Buying a first home: Las Vegas
 

I've been doing very well in poker recently and have decided to pursue a wise professional gambler ivesting strategy: spend your money before you lose it. I’m decided purchase a single family home/condo/townhouse in Las Vegas and am looking to spend 300-400k. I choose Las Vegas simply because I am a professional gambler.

-I am basically a total real estate noob and could use any advice I could get (along with book recommendations).

-I plan on putting down 100-130k. My credit score is around 740 and I only have a tax return for 2006 (with my own records for 2007). Will I have any problems getting a loan? Will my parents have to cosign?

I am looking for in order: safe area, baller factor (pool, hot tub, tile floors etc), closeness to strip.

I sincerely appreciate any help.

Re: Buying a first home: Las Vegas
 

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am looking to send 300-400k.

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stars account stinkypete13 plz

Re: Buying a first home: Las Vegas
 

don't know much, but it seems like putting down 20%+ and having a 740 score should be enough to get the mortgage you need

wherever you live, you can just make renovations to make it baller, so that's not really an issue.

Re: Buying a first home: Las Vegas
 

I think you should hold off buying for a few more months. I have a feeling vegas RE hasnt gone down nearly as far as it will.

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more months. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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Have you been to michigan in decemeber?

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more months. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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Have you been to michigan in decemeber?

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I live in canada lol, you get no pity from me. You can always rent for a few months.

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more years. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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FYP

Re: Buying a first home: Las Vegas
 

http://macromarkets.com/csi_housing/MSA/las_vegas.asp

Check out where prices are headed in Vegas. You might want to wait awhile.

Re: Buying a first home: Las Vegas
 

wait like 2 years

Re: Buying a first home: Las Vegas
 

wait at LEAST a year

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more years. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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FYP

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The prevailing sentiment on this board is that housing, particularly in Vegas, will continue to fall. I dont' know if thats true or not. But I disagree that waiting to buy is best because I believe that you dont' have to look at your primary residence as an investment. That is your house. Buy what you want. If you can afford it and you feel like it'll improve your quality of life, by all means, by it. I wouldn't wait to buy on some vague notion that the market MIGHT fall farther in 2 years. IMO, that is a completely RIDICULOUS way to think. Clearly you want to buy a house. So buy one.

If you have 20% to put down and a 740 credit score (which is excellent), then you'll get a loan. The only difference is that you MIGHT have to pay a bit higher of an interest rate for a NO DOC loan. NO DOC loans are loans where the bank doesn't ask for income verification. But even now banks are dying to write high quality paper, which you are, so don't fret. You shouldn't have a hard time finding financing.

Re: Buying a first home: Las Vegas
 

I am a retired WS trader,and have main/vacation homes in New York.I also have an extensive R/E biulding portfolio.As shIIty as the market is...it is NEVER to late to buy your PRIMARY home,as the above poster stated,as you will always need a place to live/sleep.Trying to pick a bottom is a mistake,that has haunted many an investor,in any market!

I am buying another home LasVegas and will be there on Nov.24th -Dec? for the Venetian NPL Series to consumate a deal.

Your price range of 300-400K is perfect,as there are a TON of scared,must sellers in that range in prime areas

There are some ABOLUTE STEALS in L/V right now ,and doing some due diligence,will IMO be worth your while

PM if you want some contact info in the Real Estate market

~stephen feraca

[img]/images/graemlins/cool.gif[/img]

Re: Buying a first home: Las Vegas
 

Now is precarious time, but you might want to look at new homebuilders who have inventory that has fallen through because of the financing turmoil. You may be able to find incentive packages topping $250k or more than 1/3 of the price they were selling less than a year ago, and $/sq ft that are otherwise untouchable, going back five or six years in valuation. I just don't see how deals like that can be a bad entry point for the long term as a primary residence. I think the notion that you have to wait another year is nonsense, given some of the valuations that are out there. Not ubiquitous, but out there.

eastbay

Re: Buying a first home: Las Vegas
 

I'll echo alot of the sentimate above. Aggressivly negitoate any deal you make in LV. Bargains are to be had today if you search and try and cut prices see if you find a seller just ready to go right now and you can get next years price declines today. I wouldn't do this as an investment, but if your sure your ready to settle and live in one place in LV you'll be fine. I'd just caution when looking at new homebuilders with lots of inventory, I wouldn't buy in 'failed communities' with lots of vacancy's unsold homes and the like for quality of life issues and future values will hurt more in communites that never got off the ground and never should have been built. If looking at new home homebuilders I'd stick to communites that have high sales % overall and high occupancy rates and they are just looking to clear out the last inventory there.

Steve

Re: Buying a first home: Las Vegas
 

good2cu,

i would be very, very careful about this. let me preface this by saying i am not an expert, but i've done some reading on the subject, taken a few RE courses in college, etc.

the prices look great now, compared to how they were at the peak of the biggest real estate bubble in our countries history just a year ago.

the way i see it, things aren't THAT bad right now. yeah, prices are certainly cheaper than they were, but i'd wait till we started to see the decline in prices in Vegas flatten a little bit before jumping back in. Prices are significantly lower than they were 6 or even 3 months ago, and I don't think anyone really knows when that is going to stop. i read about quite a few people saying "my house lost X value, but it will bounce back so I'm just going to ride it out for another 6-12 months." Assuming this doesn't happen, there's going to be another surge of motivated sellers, selling at much cheaper prices than you can find today, in another year+.

I am going to look to buy in Las Vegas in 18-24 months if the market continues to soften and I can get a summer home for 40-50% cheaper than they were in 2006.

tc

Re: Buying a first home: Las Vegas
 

Waiting to buy a home cheaply is great but there are a few things we must consider.

Good2cu is currently a professional poker player who claimed he has won a lot (we'll take his word for it). Considering that he's also an online player, it's also important for him to operate in an environment where he feels fresh. Here are the advantages of him buying right now.

1. Tax deductible off his mortgage interest to lower some of his income.
2. His home office, which can be 1/5th or 1/6th of the mortgage payment if he choose to operate in a large room.
3. The rent for WSOP.
4. No state income taxes.

The above advantages are monetary and are obvious. Here are the intangibles of owning a Vegas home.

1. Raise his street cred and feel good about himself.
2. Can you imagine the opportunities for boning girls at this house? It's freaking Vegas.
3. Friends visiting him all the time. Ok, maybe not this one.

Lastly, the market outlook. We do not know how much the Vegas RE will go down. The majority consensus is that it will go down with a range of 2 years. I'm going to go ahead and stick my neck out and say no one know whether this range is correct. 2 years is just a number that "seems" right and since everyone is saying it, it must be correct.

But look at the upside, we are saving a lot of taxes. Our quality of life will probably increase. We get to bang more girls. Mostly importantly, OP gets to learn to make a big financial decision at an early age. And this is assuming that the Vegas RE is in deep shiet and will continue to plummet. Now imagine if the Vegas RE manage to depreciate at a lower rate. Compare this amount to the amount that Good2cu saves from taxes, it might be a good investment. That is, assuming Good2cu makes over 150k [an educated random number]. My reasoning is obviously flawed if he makes less than 150k.

Re: Buying a first home: Las Vegas
 

Last weeks business week has an article on the real estate market and it touches on vegas, I would look into it.. fwiw vegas has 48k homes with no resident that have literally just been built.. LOL donks

Re: Buying a first home: Las Vegas
 

Even if prices don't drop much further, now is a good time to wait and see. Right now you can rent a place much cheaper without any of the risk involved. All the fundamentals are there that even if housing doesn't fall, it sure isn't going to go up any time soon.

If you took out a $250,000 mortgage fixed for 30 years at 7% interest you would be paying $1,600 per month.

For the first year you will be paying about $1,400 in interest from that loan building a measly $200 in equity per month. It won't be 10 years before you're still flushing $1,200 per month down the drain in interest alone.

Not to mention if your house depreciates at all you not only lose your interest payments your equity would be evaporating faster than you're putting it in.

Right now you can rent a 3 bedroom, 2 bath house for around $1,300 a month, You could find a 2 bedroom apartment for less than $1,000. If you rented for 1-2 years you could easily put the $300-$700 month you save in a good interest earning place for a few years when the market is in less turmoil.

Sure it's a good time to buy now. The chances are very high it will be a BETTER time to buy in the coming months so it's an EVEN BETTER time to rent now.

Re: Buying a first home: Las Vegas
 

I much prefer owning to renting as I think the extra freedom is worth some premium. That said there are only a few places that if I moved to right now I would not buy a home. Vegas and Phoenix are at the top of that list. They had massive runups based on speculative california buyers. I would seriously consider leasing a place for a year or two, or maybe even some type of lease-option. Do I know that the market will lose money over the next 2 years? No, but it seems far, far more likely there, than in many other places. There are many, many investor owned properties there.

The one exception I might make is if I came across a property that priced in a 8-10% decrease per year over the next two years. If you can get that sort of discount, then you might be worth considering. That is just my .02.

Re: Buying a first home: Las Vegas
 

Slow,
these are good points. he doesn't need to own a house out in vegas though, he can rent, so the state income tax should work either way. also, from what i have been told, claiming the home office thing is one of the surest ways to get audited. for getting a tax rebate on 1/6th of his mortgage payment, as a professional poker player who probably has some things he wouldn't want the IRS seeing, that might not be the wisest decision.

i guess what i'm thinking about reading all of these replies is that there really is no "right" answer here. i don't think anyone can argue that renting is not the safer course of action here. if i'm an internet poker player (which i am), i'm certainly looking to minimize any other risks in my life over the next two years, at least until we all know more about how the environment in which we work in will change.

tc

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more years. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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FYP

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The prevailing sentiment on this board is that housing, particularly in Vegas, will continue to fall. I dont' know if thats true or not. But I disagree that waiting to buy is best because I believe that you dont' have to look at your primary residence as an investment. That is your house. Buy what you want. If you can afford it and you feel like it'll improve your quality of life, by all means, by it. I wouldn't wait to buy on some vague notion that the market MIGHT fall farther in 2 years. IMO, that is a completely RIDICULOUS way to think. Clearly you want to buy a house. So buy one.

If you have 20% to put down and a 740 credit score (which is excellent), then you'll get a loan. The only difference is that you MIGHT have to pay a bit higher of an interest rate for a NO DOC loan. NO DOC loans are loans where the bank doesn't ask for income verification. But even now banks are dying to write high quality paper, which you are, so don't fret. You shouldn't have a hard time finding financing.

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That is just a BRILLIANT post to make on a business and finance forum. Who cares if he might be able to save fifty or a hundred grand by waiting a couple years, right? He'll be able to plant his vegetable garden NOW.

Re: Buying a first home: Las Vegas
 

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Slow,
these are good points. he doesn't need to own a house out in vegas though, he can rent, so the state income tax should work either way. also, from what i have been told, claiming the home office thing is one of the surest ways to get audited. for getting a tax rebate on 1/6th of his mortgage payment, as a professional poker player who probably has some things he wouldn't want the IRS seeing, that might not be the wisest decision.

i guess what i'm thinking about reading all of these replies is that there really is no "right" answer here. i don't think anyone can argue that renting is not the safer course of action here. if i'm an internet poker player (which i am), i'm certainly looking to minimize any other risks in my life over the next two years, at least until we all know more about how the environment in which we work in will change.

tc

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I don't know about others but I file my taxes so I don't care if I get audit. That does not mean I do not think getting audited is probably a pain in the ass and I will try to do my best to avoid getting audited. However, that does not mean I won't try to minimize my tax liability legally.

As for claiming 1/5th or 1/6th of the mortgage, it was just an estimation. If I buy a house with 2000 square feet in it and my home office is 500 square feet, I wouldn't forgive myself if I do not claim 1/4th of my mortgage.

As for renting is probably the safest route, you're right. But keep in mind that Good2cu wants to bang hot girls and raise his street cred. Renting just doesn't get it done. Well, it might if he already own a place somewhere else.

Another factor, which I think is very important, is that he's a poker player. It's not a job where adults will hear upon introduction and instantly think, "young man, I wouldn't mind if my daughter walk down the aisle with you." By having some type of asset, at least he'll feel better about himself and his profession. One might argue that he doesn't care what others think of his choice of his work but I am sure that he would be giggling from ear to ear if his job title generates compliments instead of "oh."

Which reminds me, when you introduce yourself to adults, do you introduce yourself as an entrepreneur/businessman [considering that you co-found CR] or do you say you're a professional poker player? I'll bet you $1 at even odds that you say the former more often [img]/images/graemlins/cool.gif[/img]

Re: Buying a first home: Las Vegas
 

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If you took out a $250,000 mortgage fixed for 30 years at 7% interest you would be paying $1,600 per month.

...

Right now you can rent a 3 bedroom, 2 bath house for around $1,300 a month, You could find a 2 bedroom apartment for less than $1,000. If you rented for 1-2 years you could easily put the $300-$700 month you save in a good interest earning place for a few years when the market is in less turmoil.


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I think you are on the right track. It's impossible for the vast majority of us to time markets. But it's possible to compare the cost of owning vs. the cost of renting. Though owning has some intangible benefits, you really want the costs to be at least similar before you own. After all if you make a mistake purchasing a home it's a very expensive and time consuming mistake to undo. And if you are a renter it's a lot less hassle because you don't have to maintain the place.

In this example, we haven't considered property taxes, insurance costs, maintenance, and lost interest/investment gains on our downpayment. Assuming this $250k mortgage is on a $300k home with $3K per year property taxes, $1k per year insurance, $1k per year maintenance and required a $50k downpayment, which could have been earning $2.5k per year in interest (5%). Your gross costs are $25k per year, or almost $2,100 per month.

Then you need to figure out how much of a tax deduction you will get. First you have to itemize, and if you make over $100k per year, you may lose some or most of your tax deduction because of the AMT calculation. But assuming you can keep all of it, and that you are in the 28% federal bracket, you'd be able to benefit around $5500 per year. So your net costs are about $1,600 per month.

Note: Don't get hung up on my estimates, use your own accurate numbers, I'm just showing you the template to doing the math.

But if you did estimate your ownership costs at $1,600 per month, and renting a similar place cost a similar amount, owning probably makes sense if you are planning to stay at least five years. Eventually you'll see some appreciation. You need at least 7% appreciation just to pay the realtor fees when you sell the place and break even, but everything over that will be gravy, so the longer you stay in the place the better ownership will work out.

If you are only going to own for a couple years, I'd just avoid the hassle and rent if the costs were similar.

Re: Buying a first home: Las Vegas
 

Hey Taylor,

Your comment is abit different,as you are talking about buying a second/vacation home for yourself which has a totally different set of paramaters,such as higher mortgage rates for second homes,selling it first before your PRIMARY home in an emergency,maintanence,lack of a rental income maybe,etc.

He is talking about his FIRST primary home. If he plans on living there for 5+ years its another story.I have many years of R/E experience,good and bad(including the 1990's R/E collapse after the stock market crash where the sky was falling then too),but over time you I would rather own R/E than ANY instrument in the world.

There are a TON of steals,forclosures,even "short sales by banks"...which is the bank selling at a severe discount to the mortgage/mortgages held on the property(this was unheard of years back)in Las Vegas right now.The fact L/V has a vibrant economy,jobs,low taxes compared to us in the bigger cities...he will not get hurt if he does his home work beforehand

True ...prices "may" drift south in the next few years,but alot of the damge is done.There are PLENTY of scared sellers NOW,and by the time he "actually buys" will be a few months foward anyway which should offer him even more bidding flexibilty?

Some of the prices of homes I looked at during the WSOP in June in LV are already 30+% lower since then,and MUCH lower from their 2006 highs.

IMO Las Vegas incurred one of the greatest % rises,but also one of fastest to fall the last year or so.If a particular property owner was speculating/flipping the house with 0% down,then he has already felt the wrath of the damage,and anyone NOT speculating/flipping or also subject to one of those ridiculous ARM's are not going to give their homes away ,if they LIVE there.
Yes their net worth may have dropped,but if they have a job,retired,or paid CASH....they are not going anwhere.

Once this inventory has subsided,prices will slowly begin to appreciate,and a young person buying a home vs. renting or playing the stock market is well on his way $$$ long term.Just based on the #'s he mentioned above...he can be a [censored] MANSION compared to us in NY,Chicago,Boston,ect.!

As the supply dwindles(new home builders are DONE as of now)the market should be fine in next few years,but TIMING that is impossible!

On a side note..I think you live in Chicago?
Well I am seeing the R/E markets drop abit HERE now in New York as well,along with the other "bulletproof" big markets that have not felt the pain yet.I dont think they will fall anywhere near as hard... but a flat to lower market is expected here as well the the next year here also

IMO R/E markets that have gotten SLAUGHTERED first with a sound economic base ...will see a recovery FIRST (ala Las Vegas)

According to what he claims to be putting down 30% and a high FICO score,getting ONE FIXED RATE mortgage,along with this being a long term primary residence,he will not get "hurt" by any means if he shops around prudently now.

I am seing deals that are ludicrous(i am paying cash and that may be the reason) but they sure are out there

I also would reco. that he get a pre-approved FIRST mortgage before he bargains,as that holds alot of weight to with a potential seller,and hungry brokers willing to hunt around for you

The real recovery IMHO will not be when buyers return,but when credit standards are loosened on the consumers end,and that has already started with last months .50% Fed cut!

I do have a concern though if the Stock Market were to collapse,(then all bets are off)but I dont think that would happen with rates still historically low,as our dear FED GOV'T will do whatever they have to do,to save the economy and their asses from past debacles

~stephen feraca [img]/images/graemlins/cool.gif[/img]

**I mean i'd rather own a home that MAY go down abit than have a $100k+ laying around on PokerStars and Fulltilt earning me ZERO interest...no?

Re: Buying a first home: Las Vegas
 

For those who are saying to wait because Las Vegas real estate is trending down, isn't it feasible that at least some of the property out there has already been corrected to a price near its actual value? And the additional declines that ya'll are expecting to see over the next year will primarily be a result of stubborn sellers who are slowly backing off their listed prices and getting closer to where the builders are?

Re: Buying a first home: Las Vegas
 

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For those who are saying to wait because Las Vegas real estate is trending down, isn't it feasible that at least some of the property out there has already been corrected to a price near its actual value? And the additional declines that ya'll are expecting to see over the next year will primarily be a result of stubborn sellers who are slowly backing off their listed prices and getting closer to where the builders are?

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http://www.cnbc.com/id/20907018

As of last month, 74% of homeowners don't think the value of their houses has gone down since last year.

"Is this a buyers market?"
http://www.businessweek.com/the_thre...s_a_buyer.html

Re: Buying a first home: Las Vegas
 

Just rent for now. Prices are sick low anyway.

If things go bad with poker, you might turn into one of those super motivated sellers and lose a lot of money. And anyways market doesnt seem bottomed out yet. Supply lot bigger than demand.

Re: Buying a first home: Las Vegas
 

I've posted my thoughts on the rent/buy decision in some of the other recent "Should I buy a home" threads, but I wanted to make an additional observation.

Assuming most people are taking out a mortgage for a significant portion of their home - if you are tying to time the housing market by waiting X amount of months to purchase, by the same reasoning shouldn't you be taking into account potential interest rate changes and the effects on your housing costs? If we are going to try to time one market that the experts can't even figure out, why not try to time them all?

If you save $20,000 on a $400K home (5% decline) by waiting 12 months, but in that time the going rate on a mortgage increases by 1% (from 6.5% to 7.5%) the increase in monthly payments will eat away the costs savings in less than 7 years of payments. While we are in a time of historically high housing prices, we are also in a time of historically low interest rates. Just something else to think about if we are recommending trying to time markets.

I believe if OP feels the #'s from a buy/rent analysis show it is prudent for him to buy, and his lifestyle preferences making owning desirable; then by all means if you can find a good deal now there is no need to wait. Buying a primary residence should not be purely a numbers game - the biggest factors should be the OP's lifestyle preferences.

Re: Buying a first home: Las Vegas
 

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Just rent for now. Prices are sick low anyway.

If things go bad with poker, you might turn into one of those super motivated sellers and lose a lot of money. And anyways market doesnt seem bottomed out yet. Supply lot bigger than demand.

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I'm outrage an ex-owner of a lambo says this! [img]/images/graemlins/cool.gif[/img]

Re: Buying a first home: Las Vegas
 

Jimbo, in your example you have to also take into account that prices may fall even lower if interest rates rise because that too changes the rent vs. buy calculation. So basically its a wash.

Re: Buying a first home: Las Vegas
 

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I think you should hold off buying for a few more years. I have a feeling vegas RE hasnt gone down nearly as far as it will.

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FYP

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I agree

The wife and I decided to buy a condo in Vegas as our "vacation home" however after researching the market I've decided that it'd be foolish to buy in this market and will "reevaluate" in 6 months (basically we will be buying one eventually just not until I think the market is "recovered/ok").

It's ultimately up to you though, so with that said.... with your credit score, and % you're putting down, if you do choose to buy a home in Vegas you will not have a problem getting a loan. And there will be no need for your parents to cosign. However if they do cosign (I'm assuming good credit scores and good job history etc. etc.) you'll get better rates, but it's not necessary at all.

hope that helps

Re: Buying a first home: Las Vegas
 

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Jimbo, in your example you have to also take into account that prices may fall even lower if interest rates rise because that too changes the rent vs. buy calculation. So basically its a wash.

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Your payment MIGHT be a wash, but you will probably owe a lot less if you wait a year or two. If you have to sell or want to refi if rates drop again, the amount owed on the house will be lower. You'll net more cash in a sale and if you refi at a lower rate, your payment will drop.

For people that think prices are already low, I nearly bought a brand new house near Summerlin in the late 90's for a hundred grand.

Re: Buying a first home: Las Vegas
 

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Just rent for now. Prices are sick low anyway.

If things go bad with poker, you might turn into one of those super motivated sellers and lose a lot of money. And anyways market doesnt seem bottomed out yet. Supply lot bigger than demand.

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I'm outrage an ex-owner of a lambo says this! [img]/images/graemlins/cool.gif[/img]

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what happended to the lambo?

Re: Buying a first home: Las Vegas
 

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http://macromarkets.com/csi_housing/MSA/las_vegas.asp

Check out where prices are headed in Vegas. You might want to wait awhile.

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I respectfully disagree that that chart shows "where prices are headed", although it is my opinion that median prices will continue to decline for another year or so.

On a 5 year chart, RE appreciation in LV is in line with commodities and nearly in line with stocks.

On a 10 year chart, you're normalizing against the dead bottom of the fallout from the 1990 RE crash, circa 1997, and near the blow-off top of the stock market. Of course it's going to look silly when you pick those as "equal" starting points, because they were not.

These charts that average over everything in an entire area also miss the point that there are currently very wide differences in value at the same point in time. You could easily get ripped off in LV, in fact most properties are almost certainly rip-offs at current asking prices. That doesn't mean there will be zero opportunities for a good entry point for the long haul.

eastbay

Re: Buying a first home: Las Vegas
 

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If you save $20,000 on a $400K home (5% decline) by waiting 12 months, but in that time the going rate on a mortgage increases by 1% (from 6.5% to 7.5%) the increase in monthly payments will eat away the costs savings in less than 7 years of payments. While we are in a time of historically high housing prices, we are also in a time of historically low interest rates. Just something else to think about if we are recommending trying to time markets.


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This argument doesn't really hold water, because prices are highly correlated with rates (inversely, of course). If rates surge, prices will fall even further. People choose their price point by their monthly PITI.

eastbay

Re: Buying a first home: Las Vegas
 

[ QUOTE ]
http://macromarkets.com/csi_housing/MSA/las_vegas.asp

Check out where prices are headed in Vegas. You might want to wait awhile.

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Yes, and don't forget to chase your gutshot draws. You're long overdue hit and make a killing.

Re: Buying a first home: Las Vegas
 

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The real recovery IMHO will not be when buyers return,but when credit standards are loosened on the consumers end,and that has already started with last months .50% Fed cut!


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In my area, I believe the ballooning of the jumbo rates is very meaningful. Since median prices are way above 417k, a great deal of loans need to be jumbo, or other "tricks" need to be played. With the "trick bag" dried up, it's the jumbo rates that have a great many otherwise willing buyers on the sidelines. If the currently ridiculous (IMO) premium comes off of the jumbo rates in the next 6 mo. to a year, IMO this period will have been a narrow window where a market "dislocation" created a great opportunity for the very few who have the cash to put down 150k+ on top of a conforming loan, because the pool of buyers is artificially and temporarily low. Heck, cops make six figures around here. Add a wife's teacher's salary and $500k is a blue collar buying range, it is simply not an expensive house or a large loan for the incomes in this area. Jumbo rates have already started to trend back in-line with conforming rates.

Also, reading this thread I'm reminded of the old saying about when to be greedy and when to be fearful. It's practically viral that you "have to be on the sidelines" now, almost as bad as it was viral that you "had to get in or be priced out forever" two years ago. The virus was wrong then, and I believe it's wrong now.

eastbay

Re: Buying a first home: Las Vegas
 

My question is for the people in the buy now camp is what do you see that could drive the prices higher in the next few years?

I was a mortgage broker during the boom and this is my take on the situation. When the market was hot I could put a loan through for anyone. The subprime portion is obvious but, the big issue to me where the loans I was putting through for conforming borrowers at that time. The majority of borrowers that I saw in my area (Chicago) put little or no money down and took an interest only ARM. In most cases they couldn't even afford a fully ammoratized loan. I did very few loans where someone had 20% down and they took a fixed loan and had no problem making the payment. Then there were the No Doc, Lo Doc, Neg Amm and other programs that just seemed crazy even at the time. These programs created an artificial demand that drove the prices so high. A 5 year arm is about the same as a 30 year fixed loan right now and I don't think the majority of these other programs exist any longer.

I am no longer in the mortgage biz but, maybe someone who is can say how easy/hard it is for the average consumer to get a 100% LTV loan or a no doc/ lo doc loan etc. If banks want people to put money down I don't see how the demand can catch up any time in the near future.

I think the prices still have a long way to drop but, even if they don't can anyone give a compelling reason why they would be any higher than they are now in the next few years?

Re: Buying a first home: Las Vegas
 

I'm not sure if this is relevant, but I had an interesting recent experience with refinancing my mortage

At the end of September, I got a new loan (to get out of the ARM that for some reason I was put in). The interesting thing is that they gave me 6% fixed, no prepayment penalty, STATED INCOME loan. This is Countrywide of all people, who got themselves into a ton of trouble partially by doing things like this. Granted, my stated income is very high for the size of the loan I have, but I'm still in my early 20's and self employed so I should be a high risk and I doubt they should just take my word for it.

So I guess this is a little off topic, but it still seems like some of these mortgage companies are loaning out money a little bit too freely. I don't know exactly what, if any, implications this will have on the market.

tc

Re: Buying a first home: Las Vegas
 

TC,

Did you have more than 20% equity? If you did and also had a decent credit score then this would make perfect sense. I bought my place in '03 when I was flat broke with no money down. I refinanced in 6 months and I got 3.5% on a 5 year arm and an equity line for the remainder. That was an example of banks lending money too freely.

Good2cu,

Just rent some sick condo on the strip. That would be more balla than buying a place anyway.