Back in May I posted an article suggesting that the Las Vegas real estate market may finally be showing signs of life. Since that time we have seen a continuation of the banks dumping foreclosed properties on the market and prices falling further. We have also witnessed the cancellation or delay of several projects including the $4.8 billion Echelon Place mega-resort. Builders have drastically reduced new construction as well.
On the national scene we have witnessed unprecedented events that have led to the caped crusaders of the Beltway, otherwise known as Congress, rushing in to save the day with a $700 billion bailout package. After acting with a real sense of urgency to pass this package, now being called a rescue, they have yet to figure out exactly how they are going to spend it. Makes you wonder how they arrived at the $700 billion figure in the first place.
But it seems a funny thing has happened on the way to economic Armageddon, real estate sales have been steadily rising. A Washington Post article shows a trend of rising real estate sales nationwide. It seems the law of supply and demand is very much in effect. As prices have fallen, demand has increased. Many of these sales are foreclosed (REO) properties, but they are still sales. As the inventory of the REO properties dries up it will allow the rest of the market to pick up as well.
Through all of the turmoil, people still want to own real estate. Wealth has long been associated with property ownership. That is even truer in turbulent times. Real estate is an excellent hedge against inflation and that is probably going to be very important in the years ahead of us. The way the Government is throwing around billions, if not trillions, of dollars, inflation is inevitable. The question is not whether we will have inflation, it’s just a matter of how bad it will be.
We definitely have many challenges to deal with. There are many good deals out there, but there are bad ones as well. The frozen credit markets have made it difficult to finance a deal, but that also creates more opportunity. These times call for more creativity such as “subject to” deals, seller financing and lease options to name a few. The moral of the story is that this is a great time to be buying real estate, not a time to be paralyzed by fear. Those who are afraid will wind up wishing they had acted. Those who are buying now will look back and say “boy, I’m glad I bought then!”
It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.