* Nouriel Roubini: “A sustained rebound in housing demand is vital for bringing down elevated levels of housing inventories and stabilizing prices. With housing affordability at an all-time high, buyers are responding positively to falling prices, historically low rates on mortgages and a US$8,000 tax credit for first-time home buyers. Still, home sales and purchase mortgage applications remain depressed y/y. While the tax credit, which expires on December 1, 2009 will boost sales through the end of the year, a sustained uptick in demand for housing may be delayed as the worsening unemployment rate prolongs consumer retrenchment.”
* Lawrence Yun, Chief Economist, National Association of Realtors: “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.” (August 21, 2009)
* Calculated Risk Blog: The first-time home buyer tax credit will boost home sales through November 2009. “This level of first-time buyers is completely unsustainable–even if another tax credit is enacted. There was significant pent-up demand from potential first-time buyers who were priced out of the market in 2004-2006, and then were afraid to buy as prices fell. But demand from these buyers will wane.” (August 14, 2009)
The expert opinions vary, but somewhere a reality check must appear. I am bullish on the long-term economic future for Las Vegas. That being said, we are far from being “out of the woods” so to speak.
We have seen a significant rise in real estate sales in 2009 causing many realtors to proclaim that we have hit the bottom and are on the way up. It is always interesting to me how they make these broad statements based on a few months of increased sales. To me, this is the “living paycheck to paycheck” philosophy. This uptake in the housing market has been driven by Foreclosures and Short Sales…hardly a positive sign when people are losing their homes.
The wealthy are having a difficult time selling their homes. In March alone there were over 1100 homes for sale over $1,000,000.00 and less than 10 sold during that month. Wealthy individuals drive economies as they have money to spend and create jobs by owning businesses. Currently unemployment in Las Vegas is north of 13%. Many believe it could go as high as 17%. Until the unemployment numbers start to fall, we are still in a precarious position. A big boost will be if the federal government extends the first time buyers tax credit of $8000, that is due to expire the first of December 2009.
As people in the market place, we have to “re-invent” ourselves. Real estate agents need a reality check and get outside the bubble. One agent, who I had highly respected up to that point, told me that our economy was on the way up because housing sales were up. I pointed out to this agent that was only the case in homes below $200k, an distinct indication that they were REO and Short Sales. this is the “paycheck to paycheck” mentality. This is not something that is sustainable. Unemployment must stabilize and begin to decrease for prices to climb. The mid-level and high-end markets must show signs of recovery. This could easily take 2-3 years as there are more ARM re-sets to happen in 2010 and 2012. We must be creative in our approach. Look for other ways to stimulate the markets.
One positive note is that the buildable lots in the Las Vegas area are being scooped up rapidly by investors and builders. Prices in that market are rising. Raw land prices seem to have stabilized as well.
Ask yourself this…Are you ready to re-invent yourself in the housing market? Are you ready to take that Empowering step?
