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To Buy or Not to Buy-Las Vegas? December 27, 2006

Posted by AlynnROCK Group in Auction News, Real Estate News.

vegas.jpgOne of the great questions real estate investors struggle with is whether or not to buy real estate in a hot market.  One school of thought is the property value will always increase; this is likely to be true in the long run.  The idea is, even if you pay too much now, you will still make money in the long run.  The other school of thought, the one I belong to, believes that the purchase of the home is where you make the money.  The lower the price when we buy a property, the better the investment.    With that in mind, I am going to look at two real estate markets over the next two articles, Las Vegas and Florida. 

These cities were two of the hottest markets in the country; but now have slowed down.  Is now the right time to buy? Have the prices bottomed out? Will these markets recover in the near future? And ultimately, should I invest in Las Vegas real estate? That last question is a very personal question.  I hope to give you some information that will help you answer that question for yourself.   Today I am going to address Las Vegas. 

My business partner and I recently attended the American Bankruptcy Institute convention in Las Vegas.  The keynote address, and the reason they chose Las Vegas for their convention site, was they anticipate Las Vegas is in a serious down turn.  In June of 2005, according to the conference, there were 800+ homes on the market in the Las Vegas area.  In September 2006, there were more than 20,000+ homes on the market.  Las Vegas has suffered years of draught, yet they are adding 1000 people a day to their population and have several hundred thousand living units planned.  One estimate I read, there were over 600,000 living units in the planning stages.  That is a huge number for a city the size of Las Vegas.  That article also estimated that one in three of those projects would never materialize.   

One of the largest segments of home units are the high rise condo complexes and the condo/hotel high rises.  The website “Great Las Vegas Homes” identifies a project at various stages of development.  The site also identifies 9 projects that have already been cancelled or are currently suspended.  Forbes Online had an article about the current market and focused on two developers that have cancelled a 5 billion and a 3.5 billion dollar project.  The market certainly is not what it was, and many people are leaving the market.    This can mean opportunity for others. 

I recommend reviewing Las Vegas as a potential market in which to invest.  I believe that the market is going to soften even more in the coming months.  There will be a large inventory that I don’t see going away soon.  People are going to have to sell the property, and that will be the time to buy.  As always, this is just my opinion and should not be taken as investing advice.  Do your own due diligence and make your decision.   

Stay tuned for PAX Bay Area’s next article on the Florida Real Estate Market.


1. Chris Jackson - January 7, 2007

Very useful information,thank you for putting this nice piece of info for us to read.

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