Re: Condo or timeshare ?

Guy Marcotte wrote:
We are looking at the possibility of buying something in Las Vegas. Maybe in the SW area.

1) is the SW a good, safe and quiet place ?

2) Is there any other area which is quiet and safe ?

3) Is timeshare a good idea ?

4) Maybe condo could be better and prices are affordable...

5) Do you know any condo complex where we can also expect to rent our appartment for tourists ?

Thanks.



Guy Marcotte,

We were out to dinner with friends, one of whom is a real estate agent. She has been selling houses here for many years and was a very successful agent. Until this year. Over dinner we talked about the local real estate market and how it has changed.

Up until last year she averaged 25 listings per month and about 7 or 8 closings. This year she has only taken 1 listing all year and has had 1 closing all year. The problem is that the Las Vegas market is flooded with foreclosures and short sales. Fully 70% of the market right now is short sales and foreclosures and there are many thousands of homes on the market. So many that no one knows exactly how many there are. You used to be able to look at the MLS and know exactly how many homes were for sale, but not any longer. Banks now take dozens or hundreds of homes and list them with a single agent and not all of them are listed in the MLS. The agent and the bank sit on these vacant homes and collect offers from buyers for months at a time. They want all cash offers and pass over offers that require financing since it has become next to impossible to get financing for homes here. Buyers who have cash rule but are out to steal what they can.

Current selling prices for single family homes on the south side of town are averaging $90-110 per square foot. Homes on the north side are $75-85 a foot. You can't build a house for that, but with the oversupply of vacant homes that is what the market will bring. Builders are fed up because they can't sell their current inventory for what they have invested and no one is building anything new. Can you blame them?

Sellers who can afford to price their homes correctly can sell them but it could take 6 months or longer to find a qualified buyer. Sellers who are upside down or price their homes too high see them sit forever with no offers, but there are plenty of agents who will list them for sale. The MLS is full of houses that will never sell due to being overpriced for the current market.

Financing is another problem area. To get financed today you need an appraisal and the appraisers have nothing to compare to like they did in the past. With house values dropping so fast and so many houses vacant, how do you correctly appraise a home? How do you compare a house that is owner occupied and well maintained with the 5 or 6 houses on the block that are vacant and have dead landscaping, peeling paint and a gutted interior? Appraisals used to be good for 60-90 days. Now you're lucky if they last 30 days, so by the time you get all the right paperwork done for a loan, the appraisal you paid for is no good and you have to start all over again. Ask a real estate agent today for a CMA *competitive market analysis* and they can't give you one. The market is just too uncertain and fluctuating too fast.

People who have owned their homes for 5-10 years and went in with 20% down with a 30 year mortgage might be able to break even if they sell today. Many have to bring money to the closing to pay closing costs. That's why so many people are simply walking away from their mortgages. All the equity they had is gone, if they had any equity to begin with. Anyone who refinanced in the last 2 or 3 years is upside down and owes more than the house is worth.

The condo market is even worse. There are thousands of empty condos. No one knows how many. If you are considering a condo purchase, be very very careful. She said that she doesn't know of a single condo complex that isn't on shaky financial ground right now. Do you want to invest in a property that might be bankrupt next month or that has a 50% empty and foreclosed occupancy? The associations have no idea how many units are occupied or not and have no way to provide the information to a buyer. Lots of banks that own condos are not paying their association fees. She was telling us about condos that sold for $100,000-125,000k a few months ago that are now worth less than $75,000 that can't get sold cause no one will finance them.

Meanwhile, rents are going up, but so is the unemployment rate. It's now over 12% here and rising. They say it could hit 15% by Christmas.

Timeshares are a nightmare. They are even shakier than condos.

The only bright spot is the first time buyer trying to get a low priced house. The government $8,000 incentive is helping that area of the housing market, but they still have to qualify for a mortgage and in Las Vegas, most don't.

The bottom line is, I would not tell anyone to buy a house here now for investment reasons. I wouldn't suggest anyone try to buy a condo and anyone crazy enough to think about a timeshare would be better off buying a gun and shooting themself in the head. That's my opinion and I'm sticking to it.

Gary
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