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 of investor activity
- Continued strategic defaults (right, wrong or indifferent)
A while back I wrote about how rents are declining in the valley. Â Last weekend I had three investors contact me asking me if this is going away. Â 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. Â Las Vegas rents are not declining rapidly, they are declining very slowly. Â 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. Â No investor wants a vacant home. Â Home insurance can drop them and vacant homes increase the possibility of theft and damage. Â Might as well take a couple bucks less on the monthly rent than risk theft.
When will the picture for Las Vegas property improve? Â Not until everything above does. Â I don’t see it happening any time soon. Â It isn’t the president or the government (Las Vegas was on the “out’s” before the election in 2008.) Â No government program can stave off the natural cycle. Â No government program can wash away the mindset of strategic default. Â 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! Â Let’s encourage small business to rise and find some jobs for the valley and the rest will take care of itself!
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