While prices for Las Vegas homeowners are NOT NOT NOT!
Congratulations Las Vegas – pat yourself on the back for defying all basic economic laws of supply and demand!
Here is the fuel that is feeding the fire:
- Unemployment rate near 15% in The Las Vegas Valley
- Extremely high amount of distressed inventory
- Extremely high amount o finvestor activity
- Continued strategic defaults (right, wrong or indifferent)
A while back I wrote about how rents are declining in the valley. Last weekend I had three investors contact me asking me if this is going away. The big answer is not until the employment situation improves in the valley, investor activity slows and distressed inventory declines.
I don’t expect Las Vegas property values and rental values go UP until the above picture gets a little bit more rosy. Las Vegas rents are not declining rapidly, they are declining very slowly. What I see (since I work Las Vegas area rentals,) is that new investor purchases are willing to UNDERCUT their competition when they go on the market. No investor wants a vacant home. Home insurance can drop them and vacant homes increase the possibility of theft and damage. Might as well take a couple bucks less on the monthly rent than risk theft.
When will the picture for Las Vegas property improve? Not until everything above does. I don’t see it happening any time soon. It isn’t the president or the government (Las Vegas was on the “out’s” before the election in 2008.) No government program can stave off the natural cycle. No government program can wash away the mindset of strategic default. Las Vegas property values have deflated 8.6% year over year (Sept 2010/2011) so that pretty much shows that the $8K tax credit for first time buyers artificially inflated our prices for a while (ave home price in low $100K’s.)
It’s just the economy, stupid! Let’s encourage small business to rise and find some jobs for the valley and the rest will take care of itself!