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http://www.azcentral.com/news/articles/061...bottom0618.html

How low will it go?

Home prices may dip 10% as fear grips Valley market

Catherine Reagor

The Arizona Republic

Jun. 18, 2006 12:00 AM

Greed drove metropolitan Phoenix's home prices and sales to new records in 2005. Fear is driving the market this year.
Home buyers are worried about paying too much and are waiting to purchase. Concerned about dropping home values, some owners are trying to cash out. Builders, struggling to sell even deeply discounted new homes, are scaling back production and warning of lower profits. Each day more people, from contractors and mortgage firms to real estate agents, are losing jobs or money in the metropolitan Phoenix's rapidly slowing real estate market.
Until recently, the market's slowdown had been considered a necessary, short-term hardship to offset last year's wild run-up in prices. But now many analysts and economists say it looks as if the slide will continue for at least the next six months, possibly pulling down home values as much as 10 percent before it's done. advertisement
"There's a psychological umbrella of fear in Phoenix's housing market now," said Tim Sullivan, a national housing analyst with San Diego-based Sullivan Group. "Buyers are uncertain."
Some owners at risk
A drop in home prices alone won't be a crushing blow to the Valley's housing market.
But it could be for some homeowners.
"
The only people who will really be affected are those who purchased last year, when there was fluff in the market,"
said Elliott Pollack, an Arizona economist and real estate investor. "But they will be OK if they stay in their homes for a little while."
Some may not be able to afford that. With mortgage rates climbing, the adjustable-rate loans that people took out in the past few years are about to jump higher, pushing monthly payments up hundreds of dollars.

The VIs put a brave face on it for sure. We will soon be reading similar stories here in the UK just as we did in the Great Crash of '89. We have the same problems but with more IO mortgages and virtually no long term fixed rate mortgages that they use widely in the US (15 and 30 years).

Pleasant article on the Las Vegas crash:

http://www.builderonline.com/industry-news...rticleID=320328

New Game Takes Shape As Housing Market Cools, Opening Doors for Buyers

Source: Las Vegas Review - Journal

Publication date: 2006-06-16

By HUBBLE SMITH

REVIEW-JOURNAL

The opportunity to become a homeowner in Las Vegas has widened greatly, observers say, as investors bail out of a cooling market, leaving inventory at a record high and forcing sellers to lower prices by as much as $50,000 in some neighborhoods.
It's a new game in a changing market, and old rules no longer apply, said Jason Braford, district director for ZIP Realty in Las Vegas.
Edited by Realistbear

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New Game Takes Shape As Housing Market Cools, Opening Doors for Buyers

Source: Las Vegas Review - Journal

Publication date: 2006-06-16

By HUBBLE SMITH

REVIEW-JOURNAL

The opportunity to become a homeowner in Las Vegas has widened greatly, observers say, as investors bail out of a cooling market, leaving inventory at a record high and forcing sellers to lower prices by as much as $50,000 in some neighborhoods.
It's a new game in a changing market, and old rules no longer apply, said Jason Braford, district director for ZIP Realty in Las Vegas.

I have noticed that you frequently quote Hubble Smith, a writer for the Review Journal in Las Vegas. Quite honestly he is not accurate, and frequently attributes quotes that reflect what he wants to say with no regard to what the interviewee actually said. I know because he has done this twice to me, even going so far as to totally make up a quote that had nothing to do with our actual conversation. He will say whatever he thinks will get his column read.

Right now we do have quite a few homes on the market, but our average time on the market is still just a bit less than 90 days, not the sign of a weak market. We just don't have all the investor traffic that we did a year ago, mostly because of media hype of a bubble bursting. We still have just as many owner occupants moving to Las Vegas as we did a year ago. There is more inventory because those same investors are trying to flip homes. And yes, our foreclosure rate is up. But we had almost NO foreclosures for the past two years at all, so even a slight increase in numbers is going to show up as a large percentage.

Las Vegas is currently undergoing a vast transformation from suburban sprawl to urban high rise. There are major companies that have spent millions in market research that are just now coming in to our market, among them the W Hotel. And there are quite a number of large new (50 acres or more) urban "lifestyle" developments getting ready to kick off over the next year. Just between the MGM City Center, Urban Village and the Cosmopolitan (all of which are fully funded) there will be over 20,000 permanent new jobs created in the city, not to mention about 15,000 construction jobs in the interim. My prediction is that by the end of this year the investors will be back in full force when they realize Las Vegas is really not slowing down.

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... My prediction is that by the end of this year the investors will be back in full force when they realize Las Vegas is really not slowing down.

so everything is just fine and dandy is it?

which is why i suppose you feel the need to visit a UK website called housepricecrash.co.uk? :P

having said that, most anecdotes are interesting so welcome to the board.

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I have noticed that you frequently quote Hubble Smith, a writer for the Review Journal in Las Vegas. Quite honestly he is not accurate, and frequently attributes quotes that reflect what he wants to say with no regard to what the interviewee actually said. I know because he has done this twice to me, even going so far as to totally make up a quote that had nothing to do with our actual conversation. He will say whatever he thinks will get his column read.

Right now we do have quite a few homes on the market, but our average time on the market is still just a bit less than 90 days, not the sign of a weak market. We just don't have all the investor traffic that we did a year ago, mostly because of media hype of a bubble bursting. We still have just as many owner occupants moving to Las Vegas as we did a year ago. There is more inventory because those same investors are trying to flip homes. And yes, our foreclosure rate is up. But we had almost NO foreclosures for the past two years at all, so even a slight increase in numbers is going to show up as a large percentage.

Las Vegas is currently undergoing a vast transformation from suburban sprawl to urban high rise. There are major companies that have spent millions in market research that are just now coming in to our market, among them the W Hotel. And there are quite a number of large new (50 acres or more) urban "lifestyle" developments getting ready to kick off over the next year. Just between the MGM City Center, Urban Village and the Cosmopolitan (all of which are fully funded) there will be over 20,000 permanent new jobs created in the city, not to mention about 15,000 construction jobs in the interim. My prediction is that by the end of this year the investors will be back in full force when they realize Las Vegas is really not slowing down.

I used to live in LV (1965-71) and still have an interest in what happens in the old place! My father owned a business at 3419 LVBlvd.S.

Las Vegas is seen by many to be the largest bubble market among the bubble markets. Speculators from CA have caused a frenzy of buying which does appear to be cooling rapidly. The WSJ has carried a number of articles on Las Vegas, the most recent of which, while not naming LV specifically, calls a 50% drop in the hot markets such as CA, FL, AZ and the East Coast. Las vegas has shared in the same irrational exhurerance and has participated in the ARM and interest only loan risks:

http://www.realestatejournal.com/buysell/m...-zuckerman.html

WSJ: How is the housing market?
Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we're going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.

Las Vegas is named as the 15th Highest risk city in the Nation to face a severe downturn in prices:

http://www.realestatejournal.com/buysell/m...60630-hoak.html

Below are the risk scores for the top 50 metropolitan areas, minus New Orleans:

* San Diego-Carlsbad-San Marcos, Calif., 599

* Nassau-Suffolk, N.Y., 589

* Boston-Quincy, Mass., 588

* Santa Ana-Anaheim-Irvine, Calif., 588

* Sacramento-Arden-Arcade-Roseville, Calif., 585

* Riverside-San Bernardino-Ontario, Calif., 583

* Oakland-Fremont-Hayward, Calif., 582

* Los Angeles-Long Beach-Glendale, Calif., 575

* Providence-New Bedford-Fall River, RI-Mass., 568

* San Francisco-San Mateo-Redwood City, Calif., 560

* San Jose-Sunnyvale-Santa Clara, Calif., 559

* Cambridge-Newton-Framingham, Mass., 537

* Edison, N.J., 536

* New York-White Plains-Wayne, N.Y.-N.J., 498

* Las Vegas-Paradise, Nev., 481

* Newark-Union, N.J.-Penn., 459

* Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla., 441

* Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va., 431

* Miami-Miami Beach-Kendall, Fla., 359

I sold my house in Carlsbad a couple of years ago. Phewwwwww! The key is knowing when to get out. My gues is that 6 months ago was the sell buy date in Las Vegas.

Disasters were already beginning to happen in LV in 2005 which was arguably the year the market turned:

http://www.sfgate.com/cgi-bin/article.cgi?...MNGOTBLIIR1.DTL

Monday, March 7, 2005

Las Vegas' lucky number last year was 52 -- as in 52 percent. That's how much real estate prices jumped in the nation's fastest-growing city in one year, as a housing shortage set off a wave of speculation by investors from California and other states.
But as any gambler knows, Lady Luck eventually turns a cold shoulder. Las Vegans wanted to cash in, too, and so many put their houses up for sale that they flooded the market.
By the end of the year, some homebuilders were slashing prices.
For investors from states like California where prices seem to move in only one direction -- up -- it was a stark example of a deflating bubble.
"When you lose money in real estate, you really feel it,'' said Igor Doncov, a software engineer in Half Moon Bay who bought two new houses in Las Vegas early in 2004 but sold them at a loss after his builder, Pulte Homes, cut prices on its new models by $180,000.
"I thought I couldn't lose," he said in a telephone interview. "But it turned into a total disaster."
Housing analysts don't think Las Vegas' slowdown is a sign that prices will soften soon in other fast-appreciating regions. But they say it is a warning of what could happen in the Bay Area as interest rates go up -- particularly for people trying to "flip" houses for a quick profit.
"Everyone is watching Las Vegas with its price appreciation and flipping, " said John Karevoll, an analyst at DataQuick, the La Jolla real estate research firm.
"If something weird happens, it'll happen there first."

The media is very bearish on LV and that alone could trigger more drops. The US is taking a far more realistic view of the house bubble and correction than we do in the UK which is still largely in a state of denial. The press is slowly starting to print horror stories but nowhere near the level of the US. Add the Wall Street Journal's frequent exposes and you have some strong credibility coming from the bear camp.

Edited by Realistbear

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  • 332 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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