Buying a first home: Las Vegas

[MatthewRyan]

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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.

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sh- wow sick good post. It is like you read my mind

[stephenNUTS]

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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

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Nice Post

When there is BLOOD in the street in any market(esp. real estate)....I will buy at MY PRICE.
If I am off by abit...I will wade the waters,as long as I have done my DD,as the rewards are just greater down the road.
Attempting to market time,is a MAJOR mistake to most investors...e.g "the herd mentality"

Two years ago people were climbing over each other to buy real estate(i laughed)...now everyone wants to wait TWO+ years(i'll take my chances doing my homework here)

I see the same happening in the stock market as we continue make new highs each day...NO-ONE wants to miss the boat....again I will take that chance and wait on the sidelines to re-enter after liquidating a large majority of my equity holdings the last few days.

I can see a perfect storm brewing in the stock market with catastrophic implications if any one of many catalysts trigger a major sell-off IMO....oil hitting a NEW record high on Friday,inflation,another terrorist disaster,continued Middle East issues,dollar tumbling/gold rising,trade deficit expanding,etc.

~SF

[eastbay]

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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?


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For the record, I am not in any "buy now" camp. But I am also not in the "do not buy now" camp, either. In every market there are good entry points and bad entry points for someone looking for a primary residence. And while I wouldn't necessarily say that there's *never* a time to be in the "do not buy now" camp, I would say it's certainly not now in some markets. Not when there are homes being sold at 40% off of the highs in the market. In some places, in some categories, there are *already* historically large corrections in place, now.

You're asking what catalyst might drive prices higher, and I already named one: where median prices are well over $417k, a restoration of the jumbo market could drive prices higher.

But I think another point is that there doesn't have to be any catalyst to drive prices higher when looking to buy a primary residence. There just has to be some reason to believe that you're not going to suffer significant losses in any particular entry point. In some regions, on some properties, I think that support is already in place.

eastbay

[good2cu]

All,

I admit I am basically a Real Estate fish but I don’t see how this isn’t a perfect time to buy. The front page of the Las Vegas Review Journal today proclaims, “Everyone has housing woes”, there are over 50,000 new unsold homes that aren’t selling and 2% of the houses in Las Vegas have been foreclosed. It seems like everyone is panicing and deeply slashing prices. Will these prices continue to fall? I can’t say and I doubt anyone else really can.

Also anyone who could recommend good real estate agent it would be greatly appreciated.

[stephenNUTS]

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All,

I admit I am basically a Real Estate fish but I don’t see how this isn’t a perfect time to buy. The front page of the Las Vegas Review Journal today proclaims, “Everyone has housing woes”, there are over 50,000 new unsold homes that aren’t selling and 2% of the houses in Las Vegas have been foreclosed. It seems like everyone is panicing and deeply slashing prices. Will these prices continue to fall? I can’t say and I doubt anyone else really can.

Also anyone who could recommend good real estate agent it would be greatly appreciated.

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I just answered your PM,so let me know how you make out

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

[eastbay]

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All,

I admit I am basically a Real Estate fish but I don’t see how this isn’t a perfect time to buy. The front page of the Las Vegas Review Journal today proclaims, “Everyone has housing woes”, there are over 50,000 new unsold homes that aren’t selling and 2% of the houses in Las Vegas have been foreclosed.

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Let me balance my argument: 50k new unsold homes is a worrying number. Currently less than 1k new homes are selling a month. You can do the math on how long it will take to clear that inventory even if not a new single home is built - which won't be the case.

That's a supply/demand imbalance that will take a long time to work itself out. Of course, once signs of a bottom show, you may see pent up demand come out of the woodwork...

eastbay

[BuddyQ]

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Let me balance my argument: 50k new unsold homes is a worrying number. Currently less than 1k new homes are selling a month. You can do the math on how long it will take to clear that inventory even if not a new single home is built - which won't be the case.

That's a supply/demand imbalance that will take a long time to work itself out. Of course, once signs of a bottom show, you may see pent up demand come out of the woodwork...

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Yup. Going to be a tricky matter indeed to get in at the exact bottom.

[spex x]

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But I think another point is that there doesn't have to be any catalyst to drive prices higher when looking to buy a primary residence. There just has to be some reason to believe that you're not going to suffer significant losses in any particular entry point. In some regions, on some properties, I think that support is already in place.

eastbay

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I agree completely, and I guess that this idea is what I was trying to get at in my earlier response. Basically, if you're going to buy for a 7-10 year holding period (like, in the case of a primary residence), I can't see any reason whatsoever to NOT buy now. And since the OP clearly WANTS to buy, my feeling is that he should go ahead.

[maxtower]

This doesn't have to be such a big question mark. If OP can find a place that is close to the cost of renting then he can safely buy. If the cost of renting is a lot lower than the cost of owning, then he should wait. I think Desert Cat has gone through a couple example calculations in past threads. If you are interested in a specific property, just go through the calculation yourself to see what price should be offered on the place.

[mak15]

good2cu already pointed this out himself, but whenever everyone says you should wait to buy then it can't be that bad of a time to buy.