The 3 hottest real estate markets are #1 Seattle (median SFR $830k), #2 Las Vegas (median SFR $295k, and #3 San Jose (median SFR $1.1M). Based upon the percentage (%) gained year over year. The rankings can flip flop monthly, but these cities constantly appear on top of many lists.
If you had to choose, which of the 3 cities would you invest and why?
Terry
I don't invest in any of those markets but if I had to choose, it would probably be Las Vegas.
Seattle and San Jose has surpassed their 2006 highs so they would be pushing new highs going forward. Las Vegas is still below it's 2006 highs so there could be room to grow. The reason I'm not buying MF in Las Vegas currently for cash flow is because of all the construction going on. A boatload of inventory is coming online and vacancy rates are slowly creeping up, even with the population and job growth.
You are correct about still below pre-recession highs of $315k in Jun'06, and currently at 304k, and will pass towards 3rd Quarter (based upon my forecast).
You are correct about " boatload " of inventory but as to when coming, that's a guess at best. The inventory that I am talking about is the institutional investors who bought after the crash and held in portfolio. They bought at the very low, and the cashflow is great. If they flood LV market, will depress price. If they are smart, can slowly and get top dollar. Also, they can hold and still appreciate and collect rents.
You area (bay area) is even riskier due to $1M median SFR.
Terry
yup, everything you say i agree.
2017, developers put 3500 rental units online.
2018 is projected to have 3,700 new units for rental market.
Could be more in 2019. Investors in California are putting their money in Vegas as deals are hard to find here and the cloud of rent control going on the ballot in Nov. Net absorption rate in Vegas has ticked down over the past few months. rehab MF projects are still a good bet there.
I'm biased in LV market with multi's, and will ride it until it starts to get wobbly. If I had to guess a date, it mines else well be early 2020, which coincides with the Raiders stadium completion date.
I don't like Cleveland, even though good cashflow and low sales price, it is the high real estate taxes. The high taxes will only go higher, and is indicative of bad liberal government who decides to pass budget short falls onto the home owner.
Which city do you like?
Terry
yeah 2020 seems like a year where we might hit a plateau or a slight dip for 6-12 months then continue the growth. This is in general terms for the US market.
I only invest in cities that I know the market inside and out. closed on a MF in Stockton not too long ago. Looking for more there as well as Sacramento, Modesto and Las Vegas. But it's tough to find a deal these days so putting cash reserves in place in the mean time to pounce on a deal when they do appear, whether the market goes up or down a few %.
I grew up in Stockton, now reside in Southern California, but still go back home to visit my mom. Since, you live close (Pleasanton) but don't live in Stockton that might be okay. Living in Stockton, is a whole different experience and most of it is negative. The city just has too many negative experiences, like the epic center of the mortgage crisis and meltdown of 2008. Cleveland elementary school shooting. The city went bankrupt.
The city does not have any major employers like silicon valley. The city has always been an agricultural farm town and never grew beyond that.
I hope your plan is not long term because the next downturn in silicon valley will affect Stockton just like 2008.
Terry
@Account Closed
As a realtor here in Vegas, It would be beyond amazing financially to me, to have a median price of $543k.. Stepping out of 'fantasy land' and back into reality, there's 0 chance that will happen unless there's very drastic changes to this local economy.. Well, even with drastic changes, there's 0 chance that will happen.. maybe 20+ years from now..
The wages/jobs and equally as important local working class spending habits, will mathematically make that impossible.. Most people don't realize that the average working casino couple makes an "ok" salary on their Friday paycheck, but that money is gone by the end of that weekend after gambling and drinking/partying.. I worked in the casino business here for 6+ years and know for certain that a majority of employees are living paycheck to paycheck.
Sustaining a 325k+ median may be possible, but anything higher than that is a stretch.. The speculation and California Exodus may artificially keep that going for awhile, but unfortunately that can only last so long..
Las Vegas would be my last choice. One, its in the desert and land is cheap. Therefore supply is essentially unlimited. Second, it has mostly service level jobs. They can only support house prices to a certain level and no more. Third, the economy is still very dependent on tourism.
San Jose, while the median price of $1.1M may seem steep, its very easy for a dual income tech couple to have income between 300K-400K and that supports the level of home prices. Second, land is very limited and supply is limited. Third it has a pretty diverse employment base even if it is a bit tech heavy. And you cant beat the weather and the point that everyone wants to live there.
The entry points in the Bay Area are very steep and perhaps buying purely for investment purposes is difficult. But we have ended up owning a couple of rentals which used to be primary residences and the appreciation has been tremendous and they also do positive cash flow. I totally dont believe in cashing those out for high cash flow markets in the midwest. I do own those as well and they have done well too, but nothing compared to the sheer wealth generation that the Bay Area homes have created.
Tuff call. Personally I think all three markets (maybe Vegas slightly less so) are pushing highs that make me a little nervous. All things considered, I'd say Vegas but in the back of my mind all I'm hearing is Omaha, NE. :D
@Account Closed
Wow, did not know that top casinos pay 80 to 110k, is that base or includes tips? It will take some time before reaching 543k. I would be happy for Las Vegas reaching their pre-recession high of 314k. It is a psychological and statistical barrier to reach before going even higher. Similar to say stock in Apple.
From a performance percentage (%), the rankings in appreciation, are #1 Seattle, #2 Las Vegas, and #3 San Jose. Unless you have unlimited cash, then barriers to entry will keep many out of the higher markets. The close proximity of Las Vegas to southern california, makes LV the logical choice. Bay area logical choice would be Sacramento. Seattle might be Oregon?
Below is a snapshot of median home/SFR prices as of Apr'18. Maybe see a number might change one's opinion. When talking hypothetical and actually taking action are two different things.
Terry
Not true Mary, so not true..
Very few people at small local joints are making 50-60k.. Maybe a random senior bartender or cocktail waitress.. Dealers definitely don't make close to that.. Supervisors don't even make that..
Some higher end casinos like Bellagio, Aria, Wynn will make 80k+, but this is a select few places, and a select few certain jobs..
Your AVERAGE couple, say a dealer at Excalibur and a front desk clerk at Circus Circus will pull in a total of $70-75k which isn't terrible, but not enough to support a drastic rise in prices from where we're at.. For every Wynn team leader making $80-100k, there's hundreds of Kwik E Mart cashiers making $9 an hour..
The place to be in this town right now is developing these new apartment buildings that are going up everywhere.. Fleecing all the locals for $1400+/month for a 2 bedroom apartment is like taking candy from a baby.. The people renting these have no other options, because they don't make enough $, cant save up for a down payment, and credit is typically no good..
Nice to hear from a local. I had the impression that the average Las Vegas person makes about $40k annual. That comes out to about $20 an hour, with or without tips. If you can make $100k for one person, that is fabulous anywhere, expect bay area.
If couple makes 70-75k, then could qualify to purchase say 3-4 times their annual, depending on credit score, can qualify to purchase homes in the area of 250-300k. Low end Summerlin, or almost anywhere in Vegas.
Speaking of rents, I have a 4plex, behind MGM casino, that is gated, washer/dry, and one car garage. For 2 bed/2 bath, charge $650, and 3/2 charge $700. I know that I have way below market rents, but i'm waiting for original inherited tenants to move out and remodel. Also, i've 4x/5x times my money already so don't want to be greedy.
Terry
In Las Vegas market, All I can say is, I have reviewed 500 plus rental applications with proof of income (pay stubs, bank statements) myself.
I "love" tenants with occupations such as cocktails, bartendar, steak house waitress, resturants waitress, butlers, table game dealers, floor supervisors in the strip casino!
I know some people working two table game dealing jobs (80 hours per week) in the strip casino at the same time, making $90k in Ari_x and $100k in Cosmopolit_x, so one person is making $190k per year. This is truth. I didn't make it up.
I feel sad for the workers who are making $9 an hour in walmart, or the workers who are working in low-pay small casino.
They are performing the same service job. Those who got low-paid should keep looking for new casino jobs and move-up to get higher pay for themselves for performing the same service job.
Las Vegas may be the only city in USA that many people without a college degree still get a very good pay $100k job from the strip casinos.
The $35k range would be pretty accurate for an average casino worker.. (I spent 6 years as a dealer at a mid level center strip casino, making $45-50k/year before getting my real estate license full time in 2010).. Which is why we're at the tipping point with these median prices.. Still affordable for the average couple that doesnt blow their wages gambling/drinking and can actually qualify with credit, down payment, etc.. As prices increase further, and if/when rates continue rise, they will be priced out in a matter of time.. Still some room as this Vegas real estate locomotive seems to be chugging along, but the breaks will have to trigger sooner rather than later..
Seen in other posts you have several 4-plexes here along with the one you just mentioned.. Congrats, thats the best performing sector in the last 2 years appreciation wise.. Prices have nearly 2x on some of those since 2016 which is amazing.. That $700 rent is definitely low, although that is a tough area..
Las Vegas strip casino high limit room table game reveal...
Las Vegas is the world number one casino gambling and entertainment industry.
All the gambling whales would travel all different casino in the world. The Las Vegas strip casinos are the one that the whale would not skip gambling.
Every day, a typical wealthy gambler (many many of these gamblers in the world come to Las Vegas) would bring $3 million to $5 million bank roll for gambling in casino. This is like a $500 bankroll an average person bring to a casino.
Sometimes, there are whales bring $10 millions to $20 millions for just "one session" (one day to one week) to gamble.
They bet somewhere between $15k to $400k each dealing hand.
Many strip casino table game marketing host become millions from the tips they got from the whales.
The $40k average income on the newspaper is the number from IRS. However, Many many income are tips and cash that they didn't report it on IRS.
Do not under estimate the average income in Las Vegas.
Las Vegas strip casino high limit room table game reveal...
Las Vegas is the world number one casino gambling and entertainment industry.
All the gambling whales would travel all different casino in the world. The Las Vegas strip casinos are the one that the whale would not skip gambling.
Every day, a typical wealthy gambler (many many of these gamblers in the world come to Las Vegas) would bring $3 million to $5 million bank roll for gambling in casino. This is like a $500 bankroll an average person bring to a casino.
Sometimes, there are whales bring $10 millions to $20 millions for just "one session" (one day to one week) to gamble.
They bet somewhere between $15k to $400k each dealing hand.
Many strip casino table game marketing host become millions from the tips they got from the whales.
The $40k average income on the newspaper is the number from IRS. However, Many many income are tips and cash that they didn't report it on IRS.
Do not under estimate the average income in Las Vegas.
Just curious, when is the last time you've been to Vegas? Have you seen how empty the casinos have been lately? Have you read the news about how the Vegas casinos have been bleeding money for years now? Also, using hypothetical scenarios doesn't really strengthen your argument. And the only factual statement made in your post is incorrect. LV is no longer the world's #1 gambling and entertainment location.
The fresh sports gambling law with definitely hurt the casinos. I know people who would go to Vegas just to bet on sports. Seems like the casino's are slowly going away from the gambling with more pool parties, night clubs etc to drive in sales elsewhere but will be interesting what the Las Vegas economy will be in 10 years from now
All whales and big gamblers are gambling and hidden inside the high limit rooms. Many table game dealers or floor supervisor outside the high limit rooms won't notice them as well. Only the gamblers or the people who are working inside the high limit rooms would know their existence...
Most big gamblers are not from USA. Most of them are from overseas...
A lot of gambling money coming in to Las Vegas from overseas...