The Wall Street Journal - OPINION

The Housing Crisis Is Over

By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A23

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in “months of supply” terms. That’s the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won’t stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they’ve been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one’s income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today’s house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets’ perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets’ perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.

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We get many, many phone calls from people who need to rent a home, but wonder if the rental they’re looking at is in foreclosure or soon will be. The county recorder’s office says on a daily basis, renters are learning the home they’re living in went into foreclosure. The scary part is that the renters only learn this when they find a notice on their front door telling them they have a few days to move out! Others will find a padlock on their rental home. Not only do these folks have to move out, if they paid first and last month’s rent, plus a security fee, they likely won’t get that money back.

Unfortunately, there is no quick 1-800 number to call and get an answer. Instead you have to do a little detective work. The Watchdog is watching out for you. We’ve made this as simple as possible and have put a step by step list on how to see if the home you’re renting, or want to rent, is currently in foreclosure. It would make a lot of sense to check this on a monthly basis.

Here we go!

1. Get the address of the rental property. If it’s not in the rental ad, call and get it. Or better yet, set up an appointment to look at the house. That way you’ll be sure the address you’re given is accurate.

2. Go to the Clark County Assessor website:

3. In the top left corner, click on address search and then enter the address. Keep in mind you enter the house number, the street name, the type of street (court, circle, road, etc) on separate lines. If you don’t know what city or town the rental is in.. just leave that unspecified. Even though the rental home is in Las Vegas, it could show up under another town, such as Spring Valley, etc. Anyway, enter the address information and hit submit..

4. You should see a listing with the exact address. It’s probably the first one on the list. Click on the parcel number.

5. Under general information you should see the homeowner’s name and address, and also the parcel number again. Write that parcel number down .. you’ll need it.

6. Go to the Clark County Recorder website.

7. The second listing on the upper far left side of the site is “search records” .. click on that.

8. In the middle of the page you’ll see several options to search on. Simple, Advanced, Instrument ID and Marriage.

9. Click on “Advanced Search“.

10. The only thing you want to concern yourself with on this page is “legal descriptions”. There are four lines under legal descriptions .. you want to use the first line which shows parcel number. In the blank space NEXT to parcel number, you want to enter the parcel number you wrote down. Do not enter the dashes between the number .. just the numbers. Then click on the button below that says “Detail Data“.

This should take you to the “Web Services Detailed Data Results.”

You’ll notice each entry has an instrument number and a document type. If default paperwork has been filed with the recorder’s office, it should be listed here. The most recent actions are listed first. If it’s not listed now .. you may want to check back on a weekly or monthly basis. If you see something that might be a default, or you want more information, write down the instrument number and take it with you to the county recorder’s office. They are there to help you and that instrument number will prevent you from going through all these steps again. Some detailed documents are ONLY available at the county recorder’s office. Employees there will help you find what you’re looking for.

Where is the County Recorder’s office? It’s inside the big stone-looking building at 500 S Grand Central Parkway known as the Clark County Government Center near Charleston. It’s across from the Premium Outlet Mall and near the World Market Center. The recorder’s office is on the second floor. The phone number is 455-4336.

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Home sales show signs of life

As LV closings increase, median prices for new and existing homes drop

By HUBBLE SMITH
REVIEW-JOURNAL

While sales of both new and existing homes in Las Vegas trail last year’s numbers, they’re picking up momentum, a local housing analyst said Tuesday.

New-home sales increased for the third straight month to 1,146 in March, though the first-quarter total of 2,296 is down 44.1 percent from the same period a year ago, Dennis Smith of Home Builders Research reported.

The total includes 188 high-rise condo units, led by 102 closings at Palms Place at an average price of $668,130.

Median price for all types of new homes sold in March was $278,630, a 9 percent decline from a year ago.

The resale segment continues to improve with 1,899 recorded closings, the fourth straight monthly increase. For the first three months of the year, existing home sales are off 34.4 percent at 4,916.

Nationally, the National Association of Realtors reported Tuesday that sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.

The median price of a home sold last month in the U.S. was $200,700, a decline of 7.7 percent from a year ago and the seventh consecutive year-over-year price drop. It was also the second biggest decline following a record 8.4 percent drop in February. These records go back to 1999.

“Like I’ve been saying, it looks like we’re close to the bottom,” Smith said. “I’m talking about sales. The price is not a reflection of whether the market is turning around. It’s a lagging indicator. You have to have better demand.”

Resale prices are being dragged down by foreclosures and short sales, he said. The $230,000 median in March is down 19.3 percent from a year ago.

“Even if more than half of the resale total are foreclosures or short sales, so what? The most important thing is to get rid of the excess inventory and that is what’s happening, although the lenders could step things up a little bit,” Smith said.

“We know of instances where short sales are taking months to get responses from the selling banks. Are they holding offers while waiting for higher offers? Are they understaffed? Whatever the reason, they need to speed up the process.”

David Vaughn of Las Vegas said he made an offer for the full amount of $229,900 on a foreclosure home advertised in the Review-Journal by Countrywide Home Mortgage. That was 12 weeks ago.

“I called Countrywide,” he said. “All the financing is in place. I can’t get them to even talk to me.”

Las Vegas-based SalesTraq reported 1,076 new-home closings in March, a 40.3 percent decline from the same month a year ago. The median new-home price has dropped 10.2 percent to $276,292.

Existing home closings were down 62.8 percent in March to 980 and their median price dropped 13.9 percent to $247,000.

SalesTraq President Larry Murphy tallies foreclosure sales separately from existing sales. He showed a record 2,468 foreclosure sales in March, nearly five times more than March 2007. Their median price was only $225,165.

The big news is the price decline, said Debi Averett, founder of Housingdoom.com blog site.

Prices are still falling like a rock, but the drop in home sales isn’t as steep as the market shifts from “plummeting” to “stagnating,” she said.

“Sadly, lower prices means more foreclosures and more foreclosures means lower prices,” Averett said. “Even this isn’t bad news for everyone. There’s a lot to be said for affordable housing. It’s just sad that getting Las Vegas back to that world is such a painful process.”

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491. The Associated Press contributed to this report.

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Foreclosure hits the big guys, too

Vacant Henderson house practically a steal at $2.35 million

Sam Morris

Hardly lived-in 9,400-square-foot Henderson home has 19 rooms, including eight bedrooms. The house and lot feature a mammoth kitchen and entryway, four fireplaces, and a pool and spa. Remarkably, three of the seven houses in the high-end neighborhood off Sunridge Heights Parkway have been in foreclosure.

By Brendan Buhler

Wed, Apr 16, 2008 (2 a.m.)

Chris Morris

Sam Morris

Hardly lived-in 9,400-square-foot Henderson home has 19 rooms, including eight bedrooms. The house and lot feature a mammoth kitchen and entryway, four fireplaces, and a pool and spa. Remarkably, three of the seven houses in the high-end neighborhood off Sunridge Heights Parkway have been in foreclosure.

Sun Archives

• Hey, buyers: All Aboard! (3-02-2008)
• Nevada Had Top Foreclosure Rate in 2007 (1-29-2008)
• Speculators bear brunt of foreclosures (9-23-2007)

Beyond the Sun

• In Pictures: Where To Find Million-Dollar Foreclosures

With its lightly used 19 rooms — not counting the nine bathrooms, the studio-apartment-sized foyers and the six walk-in closets — and with its four fireplaces, three balconies, two wet bars, pool and spa, 821 Majestic Ridge Court really is what the ad says, a “luxury foreclosure.”

But the most interesting things about 821 Majestic Ridge Court in Henderson aren’t its 18-inch Travertine tiles, its marble accents or its chandeliers. Those you pretty much expect for a $2.35 million asking price. There’s nothing wrong with the house, really, if you can overlook the lack of appliances and the unfilled speaker holes in the theater room’s ceiling.

What’s interesting about 821 isn’t even that it’s a foreclosure. It’s that it’s the third foreclosure in the neighborhood.

There are seven houses in the neighborhood.

It’s not what you think.

What happened at 821 and at its neighbors wasn’t about first-time buyers and adjustable-rate mortgages.

This was more about speculation, investment, folly, a time when the market was, so to speak, still staying out late in clubs, full of interesting chemicals and convinced the weekend would never end, even if it was Sunday evening.

Its two sister houses went into foreclosure in 2006. Eight-twenty-one — the only house on the street now for sale — entered foreclosure in 2007.

“People used to pretty much put a deposit down without ever looking at the lot, just the plans,” says Ross Fabrizio, the real estate agent stuck with selling the house for the private lenders who are 821’s unhappy owners. “In 2004, you could sell anything right away. Now you just hope someone shows up to look.”

He guesses there are maybe 100 houses on the market right now that once were valued at more than $1 million. Some of them still are.

The house at 821 was built on one of five lots purchased in the middle of 2003 by a company named Phoenix Properties & Development of Henderson. It was sold to another investor, a company by the name of Park Place West. At one point the house was assessed at $3.8 million. More loans were made. A pool was put in. And then, nothing. No more work. No more payments.

Steve Portnoff, a retired swimming pool distributor and contractor, is one of 11 people who lent a total of $2.85 million to Park Place West, which he now believes was run by the same people who ran Phoenix Properties & Development. His lawyers haven’t been able to find them since the foreclosure, though he’s heard they might be in Sedona, Ariz. Call the number listed for Phoenix Properties in Henderson and the line just rings and rings.

“We took a risk,” Portnoff says. “And now we’re getting raked over the coals.”

Donna Barbee is also not enjoying her experiences on Majestic Ridge Court. She’s a regional vice president of Griswold Realty Management and runs the Majestic Ridge homeowners association. There was nothing but trouble with Phoenix Properties and its houses, Barbee says. You would think it should be easy in a neighborhood of seven multimillion-dollar homes, but the vacancies and turnovers and the lack of paid dues have made it difficult. Right now only three houses in the neighborhood are occupied by their owners, and they’re the ones she feels sorry for.

“It’s going to be a beautiful neighborhood,” Barbee says, “if only we get some more homeowners out there.”

And, getting back to 821, it could be a very beautiful house for the right kind of family, the kind that can find a use for its elevator and its several balconies, from one of which you could very easily see yourself singing to the Argentine masses, telling them not to cry for you.

Even if there’s not an oven or a fridge, the place is, Fabrizio points out, move-in ready when you consider the nine-nozzle shower in the master bathroom.

“You could take your girlfriend over here tonight and have one heck of a party,” Fabrizio says.

And, Portnoff, says, except for two weeks in 2007 when the former owners — two people from Phoenix Properties — squatted during the foreclosure, 821 Majestic Ridge Court has never been lived in.

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HOUSING: ‘Feeding frenzy’ in Las Vegas Foreclosures, short sales rise, bringing big drop in prices

By HUBBLE SMITH
REVIEW-JOURNAL

More than half of Las Vegas home sales in March were foreclosures or short sales, the president of Greater Las Vegas Association of Realtors said Monday.

The association reported 1,478 escrow closings for single-family homes during the month, a 34.6 percent increase from February. It was the third straight monthly increase. Sales are down 7.9 percent from the same month a year ago.

“What an increase we had in March,” association President Patty Kelley said. “People are coming outside, the weather’s getting warm and they’ve heard doom and gloom all winter long. There’s some great deals out there, and they’re not going to last forever.”

Inventory of homes listed for sale is at 22,763, up 1.2 percent from February and up 6.9 percent from March 2007.

Median prices declined 1.4 percent to $243,169 as bank-owned properties continue to sell below market value, Kelley said. Foreclosures and short sales, or homes sold for less than the mortgage owed, accounted for 773 sales in March, 52.3 percent of the total.

While home prices are still declining, down 20.3 percent from a year ago, Kelley said she doesn’t expect them to go much lower because they’re now selling for less than what it would cost to build that same home today.

She said foreclosure homes are getting multiple offers. It’s taking longer for banks to approve sales and for buyers to close escrow.

“It’s starting to become a feeding frenzy,” Kelley said. “The banks, the title and escrow companies are backed up. They laid off all their people and now they don’t have the staff to handle the volume. We could get foreclosures and short sales out of the inventory. We have buyers coming back, but the banks can’t act fast enough.”

Doug Glendinning of Las Vegas said he’s losing his enthusiasm and patience three weeks after making an offer on a bank-sale home.

“With so many houses in that particular category, I don’t understand how the bank can drag its feet on accepting or rejecting or asking for a counter(offer),” Glendinning said. “I’m not concerned with their decision, just how can they sit there and not make one? No one can explain this to me in any common-sense terms.”

Distressed property sales are among the greatest opportunities in Las Vegas right now, Jeremy Aguero of Applied Analysis said.

“Sharks are swimming around the blood,” he said at an economic forum last week.

Jeff Adams of FreeReal EstateMentoring.com said the current market is a real estate investor’s “dream come true.”

“With the subprime meltdown going on right now and foreclosures up over 700 percent nationwide, there is a huge opportunity out there to pick up properties at 50 (cents) to 60 cents on the dollar,” he said.

Realtor Steve Hawks of ReMax Platinum said he just received notice from the bank about a 2,480-square-foot home in Seven Hills going on the market for $334,000, compared with its 2002 sales price of $565,000.

For condos and townhomes, there were 198 sales in March, a 19.3 percent increase from the previous month and a 41.9 percent decline from a year ago. The median price was $163,000, down 18.5 percent from a year ago.

Total sales volume for March was $451 million, a 25.4 percent decline from a year ago.

Association statistics are based on data collected through the MLS and do not necessarily account for newly homes sold by local builders and other transactions not involving a Realtor.

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BUYING INTO VEGAS

Foreign investment flowing into city developments at rapid pace

By HUBBLE SMITH
REVIEW-JOURNAL

Las Vegas has never been short on cash. From the mob to Wall Street, investors have shelled out billions of dollars in a show of faith in the city’s gambling-based economy.

These days money is coming more and more from foreign sources.

Last year, Dubai World invested $2.7 billion to gain 50 percent interest in CityCenter and put $2.4 billion into MGM Mirage stock. Elad Properties of Israel paid $1.2 billion for the 40-acre New Frontier property.

CityCenter Developer: MGM Mirage Foreign investor: Dubai World Country: Dubai Amount: $2.4 billion Interest: 50 percent Cannery, Eastside Cannery Developer: Cannery Casino Resorts Foreign investor: Crown Ltd. Country: Australia Amount: $1.8 billion Interest: 100 percent New Frontier Developer: Phil Ruffin Foreign investor: Elad Properties Country: Israel Amount: $1.2 billion Interest: 100 percent Plaza, Las Vegas Club Developer: Jackie Gaughan Foreign investor: Tamares Group Country: Lichtenstein Amount: $82 million Interest: 100 percent New Frontier Developer: Phil Ruffin Foreign investor: Elad Properties Country: Israel Amount: $1.2 billion Interest: 100 percent

Australia-based Crown Ltd. made a fast-track entry into the U.S. gaming market with its $1.8 billion buyout of Cannery Casino Resorts, which includes the Cannery in North Las Vegas and the Eastside Cannery under construction on Boulder Highway at the former Nevada Palace site.

Crown also acquired a 20 percent stake in Fontainebleau on the Strip for $250 million and bought into the former Wet ‘n Wild site for $22.5 million.

Kazuo Okada, founder of Japanese pachislot and pachinko machine maker Aruze Corp., owns a 20 percent share of Wynn Resorts.

“I think it’s certainly evident of the broad appeal Las Vegas has in the international marketplace,” Las Vegas Chamber of Commerce spokeswoman Cara Roberts said. “Even in a down economy, business people

are looking to this region with strong business prospects.”

With the U.S. dollar weakening against foreign currencies, international investors are snapping up many of the Strip’s high-priced condos, as well.

Aaron Auxier, a broker with Luxury Realty Group, said the national press often misunderstands what’s happening on the Strip when it reports about Las Vegas real estate. More than $1.5 billion in condo sales show that CityCenter has an “ever increasing appeal to a global audience,” he said.

Foreign buyers are also looking for second homes in Las Vegas.

Realtor Robin Camacho of American Realty & Investments said she has a Canadian client who owns a home in Southern Highlands and now wants to buy a condominium in Summerlin. The National Association of Realtors reported that one in five Realtors has sold a home to a foreign buyer in the past year.

DOWNTOWN’S LICHTENSTEIN CONNECTION

Land values in downtown Las Vegas have quadrupled to about $8 million an acre in the last four to five years as investors recognized potential in an area largely ignored by local developers.

Tamares Group, headquartered in Lichtenstein, is the largest private land holder downtown after acquiring a 40-acre mixed-use site along with the Plaza hotel and Las Vegas Club. Tamares purchased the portfolio in 2004 from Jackie Gaughan, one of downtown Las Vegas’ gaming pioneers.

The investment was made knowing that Las Vegas is one of the country’s fastest-growing cities and that a regeneration plan was under way throughout downtown, said Harry Braunstein, Tamares’ general counsel in New York.

“We saw tremendous potential not just in the entire valley, but in particular downtown,” Braunstein said. “Although it’s been slow to mature, we are big believers that it will happen. We bought out our partners. Our holdings are very diverse downtown. We’re part of the East Fremont entertainment district and we just submitted a proposal for a residential property on east Fremont Street.”

IRISH LUCK, ISRAELI CASH

International investment has reached suburban projects such as Sullivan Square, a 16-acre mixed-use development by Glen, Smith & Glen near Durango Drive and the Las Vegas Beltway. Making its first venture into Las Vegas, Harcourt Developments of Ireland has committed $800 million in construction financing for the project.

“We are aware that the property market is in a bit of down time at present across the (United) States, but people are still moving to Vegas to live at a rate greater than anywhere else in the U.S.,” Harcourt Director Mike Murphy told the Review-Journal. “After we came to see the project on the ground, we agreed that Sullivan Square had the look of a winner.”

Israeli money is behind both One Queensridge Place and Queensridge Village being built at Rampart Boulevard and Alta Drive, said Johan Lowie, chief executive officer of Executive Home Builders. He said the credit crunch has “decimated” foreign investment now.

Tom Climo, a Las Vegas economic consultant educated in England, said foreign capital invested in Las Vegas increases local gross domestic product and disposable income.

“This means Vegas residents are better off than they would be without foreign capital,” he said. “What you worry about is the longer-run scenario where foreign ownership stigmatizes sustainable local employment in favor of the transfer of employment to foreign-based personnel, the lack of unionization which goes with that as well as attendant loss in job quality, distortions of investment in planning and research and, in general, the control given to a foreign entity over American capital and land.”

THE SPANISH RETURN

Real estate appraiser Shelli Lowe of Integra Realty Resources said she appraised a proposed high-rise site on Sahara Avenue, east of the Strip, for an investment group from Spain. The 13-acre site, now home to the 200-unit Palms Apartments, was purchased last year for $24 million.

The buyers aren’t planning to “flip” the property for a quick profit, said Jason Glasgow, a California broker who negotiated the deal. They’ve developed more than 3,000 high-rise condos in the United States in the past 10 years.

Opportunities to develop projects within walking distance of the Strip will continue to present themselves in Las Vegas as “more reasonable, thoughtful operators” enter the market, Glasgow said.

Despite a high foreclosure rate and declining home prices, land values in Las Vegas are not dropping, appraiser Lowe said.

“Not if they’re commercially oriented,” she said. “We’re doing a piece that’s selling for $30 million an acre across from the Mandalay (Bay), so we’re still seeing large prices paid for commercial and industrial property.”

John Vorshek, regional manager for Marcus & Millichap brokerage in Las Vegas, said his office has closed two commercial deals with different foreign investors this year.

ASIAN PERSUASION

A group from Hong Kong with holdings in California bought a 92-unit apartment complex for $18.4 million. It was an all-cash transaction and closed in 28 days.

“Unbelievable,” Vorshek said.

Durango Commons retail center was sold to a Korean group for $7 million, he said.

“They flew over and looked at the property and asked all the right questions about vacancy and leasing and household income,” he said. “Why Las Vegas? We’re the most known city in the world.”

Generally speaking, the “smart money” is buying in Las Vegas right now and some of that capital is coming from overseas, said Charles Clawson, president of Noble Title in Las Vegas.

“With the dollar so weak, foreign investors have much greater purchasing power than they might normally have,” he said. “That greater purchasing power, combined with the distressed real estate market, makes real estate investments in Las Vegas very attractive to foreigners.”

GOING FOR BROKE

They’re also investing in Las Vegas technology. BetBrokers of London signed a letter of intent to acquire operating assets of Winning Edge International, a Las Vegas-based sports handicapping Web site, for $6.5 million.

The Association for Competitive Technology released a report in 2006 on the importance of direct foreign investment, particularly for small and midsized enterprises.

“Innovative technology startups — an important engine of economic growth — are especially dependent on a constant flow of capital which can be invested into the research and development that often leads to breakthrough new products,” co-author Nora von Ingersleben wrote. “With the United States facing the worst financial crunch and crisis since the Great Depression, it is much harder for start-ups to raise capital to develop innovative new products.”

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Observers see under-the-radar buying opportunities in Lake Tahoe

Ignore the gloomy economic headlines and the negative talking heads. This is the perfect time to buy real estate, especially in Lake Tahoe.

That’s the advice of multimillion-dollar real estate investor Larry Zavadil, mortgage lender Norm Hansen and luxury home Realtor Jerry Boren.

“It’s a challenged market,” said Hansen, managing partner at Amwest Mortgage in Zephyr Cove. “It’s also what I’m calling the perfect storm, meaning that in the mortgage business, the financial markets are so volatile that on any given day you can’t tell what the rates are going to be, except that they are low.”

Right now, home prices and mortgage financing rates are low, but it won’t stay that way, he warns. By the time the media and “talking news heads” start to find something positive to say about the economy, it will be 30 days too late for investors, he predicts.

“It’s actually the perfect time right now to do something,” Hansen said. “The fence sitters need to get that through their heads.”

Zavadil couldn’t agree more.

This Midwestern businessman has been building up his finances since his mid-20s in Glenwood, Minn., when he founded American Business Forms, now known as American Solutions for Business, in the basement of his home.

Today he owns 52 properties across the United States worth nearly $100 million. Four of those properties, worth more than $18 million and listed with The Boren Group are in Lake Tahoe. His properties up for sale include a private lakefront property on Lincoln Park Circle, another home in Zephyr Cove, Elks Point and two units that are ski-in, ski-out under construction in Quaking Aspen.

“We also have our eyes on some remodels in the Stagecoach area because that’s another hidden area that’s going to be revitalized in another 10 years,” he said. “We have $18 million invested in Lake Tahoe on the Nevada side. To me, it’s all Nevada. If you go to California, you might as well be in Sacramento. I just don’t see the value there. They just have so many more people. It’s not the same.”

Besides, he likes Nevada because of the “tax advantage,” the lifestyle and great investment value. He has property in Florida, and several properties in California, Minnesota and Texas. He believes that those areas are still the strongest areas to have his money, even when the market was the “stinkiest.”

Zavadil said the real estate market is a buyer’s market and the “cherry pickers” are out in full force, some from Europe and Canada. Zavadil, also president of Zavadil Development, said by the time the average buyer gets down to buying, the mortgage rates are really “going to be cooking,” probably another 10 percent higher than they are right now.

Zavadil’s development group is starting to raise prices on its properties.

“We’ve started to raise prices on our projects around the country because we’ve passed the bottom,” he said. “The reason I say this is that people are waiting for mortgage rates to get down to 4.7 percent. By the time it hits, they’re going to miss 10 to 15 percent appreciation on real estate property. There is a pent-up demand.”

That pent-up demand, some experts say, is centered in Lake Tahoe, also known in some circles as the “secret hideaway” of the rich and famous. Few people know the pulse of the Tahoe luxury real estate market better than Boren, managing partner of The Boren Group, an exclusive affiliate of Christie’s Great Estates. As a Realtor and broker in Nevada and California, his 43 years experience has earned him the title of one of the best known agents of luxury homes in Northern Nevada.

He sells the “sizzle” in Tahoe, meaning the lifestyle: the skiing, the beaches, the casinos, fine restaurants and privacy for those seeking a peaceful, autonomous environment to relax in.

“We had the best lakefront selling season in Tahoe in the year 2007,” he said. “We sold more lakefront properties than ever before.”

To Hansen there is “absolutely no question” that when the markets are in turmoil they will eventually correct themselves.

“So while they’re in turmoil there is blood in the streets and you should act,” he said.

Still, there are two things to keep in mind. This is not the time to buy on margin, even if you could.

“They’re going to make you have some skin in the game,” he said. “They want you to take some physical ownership, which is good because that allows you to be in the game.”

Boren expects the real estate game to be even better in 2008 and agrees with Hansen and Zavadil that now is the time to buy. Any negative news about the economy, foreclosures, price of oil or political drama just rolls off his back.

“Negative news is sort of a self-fulfilling prophecy,” he said. “I’ve been a Realtor for more than 40 years and I have said this over and over again. Every time we have hit a recession or something to that effect, I would love to go out and do training sessions with Realtors to get them out of their state of mind. Their negativity feeds off of one another.”

To Boren the market has flipped around thanks to the baby boomers, the postwar kids that have grown up wanting more than their parents. They want the best homes in the right neighborhoods.

“We’re just scratching the surface,” he said. “They want gorgeous homes better than what they’ve been raised in or are living in right now. They want a place where their kids and grandkids are going to visit. That’s one factor. The other is that now, more than ever before, people have better second homes in Lake Tahoe than they have, let’s say, in the Bay Area.”

He notes that a lot of astute wealthy buyers are looking at Lake Tahoe. There is a supply and demand factor going on and “no other place” in the United States can meet what the area has to offer.

“Lake Tahoe is second to none across the United States,” he said. “Years ago when I came up here, the inside rim (of Tahoe) was in 21 percent private ownership. Since then it’s been bought back by the forestry service, the state of California or Nevada, or the federal government. It’s now down to 13 percent private ownership. It’s an economic principle that when you have less and less (land) and more and more people, something has got to give.”

He recalls that when he first met Zavadil, he told Boren that the “most valuable property he has ever invested in is Lake Tahoe.”

“Here’s a guy who puts his money where his mouth is,” Boren said.

Throughout the years Zavadil has survived the worst of the economy and still made money.

“Yes, we survived the worst,” he said. “We just got moving around and waited for the bubble to burst again because it’s really a mental thing. What’s going to happen by the time the TV or USA Today states the market is back, you’re going to miss by 30 days or more.

“People who sit back and watch the news don’t have a clue,” he added. “So the media really drives the mind-set. Perception becomes the reality and that’s what they live by.”

Meanwhile, as the economy continues its roller coaster ride up and down, Zavadil invests and enjoys his life, especially in Lake Tahoe.

“At the end of the day when they put you in the ground what do you take with you?” he asks. “It’s the people that do it who are successful and do other things successfully as well. They love the thrill of the hunt and the challenge.

“They take risks. When other people walk, they run. When people run, they walk.”

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If you have any questions about Real Estate in Las Vegas or Henderson, please contact me at 702-277-4605 or visit www.campbellrealestatelv.com 

Longtime Southern Nevada residents and property management specialists Chuck and Linda Castle said they weren’t even looking for a new home when they discovered Del Webb’s Club at Madeira Canyon neighborhood in Henderson. Now they call it the home of their dreams.

“We were living in a very nice neighborhood in the southeast valley, but knew that one day we would like to find a luxurious single-story home in a community that offered a unique and more suburban-feeling location,” Linda Castle said. “One day, we happened to be driving through the Madeira Canyon community and, on a whim, decided to stop and look at the models at the Club at Madeira Canyon. As soon as we saw the neighborhood and walked into the Andora model, it was love at first sight. It was the home we had always talked about owning someday. We both said, ‘We have to do this.’”

The Castles said their first impression upon entering the Club at Madeira Canyon was the unique architecture of the homes and the overall community.

“We have traveled extensively through Europe and what we saw at Madeira Canyon was reminiscent of some of the finest Mediterranean villas we had seen,” Linda Castle said. “Another attraction for us is that The Club at Madeira Canyon offers 11 models — each with a choice of elevation styles and colors, which creates more of a custom feel, where no two homes look exactly alike.

“We also love the elevation of the area and the scenic views from various vantage points within the community and were pleased to be able to select a home site that gives us views of both the Las Vegas city lights and the nearby mountains.”

The Club at Madeira Canyon is the only Del Webb neighborhood in Southern Nevada open to homeowners of all ages. Buyers have a choice of 11 floor plan designs (in three elevation styles), ranging from 2,096 to 4,817 square feet, with up to five bedrooms and 51/2 baths. Prices start in the $500,000s.

The guard-gated enclave is located within the 487-acre Madeira Canyon master-planned community in southern Henderson. It offers amenities such as walking trails, an arroyo, park with sports facilities and playgrounds and a site for a proposed elementary school.

The Andora design selected by the Castles is a 2,096-square-foot home that features two bedrooms, den, great room, two baths and a three-car garage. An optional casita can replace the separate one-car garage.

“We loved the Andora immediately because upon entering the home, you walk into an immense and open great room area,” Linda Castle said. “We’ve always liked homes that do not have a lot of walls and halls and the Andora is a tremendously open and livable home.”

Since moving in, the Castles report that they’ve enjoyed the lifestyle provided by The Club at Madeira Canyon, including the community clubhouse.

“Coincidentally,” said Chuck Castle, “the first day we visited Club Madeira, Del Webb was hosting an open house at the clubhouse that evening and invited us to stop by. We did, and were surprised to meet quite a few people we knew who were already living here. That made it seem even more like buying a home here was meant to be for us.”

Homeowners in The Club at Madeira Canyon have access to a private clubhouse facility with a swimming pool and spa; cardiovascular and weight-training equipment, exercise room, conference room with flat-screen monitors, teen lounges with computers and a television and sports courts.

The lifestyle also includes social events such as themed pool parties, movie nights, restaurant samplings and other get-togethers. Residents may also schedule services such as massage therapy.

Del Webb homes are constructed with Environments for Living building technology. With cellulose insulation and dual-pane, vinyl-framed low-e windows, homeowners benefit from cleaner air and lower power bills.

Additionally, Del Webb offers its Signature Standards, which includes numerous brand-name amenities as standard features. They include granite and Corian countertops, York heating and air-conditioning systems, Moen faucets, Kohler plumbing fixtures, General Electric appliances and Zodiaq natural quartz surfaces.

To visit, take the southern portion of Interstate 215, the Las Vegas Beltway, to Eastern Avenue and go south, past St. Rose Parkway, to Anthem Parkway, then turn left. Continue on Anthem about six miles, then make a left onto Bicentennial Parkway, a left onto Anthem Highlands Drive, and a left onto Democracy Drive, then follow signs to the model park.

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If you have any questions about real estate in Las Vegas or Henderson, NV, please contact me at 702-277-4605 or visit my website at www.campbellrealestatelv.com 

To understand SID’s & LID’s, you should first understand what is a master planned community is.

 

For Starters, here is teh website where you can see if your desired home has a balance:  http://www.amgnv.com/parcelsearch_non_pop1.asp

A master planned community is a large parcel of land that a developer has purchased. This developer will bring in many different home builders, sometimes it can be a few or one builder, who will build homes that have been pre-zoned for specific types. A master planned community usually has everything laid out from homes to retail space. Most communities have specific restrictions on how the aesthetics of the community are to look. For example, Summerlin which is a very nice master planned community on the west side of Las Vegas, have specific store front aesthetics that must be met.

It gives a homogeneous look to all the shops which can be better than 20 different, unmatched stores.

In many of these communities, they will have associations which govern HOW you can use your property. Don’t think about painting your house pink, because that will NEVER happen in a master planned community. Associations will have a set of rules called CC&R’s which are usually an inch think of rules and restrictions of your property.

Lets talk about the money now. Do you know what a SID or a LID is? It’s a Special Improvement Disctrict or a Local Improvement District. This is an amount that each person who owns a house in a master planned community is required to pay. A sid is used to finance the master planned community. It’s usually paid over the course of 10-15 years in two payments a year. If you still have a sid balance when you sell your property, who assumes the balance is negotiable. So in this market, try to get the sellers to pay it.  It doesn’t really help to pay it off early because it doesn’t save you any interest.

• Master Planned communities have associations governing how you can use your property…i.e.  Paint Color, Landscaping, businesses, retail areas, common areas.
• There is a Master Plan Association Fee.  This can range from $20-100 a month.
• There is a SID/LID payment associated with Master Planned Communities that are due on top of the sales price.  These are two payments a year paid over 10-15 years depending on the masterplan.
• Because there are associations, usually the integrity of the neighborhood is maintained better than an area without an association.
• Additions to properties have to match current styles of neighborhood and the process can be lengthy to get an approval from your HOA.
• A lot of things look the same in a master plan community.  Same store fronts, same style homes.

There are a bunch of master plans in Las Vegas. Just To name a few:

• Summerlin
• Mountain’s Edge
• Aliante
• Anthem
• Souther Highlands
• Inspirada
• Providence
• Spanish Trail
• Sun City Anthem
• Sun City Summerlin
• Sun City Aliente
• Stallion Mountain

There are many deals right now in the real estate market. I would be happy to help you with any of your real estate needs. 

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 IF YOU HAVE ANY QUESTIONS ABOUT REAL ESTATE WHAT SO EVER, PLEASE CONTACT ME AT 702-277-4605 OR VISIT MY WEBSITE AT WWW.CAMPBELLREALESTATELV.COM

Here are some thoughts for you for Real Estate investments in Las Vegas & Henderson.

With record number for foreclosures driving down home prices over the past year, how is this not a good time to invest your money in it?

Take $150,ooo and purchase 3 homes that are $150,000 each (foreclosed homes that have 3 beds, decent areas of the SW, 1200- 1400 sq ft sq ft roughly). Put down $50k on each, or 33%. Your mortgage on each will be roughly $700/mo.

Not counting any write-offs for mortgage interest & property taxes that your CPa will factor in if you are an “active investor”. You might need to have your Real Estate license to not get into trouble with the IRS.

You should be able to rent for about $1100/mo. If your positive cash flow is $4,800 for the year. $4800/$50000 is a 10% rate of return. Now your CPA will also be able to Depreciate the houses for tax purposes and save you even more money

Using straight line depreciation over 27 years. which is $5,500 for the year to decrease your taxes by if upi can use all of it.

now lets say you hold for 5 years, and the house is now worth $180k to be conservative. That is a $30000/5 years is $6,000/year, or a 12% rate of return.

Of course you will have maintenance costs, rent loss, possible HOA, etc to factor in.

Keep in mind that i am not a CPA and can’t give advice about taxes, but I believ that you will find taht most of what I have explained to be true.

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