making first home purchase in las vegas, advice requested

[lu_hawk]

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(just ask WARREN BUFFET WHO HAS LIKE 76% OF HIS MONEY IN REAL ESTATE CONGLOMERATES AND INSURANCE).

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Is that 75% insurance/1% real estate conglomerates?

[HDPM]

I read an article a while back in the review journal that talked about investors buying up new las vegas homes that just didn't cash flow. That is all well and good when the price goes up 25% in a few months, but obviously is a problem. Many of these people were california investors I think, and may have been looking for something more affordable than in cal. Also, some people are able to sell a home in california and buy a huge house in a cheaper place for cash. Happens many places. Often tho, those people pay it off and live in it, so it isn't an investment really. But that can increase the prices a little. As I remember the article tho, there was just huge investor overconfidence in las vegas homes that didn't cash flow. Now that the price is dropping....

Now if there really is a good crash, will somebody please dope slap me when the market is at its lowest and force me to buy some property that will skyrocket in a few years.... [img]/images/graemlins/laugh.gif[/img]

[laserboy]

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Laerboy has all them big words....but suprisingly little in the way of facts...The fact is the most undervalued asset class for the last 25 yrs has BY FAR BEEN QUALITY REAL ESTATE. If you buy in areas not susceptible too white flight and butressed by excellent schools real estate has-will outperform-ed almost every other venture capital mode(just ask WARREN BUFFET WHO HAS LIKE 76% OF HIS MONEY IN REAL ESTATE CONGLOMERATES AND INSURANCE). Plus the tax advantages...plus it provides shelter...plus low interest lendiong opportunities plus rent is a complete waste....should i keep rambling??

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LOL! Oh really? Is that why Buffett sold out of FRE and FNM after holding them for decades?

Price/rent and price/income level ratios are at record highs, as are bankruptcies and forclosures (even with interest rates at historical lows). The rise in real estate prices is the product of artificially low interest rates and unscrupulously lax lending practices. Nothing more. Housing prices are unsustainable at their current levels, especially in an economy like Las Vegas that produces nothing.

You are either a real estate agent, a mortgage broker, or a hyperleveraged fool knee deep in adjustable rate interest only mortgage payments.

[JTrout]

CNBC recently had a segment about one of Vegas' largest homebuilders(i forget the co. name) dropping their prices across the board about 25%.
But this 25% drop was a correcting measure stemmed from previous big increases.
It sounded to me as if the new homes were still far from a good value.
Please correct me if I'm mistaken.

[laserboy]

[ QUOTE ]
CNBC recently had a segment about one of Vegas' largest homebuilders(i forget the co. name) dropping their prices across the board about 25%.
But this 25% drop was a correcting measure stemmed from previous big increases.
It sounded to me as if the new homes were still far from a good value.
Please correct me if I'm mistaken.

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It was Pulte. I posted a link to an article about a real estate "investor" with an income of $30K/year who had purchased $1.5 million worth of these homes and is now trying to sue them for damages.

http://www.lasvegassun.com/sunbin/st...517768223.html

[natedogg]

nt

[eggzz]

Nate, whats your beef about ARMs? They seem to me to be a perfect option for a twenty something who doesn't see himself staying in the home for more than 5-7 years. So get yourself a 7 year ARM at 2.25% lower than a conventional 30 year rate. Then you are selling the place before your 7 years are up, and you made out like a bandit on the rate you paid versus what you could have paid on a conventional loan.

[natedogg]

I think ARMs are fine and have their place but right now is not the time. The uncertainty around the dollar is too great to take the risk on an ARM, IMO.

Interest rates could get seriously jacked up if the Fed decides to fight off a possible global retreat from the dollar. It's complex, and I'm no expert, but there's no doubt that ARMs are riskier than they have been in the recent past. Might as well lock it up for 30 at a historical low ....

natedogg

[SossMan]

Nate, you seem to be confusing 1 or 2 year ARMs w/ 5/7 year ARMs.
It does you no good to pay 2pts per year to have the guarantee of having a low interest rate if you stay in the home for 15-30 years and never refi.

I bought my condo a year ago. I have a 5 year ARM at 4%. I could have got a 30 yr fixed at the same time of around 6%. Think about what rates would have to go to, and stay there, and how long I would have to stay in the home w/out refinancing for the 30yr fixed option to be better. (not even counting the fact that I'll be swimming in money a la Scrooge McDuck in 5 years after I win the WSOP)

Straight ARMs and 1 or 3 year ARMs can be scary (especially if they were subprime to begin with), but 5 and 7 year ARMs are a fine option for people in my situation.