Las Vegas real estate began to heat up towards the summer of 2002 and really heated up by Feb-2003. During the summer of 2003 new home sales staff would not even let the customers in the sales office. Every time a new home builder announced the opening of a new home sub-division there would be lines formed up to 5 days before grand opening and those who made it to the sales office had to win a lottery for privilege of buying from the builder. Most Las Vegas sales offices had huge waiting lists, and buyers were told they had to wait for more than a year before their turn comes up. The situation got so bad that Pulte raised the price for one their projects in Summerlin by about $200K from high $400,000 to high $600K over a weekend and only 8 buyers dropped out. One has to note that neither fundamentals of economy nor real estate would support such price increases. Las Vegas real estate in 2001-2002 was downright undervalued, and whoever bought at that time will not lose money in any market condition in Las Vegas.
American’s are hoarders, like others on earth, however I notice it more here. When the price of anything begins to show moderate gains, there comes the hoards. Jack tells Jim that I bought and sold “whatever” and made good money in a short time, Jim tells Jill and while we are using “J’s” Jill tells Judy and Judy tell John and it goes on and on. Soon thereafter everyone wants to make money on “whatever” and the prices keep going up considerably, and way above what it is worth. All of a sudden people can’t make money trading “whatever” and the interest falls, along with the prices of “whatever” and those who got in the “whatever” market in the tail-end end up losing some or all of their investment.
Diligence is required when entering the Las Vegas real estate market as in any market and one has to decipher the reasons behind the upward or downward movement of any market. Are the fundamentals there to support the price appreciation long term or not? A good example is platinum; platinum is used in computer parts and as production of computers goes up so will the price of platinum. Unfortunately investor interest is the main reason for the market movements in United States. Investor interest is like a tsunami, starts small, rises to high levels and suddenly is gone. Investors left Las Vegas in early 2005, the writing was on the wall, Las Vegas new home builders started chasing customers in the summer of 2005 and started taking far less building permits. I was warning my customers then and insisted that they buy inventory homes so they would be protected from price decreases; I just had not counted on the collapse of the mortgage market. If I did I would have advised against buying a home in mid 2005. Well this is part one of the series. I will write Las Vegas residential real estate, past, present and future market in future blogs. And try to clear some misconceptions.