Interesting Comments Out of Las Vegas.

This Is a Lot More Telling Than The Stuff Sunday Papers Truck Out!



Interesting commentary. Comparisons with Wellington scene now?



This reminds me of when the houses in Cromwell were being sold by the Ministry of Works at a rate of 60 a month, after the Clyde dam was finished. As soon as they sold them all prices went through the roof. Supply & demand.



Note the description of the banks sales process. Its described as if its something radical . It may be for the American market. Here in New Zealand most good salespeople would say they are following a sensible, normal approach !



And note comment on the "out of town investors" philosophy.



"The economic law of supply and demand says that when demand increases and supply falls, prices are sure to rise. Apparently that law has an asterisk that says “except for Las Vegas.”
For months now I’ve been hearing about how brisk sales have been, especially in the REO, or foreclosure, market. Looking at the numbers you will see that the available supply has been steadily trending down and sales have been setting all-time records. A bank puts an REO on the market and within days there are multiple offers on the property. So why are prices still falling?
On The Street
One realtor that I know specializes in these REO properties. What he sees are a lot of cash buyers from other areas stepping in. That would seem to mean that investors are seeing the value while local buyers are still gun-shy. Are they missing a golden opportunity?
He told me a story last week of an out of state investor who made an all-cash offer for 10% below the listed price on an REO. He warned him that he had virtually no shot at that deal. His buyer said, “but it’s all-cash.” The agent’s response was “so is everybody else’s offer.” Sure enough that REO was in a multiple offer situation and sold for about 10% more than the listed price on a 100% cash deal. He went on to say that the standard practice for the banks is to place a property on the market at a price that is lower than they expect to get. After a number of offers come in they counter by asking the buyers for their “highest and best” offer. The banks seem to have hit on a winning formula for liquidating properties.
The REO Myth
I have been asking a lot of veteran real estate agents and seasoned investors why prices are still falling. It would seem that a number of people think that there is going to be another wave of foreclosures that will be a tsunami that will cause prices to fall even further. Another opinion is that banks are sitting on a significant number of foreclosures and are releasing them piecemeal in order to keep prices from collapsing altogether.
Will there be another wave of foreclosures? Perhaps, more likely than not it will simply be a continuation of the wave we’ve been riding out for some time now. In the Las Vegas market demand has been outpacing supply for a while now, can that much more supply suddenly hit?
As for the theory that banks have all of these properties hidden under a tarp somewhere I say simply, where are they? These banks are public corporations and their assets are not invisible. If they were there someone would have found them by now.
The Smart Money
Are all of these cash investors wrong? I have a feeling that they’re not. Las Vegas prices have fallen so far below replacement cost that it would seem that they are significantly undervalued. For the longest time it had been virtually impossible to get a property to cash flow in the Las Vegas market, now it is a piece of cake. How much longer before everybody else notices?"




Heres the source of the article:



http://www.biggerpockets.com/renewsblog/2009/09/14/las-vegas-record-sales-dwindling-supply-why-are-prices-still-falling/

No, This is Bad News

Sunday Paper Picks 2010 Good to Buy Holiday Home.

Why bad?
On Colins non scientific, 20 year observation of real estate trends, there is only one barometer to watch more closely than the Listener. ( That publication is always soooo wrong, investors should subscribe to see whats about to not happen)
And that market indicator? The Sunday paper banner headlines.
Why watch them for guidance? Because without fail, what they say is the opposite of what is going to unfold in the future. DOING THE OPPOSITE OF WHAT THEY SAY TO DO IS A GOOD IDEA! Yes, you cant go wrong.

So sorry, bad year for buying holiday homes.

Why Real Estate in NZ is Like Lady Di

An influential Journalist blew me away with the revelation of where these unqualified, dodgy and sensational stories are coming from. Especially in the Sunday papers.

He said to me "in New Zealand, real estate has the "lady Di " factor to Newspaper editors...put it on the front page and the sales will spike up"

What more needs said?

The Value Of Homestaging

I feel more and more strongly this is worth doing when you sell.

Its been a struggle to quantify what value it adds, in numbers. Because you cant sell the same house twice!

However I just saw some US figures, from StagedHomes.com. Their survey. Selling in 30 days vs average 60. Median 6.8% more. 6.8% .... wow! That would be like $35 000 more, on an average house in Wellington!

Certainly I feel apartments in Wellington that are not presented to "homestaged" standards will not only sell at discount, but they are virtually unable to be sold at any price, certainly those under $500 000.

This photo is of something I sold recently, homestaged. Dosnt it just look desirable?

Selling To "investors"

Heres a couple of "investor guidance" philosophies to give you the "flavor" of what they want from you!

Well, if you have, or are going to sell to a true investor, you will have done one or several things wrong, probably.

They aim to buy below market value, on their terms, with great returns, either capital gain or yield.

Heres what has or will cause it:

You bought something only an investor would want to take off your hands.

You so overpriced it when it went to market you killed a fair sale, & were only left with the bottom feeders.

you failed to present it well. Didnt have the money, time or inclination to tidy it.

Your tenants were such pigs it took 5% off the value. Get them out, clean it & home stage. $2000 homestaging should add $10000 at least.

You didnt get out soon enough. Sell before you MUST!

You bought in a terrrible location.

You didnt market it well:

you sold it yourself .

You didnt get a good agent.

You didnt get a good company.

You didnt spend on advertizing.

Sorry, if they buy, you lost!

( Note: not all sales to 'investors" will be' lose/win' but in Wellington, the chances are high!)

Where To, Prices & Volumes, 2010 Wellington?

So heres my stab at it.


Firstly this is done without any knowledge on The Listeners current position on the market.

This is an important barometer for me, as I have found that publication to be very reliably & consistantly wrong on property for 15 years. And in a timely fashion too.

When The Listener says ( and they do about twice a year) "real estate is in a terrible state, and its ruining the country, and prices are about to go through the floor, and and and the collapse will take all the greedy people who own houses to hell"... then buy buy buy!

In their defense their editorial sentiment is generally negitive towards property, so the 7% average annual increase in value over the last 100 years works against them I guess. Can anyone summarize their current opinion, to take it into account in predicting the next 12 months?


Rest of the media, also a good indication of which way not to bet... but they are confused. "You need a house, but dont buy one, maybe" , seems the overall flavour.


Tony Alexander, BNZ...far sharper than media.. says nationally up 5 to 10 % next year.


Buyers...gone for christmas, no one to ask.


Listings...more, but selling. Except over $1 million...there are a swarm there, & not enough buyers.


Investment/first home...yields poor unless you compare them to running a small business or putting it in the bank. Or pretty well anything.
first homes
Prices fairly fierce for what you get...but there is nothing else...


Rumours..bloodletting by government to reduce spending blowout next year especially in Wellington.
Loss Atributing Qualifying Companies's to lose some benefits?


US property market still weak.





So... me, Ill say volumes next year 680 to 800 sales a month...ie steady. Prices? Wellington overall...up 6% year on year. First homes & over $ 1 million...not so strong... up 3%.





And living in a clean, clever, compact Capital, safe and secure from all the stress the rest of the "civilized" world put up with every day?.............. PRICELESS!





Have a wonderful Festive Season.


Cheers


Colin