10, 01:11 AM

A contrarian post. Wait. I don't live or market Vegas, so I have no ulterior motives.
Two main reasons
1. More people are predicting a double dip of this foreclosure barrage.
2. Rents are still anticipated to drop MORE before they stabilize according to current studies.
There are numerous reasons for this, But I'll leave it at that. Rich

Edited: 06/26/2010 at 12:09PM

Richard Warren

Real Estate Investor · Las Vegas, Nevada

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Mar 22 '10, 01:25 AM

Originally posted by Rich Weese

A contrarian post. Wait. I don't live or market Vegas, so I have no ulterior motives.

Just for the record - I live in Vegas but I do not have any investments in this market, mine are elsewhere. I also don't market here because I am not a realtor nor do I have anything to sell.

1- Regarding the foreclosure barrage, that is an opinion that I have seen stated both ways. In my previous post I referred to how I feel about predictions. We won't really see until after the fact. I was merely stating what I hear from agents.

2- Rents have already dropped quite a bit and I'm seeing things I haven't in some time. Apartment complexes offering move-in incentives. Investors have been grabbing these foreclosures and renting them for anything they can get while waiting for the market to rebound. Another factor is that the area has experienced a population decrease for the first time in 23 or so years. So more supply from these foreclosures being rented and decreased demand because of a population dip reults in lower rents. You also see more people doubling up, getting roommates, etc.

On a long-term basis Las Vegas still has great weather and entertainment as a draw. For that reason I wouldn't expect it to become another Detroit.

:cool:

Edited: 06/26/2010 at 12:09PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 22 '10, 01:30 AM

Richard- What do you expect REALTORS in Vegas to say??? I agree with most of what you say. Interesting that you live in vegas but don't invest ther. hhhhmmm.
I also don't expect it be become detroit, but entertainment dollars are not flowing as before and may not for a LONG time, depending on the recession/depression. Lots of unknowns and guesses. Rents are going down and vacancies up in vegas. That is fact. Rich

Edited: 06/26/2010 at 12:09PM

Richard Warren

Real Estate Investor · Las Vegas, Nevada

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Mar 22 '10, 01:55 AM

I've always taken what Realtors say with a grain of salt. They certainly wouldn't say the sky is falling when they rely on the market to feed their families. But the points I made about what they say are verifiable. The available inventory is way down and the banks put an REO on the market and receive multiple offers in days and then ask for a "highest and best" offer. It seems they've figured out how to get these houses sold fairly quickly.

I don't invest here because the market was so overheated when I moved here that I wouldn't touch it. I found other areas that have worked well for me.

Realtors have long talked about how Vegas will be the first to recover. I think that's a joke. When the economy eventually recovers (it could be a very long eventually) Vegas will probably be in the middle to lower end of the pack.

:cool:

Edited: 06/26/2010 at 12:09PM

Mike M

Accountant · Garden Grove, California

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Mar 22 '10, 02:12 AM

Here is a list that has a large agreement amongst investors. But remember, nearly every market can have good deals if you do your research.

The top-20 markets are:

1. Dallas-Fort Worth-Arlington,Texas
2. Houston, Texas
3. Tulsa, Okla.
4. San Antonio, Texas
5. Salt Lake City, Utah
6. Phoenix, Ariz.
7. Indianapolis-Carmel, Ind.
8. Denver-Aurora, Colo.
9. Oklahoma City, Okla.
10. Charlotte-Gastonia-Concord, N.C. / S.C.
11. Ames, Iowa
12. Des Moines, Iowa
13. Southaven, Miss.
14. Killeen, Texas
15. New Orleans, La.
16. Madison, Wis.
17. Midland, Texas
18. Maricopa, Ariz.
19. Little Rock, Ark.
20. Nashville-Davidson-Murfreesboro-Franklin, Tenn.

This list takes into account both income and appreciation.

One of the most important tasks when buying out of the area you live in is good Property Management. A PM can make or break an investment.

Edited: 06/26/2010 at 12:09PM

Ted Harris

Real Estate Investor · Portland, Oregon

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Mar 22 '10, 12:53 PM

A couple of months ago the median home price rose for the first time in 39 months. Inventory is also a concern. Some of the biggest complaints I hear from agents in the REO market are that there isn't enough inventory and competition is fierce. There have been bidding wars and unless you are a cash buyer you will have a hard time competing. That doesn't seem to indicate a market that is going to drop another 30%.

As Richard mentioned, inventory can't keep up with demand ... this has been happening especially in the sub $100k range for almost a year now. I've put in close to 15 all-cash (at or above list price) offers and only come away with one so far. But these were sub $50k, 3 bedroom SFRs which are becoming extinct. There were a couple hundred on the market in early 2009 ... in your price range ($120k), I suspect you won't have quite the competition .... I'm one who's very optimistic about the Vegas market but don't expect a quick snap back as the majority of homeowners are upside down. It'll take time to get the city's homeprices fully reset to 1995. In the meantime, you can get pretty good returns for you money even with the softening of the rental market. :cool:

Edited: 06/26/2010 at 12:10PM by Ted Harris

Daniel Maher

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Mar 22 '10, 02:50 PM

You have to watch out for certain sectors of Las Vegas that seem to still be dropping. Some areas have held up pretty well but it's tough to say if that will continue when there are some really good deals in other areas that have been decimated in value.

Also a couple of communities seem to have taken a recent hit in value with the uncertainty of once proposed area entertainment and shopping centers of ever being built...

For Investment purposes, there are areas in Las Vegas that easily cash flow.

However, the job market is not that good and the tourism numbers are showing no signs of improvement. That's the wild card right now. Otherwise I would say buy, buy, buy...

Edited: 06/26/2010 at 12:10PM

Matt Eilers

Real Estate Agent · Breckenridge, Colorado

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Mar 22 '10, 11:20 PM

I just saw a stat that Las Vegas had the 2nd or 3rd highest rate of job losses in the past year.
If that were true, I would think that the real estate market would still have some drop in it (how anyone comes up with 30% is beyond me though).

Edited: 06/26/2010 at 12:10PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 23 '10, 09:08 PM

Previous post replies have made my point well!

Mike M- I say Texas every post! 3 of the top 4! 25% of top 20! Oh, and the VERY best area in TX isn't on the list, due to no single city having enuff population. However, 1 million in that valley, another 1 million within 10 miles and # 2 rated for jobs by some publications in next 12 months. Plus, Money mag listed the area # 1 for future appreciation 3 straight years recently.
Anywhere else have these #'s? Rich

Edited: 06/26/2010 at 12:11PM

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Michael P.

Real Estate Investor · Dallas, Texas

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Mar 24 '10, 08:03 AM

Originally posted by Rich Weese

Previous post replies have made my point well!

Mike M- I say Texas every post! 3 of the top 4! 25% of top 20! Oh, and the VERY best area in TX isn't on the list, due to no single city having enuff population. However, 1 million in that valley, another 1 million within 10 miles and # 2 rated for jobs by some publications in next 12 months. Plus, Money mag listed the area # 1 for future appreciation 3 straight years recently.
Anywhere else have these #'s? Rich

What area of TX is that?

Edited: 06/26/2010 at 12:12PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 27 '10, 07:21 AM

dallas, houston, san antonio and my favorite; rio grande valley. Rich

Edited: 06/26/2010 at 12:14PM

P NW

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Mar 28 '10, 03:45 AM

Glen, if you think prices are going to drop 30%, then buy a house that you can get for 30% less than fair market value. Then if prices drop, you are covered.

If you want to spend $120,000, look at houses valued at $180,000 and find one you can buy for 1/3 off.

There will be less competition at that price range.

There is never any market at any time where you can easily pick up all the good houses you want at 30% off FMV. You always have to hunt for them and put some work in.

Even at the top of the bubble, when houses sold within hours of listing, I could buy for 30% off FMV. I just couldn't shovel them up out of the gutter in wheelbarrow loads.

In this market, it will be much easier to find a house for 30% off FMV, but it will involve some effort on your part.

Don't forget to figure repair costs into your equation.

Edited: 06/26/2010 at 12:15PM

Account Closed

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Mar 28 '10, 06:22 AM

McAllen TX and vicinity.

Edited: 06/26/2010 at 12:15PM

Eddie Ziv

Real Estate Investor · Studio City, California

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Mar 28 '10, 09:41 AM

Originally posted by Rich Weese

Previous post replies have made my point well!

Mike M- I say Texas every post! 3 of the top 4! 25% of top 20! Oh, and the VERY best area in TX isn't on the list, due to no single city having enuff population. However, 1 million in that valley, another 1 million within 10 miles and # 2 rated for jobs by some publications in next 12 months. Plus, Money mag listed the area # 1 for future appreciation 3 straight years recently.
Anywhere else have these #'s? Rich

That's right! Where is Austin? Round Rock? McAllen? And the list goes on... Texas, Baby...

Edited: 06/26/2010 at 12:15PM by Eddie Ziv

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 28 '10, 06:45 PM

TC and others- McAllen is one of many cities in Rio Grande Valley (as I listed above as my fav). Pharr, San Juan, Brownsville, Edinburg, Harlingen and my favorite-Weslaco. Don't forget the one million people living across the border in Reynosa, and 5-6 bridges connecting the 2 countries. Rich

p.s. Also lots of 2nd home buyers from Monterey buying.

Edited: 06/26/2010 at 12:15PM

Marc Heflin

Real Estate Investor · Concord, California

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Mar 31 '10, 06:47 AM

Originally posted by Glen Rosen

Hello,
I've narrowed my search down to Las Vegas and was able to work out a loan.

The question is why are looking at the Las Vegas Market? Are you hoping homes prices will go up, and you will be able to generate money that way? I own property that I rent in the Las Vegas market. I purchased in Vegas becauset that is where I plan to retire, and there is no state income tax.
Right now the inventory is low because the banks are holding onto the foreclosures longer. They are releasing them in spurts possibly to keep the prices as high as possible. I do not expect the home values to sky rocket in Vegas, and expect a decent rise each year in the future. I had noticed that the amount you can charge for rent is dropping drastically over the past 6 months. That also appears to be because a lot of people are buying and renting homes. A property I was able to get 1300 for in September I can now only get about 1,000 for.
So I think Vegas is a great market if you are thinking long term. I do not think the properties will apprciate a lot, but I do think there will be a steady stream of rental income.

Edited: 06/26/2010 at 12:17PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Mar 31 '10, 10:06 PM

Certain studies have Vegas near the top of all areas in projected rent reductions over next year+. Be studious on your choices of area. Rich

Edited: 06/26/2010 at 12:18PM

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