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Ny Times Article On New Construction In Vegas

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http://www.nytimes.com/2010/05/16/business/16builder.html?pagewanted=1&ref=general&src=me

"Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.

Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more. "

There are many factors responsible for this madness some of which are covered by the article eg. 1. nobody wants to live in an area full of foreclosures, 2. easier to get a mortgage for a new development than for a foreclosure. But what the article doesn't mention is that surely this is also being driven in part by investors who are desperate for some sort of yield when everything else looks too risky (equities, gold) or too pathetic (money markets). What's amazing to me is that they still see property as "safe" even after the recent unprecedented carnage - and it's not as if they're going in at the bottom of an established market in a desirable location with a guaranteed population/workforce. This is Vegas for eff's sake. Why on earth would you want to burden yourself with a mortgage here when they are so many empty homes that renters are surely able to name their price. Just in case any of you thought the UK was unique in the extent of its obsession with property, the level of brainwashing in the US is just as bad. Simply staggering.

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... Just in case any of you thought the UK was unique in the extent of its obsession with property, the level of brainwashing in the US is just as bad. ...

It is a global phenomenon. The number of newly built but empty houses in Ireland is staggering. In Southern Spain vast estates of holiday villas are empty. Even in the UK there are plenty of new build properties that are still empty if you know where to look and yes in the "prosperous" south east as well. There's a marina development that I was interested in on the south coast that has been empty for four years now - the developers have gone bust and the administrators, Pricewaterhouse Coopers, refuse to drop the price of the unsold properties (about 30% of the development).

The crash in many countries just makes people think that now is the time to get back in before they go up two or threefold again. I'm sure many here on HPC are looking for that opportunity in the UK.

There is much more pain to come IMHO.

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One issue is there is not much economic opportunity for people nowadays. For the millions who fled to the FIRE economy there is no where else to go. If you are a builder you HAVE to keep building. Or else sit on welfare.

Investors and bankers face the same issue. There is no where else to go. So even it makes zero sense in the long run they still have to go with it.

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But what the article doesn't mention is that surely this is also being driven in part by investors who are desperate for some sort of yield when everything else looks too risky (equities, gold) or too pathetic (money markets). What's amazing to me is that they still see property as "safe" even after the recent unprecedented carnage - and it's not as if they're going in at the bottom of an established market in a desirable location with a guaranteed population/workforce.

More like Government forcing lending on businesses regardless of whether they get it back. Didnt something similar happen in Japan...roads build to nowhere, simply due to expansionary govt policies, ignoring the fact that there may have already been overcapacity. Thats what governments do afterall.

Also, maybe the land market isnt a rigged as it is here - if land prices have fallen say 95% maybe they can still make a profit if house prices have 'only' dropped 60%.

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More like Government forcing lending on businesses regardless of whether they get it back. Didnt something similar happen in Japan...roads build to nowhere, simply due to expansionary govt policies, ignoring the fact that there may have already been overcapacity. Thats what governments do afterall.

Also, maybe the land market isnt a rigged as it is here - if land prices have fallen say 95% maybe they can still make a profit if house prices have 'only' dropped 60%.

Possibly also the government has rigged the market by making loans "zero risk" for the banks, if the loans go bad they just get another bailout, so they might as well loan to anyone with a pulse, no matter how stupid their business case?

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It is a global phenomenon. The number of newly built but empty houses in Ireland is staggering. In Southern Spain vast estates of holiday villas are empty. Even in the UK there are plenty of new build properties that are still empty if you know where to look and yes in the "prosperous" south east as well. There's a marina development that I was interested in on the south coast that has been empty for four years now - the developers have gone bust and the administrators, Pricewaterhouse Coopers, refuse to drop the price of the unsold properties (about 30% of the development).

The crash in many countries just makes people think that now is the time to get back in before they go up two or threefold again. I'm sure many here on HPC are looking for that opportunity in the UK.

There is much more pain to come IMHO.

I hear what you're saying but at least in those locations that you cite there is little new building going on - those empty properties were built during the boom. It's the new construction that really mystifies/worries/angers me.

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About 7 or 8 years ago I made the mistake of registering an interest in "property opportunities" this meant I was then bombarded with sales literature for all kinds of crazy schemes.

The most annoyingly persistent were a company selling houses in Las Vegas who started e-mailing and phoning daily about the great opportunities they had. They told me that property had gone up 200% in 2 years and that now was the time to buy. When I told them that 2 years ago was the time to buy and that a simple Google search showed similar properties to theirs for half the price they soon stopped calling. Can't imagine what I'd have felt like had I gone ahead!

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A few experts, however, are starting to think the path to a better market will be much shorter. Stephen F. Auth, chief investment officer at the financial services company Federated Investors, is a housing bull. He says he does not believe that many extended families will end up all living in one place, like the Waltons in the 1930s.

“That’s an unsustainable environment — Grandma coming home, Johnny moving back in with his new wife,” Mr. Auth said. “They’re going to move back out. The great housing depression is nearly over.”

Ramping for victory

:rolleyes:

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“That’s an unsustainable environment — Grandma coming home, Johnny moving back in with his new wife,” Mr. Auth said. “They’re going to move back out. The great housing depression is nearly over.”

Uh huh. Granny will pay for the house with her $200 a month pension and Johnny will take out a mortgage with his welfare scheme payments. Thanks to the miracle of Goldman Sachs' new CDO mortgage the neighbour's dog has a 100% IO mortgage for $1.4 million on a new condo paid for by letting out the spare room to some illegal Mexicans for 60 bucks a week.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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