When Las Vegas Review Journal published an article titled:
Las Vegas land prices tumble 73.9 percent from year ago, prices down for third consecutive quarter.
This headline was repeated by numerous print and online articles, Housing Doom even published an article titled; “Ouch, Las Vegas land prices have tumbled by 73.9%”, no one challenged the validity of their article until I commented on the article and wrote a blog post about it, you can find the link to my article below.
Have the land prices in Las Vegas tumbled by 73.9 percent from a year ago? HECK NO!
I also inserted the following comment below the article in Las Vegas Review Journal:
“Masoud Saberzadeh wrote on November 06, 2008 01:33 PM: Another useless statistic, I have repeatedly written in my blog that these statistics are misleading because they are not specific. We have all kinds of zonings in Las Vegas and the only useful statistics are those which compare parcels that are zoned the same and are in the same area. This report doesn’t do that and as such should be loosely used to see market trends, nothing more.
Masoud at www.lasvegas4us.com”
And an appraiser added the following comment after mine
“Charles E. Jack IV, MAI wrote on November 14, 2008 02:46 PM:
Masoud is on target.
The data also suggests there was a 103.5% increase in property value between Q3-2007 and Q2-2008.
Does that sound right given the market during that time frame? Either we are in a really wildly fluctuating land market that has massive upswings and downswings from quarter to quarter or there is a flawed application here.
The problem is that the study does not segregate by land use or planned land use and, thus, is subject to the weights of various types of properties in the average in any given quarter. For example, if a large acreage of higher priced commercial pad parcels and Strip / South Strip parcels are sold in a given quarter, then the averages will be skewed to a higher average price per acre. Conversely, if a lot of low density speculative acreage parcels on the outskirts of town with no utilities or roads sell, then the average will be low. These averages do not isolate at all for the differing weights of the differing use types and densities that are in the transaction inventory in each individual quarter. High density residential or commercial may in fact have gone up while the low density residential and industrial uses may have fallen or vice versa.
Who knows unless you segregate the data appropriately?
“In professional appraisal, the typical technique we look at is the sale and re-sale of the same parcel over time. We may also look in a specific location for sales of the same parcel types with similar size, use, and planned uses. We then document their increase or decrease in price per acre over a particular period of time.”
It only took In Business Las Vegas, which is a sister, publication of Las Vegas Review Journal, 27 days to catch up to their mistake; they published the following article on December 5th 2008:
Real Estate; Critic says land prices need apples to apples comparisons
The problem with the first article was that many of those that repeated this article in their blogs or articles do not know numbers and know even less about interpreting numbers. Additionally, those readers of such articles take them as fact since they are published in the media.
The last thing that this Las Vegas area real estate market needs is fabricated and useless statistics that are hyped to the Nth degree. This is irresponsible behavior and hurts our beloved Las Vegas.
Although I was the first person to challenge these crazy numbers and their interpretation of the numbers, they used other people for their articles; all they had to do is look at the comments below the original article. But I don’t care; my job is to educate the public about Las Vegas Real Estate deals.
Below is in excerpt from this article:
“My article about the continuing decline of Las Vegas land prices based on statistics comparing quarterly sales has angered some members of the real estate community.”
“Don Safranek, a principal at Wert-Berater/Commercial, which provides real estate investment services, says there is no doubt that prices have declined across the board, but the problem is the data are not reliable. Only arm’s length sales should be used, he adds.”
The heck with arms length truncations; compare the same zoned land to the same zoned land in the same area, these guys did not do this.
I don’t agree with the prediction in this article either and find it way too pessimistic. The predictions in this article are based on a snapshot of the time and not a dynamic assessment of all factors that should go in to such predictions, such as FED intentions to print money and inject it in to the economy.
Another article that was widely reproduced was a Forbes.com article on August 13th 2008 that proclaimed:
I wrote the following about their article:
“The only problem that I have with this is that these guys don’t know what they are saying. How can a web-site or magazine keep track of hundreds of markets around the world and be able to write about them with any kind of authority is way beyond me. I work 10 hours plus a day and am concerned with the Greater Las Vegas Valley real estate only and have a hard time catching up with this incredibly dynamic market.”
Those that bought Las Vegas Commercial properties based on Forbes.com recommendation would look at a great loss by now. A good example would be Dubai that bought billions of dollars in MGM Stock and a share in Las Vegas City Center only to see it lose more than 70% of its value.
The moral of the story is DO NOT TRUST NEWSPAPER OR ONLINE ARTICLES THAT IS WRITTEN BY REPORTERS and not real estate agents.
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.
You must log in to post a comment.