Will home prices keep rising in Las Vegas? Episode #250

Hello! Welcome to Todd Miller TV. I read an article recently that said that home prices are going up. This is the first quarter, they’ve gone up nationally in a long time, actually since 2005. The largest percentage increase which is 7 years which is really great. So the question I get all the time is, is that gonna continue? And the reason why people want to know that is that they’re investors, they’re buying, they wanna buy and have a/they have a home appreciate. So let’s start with fundamentally, why do home prices appreciate? Home prices tends to appreciate based on a couple factors. One is employment. If a lot of people have employment or employment get better, you have more people with steady jobs to be able to buy a house and then if they do loose their job, you tend to have/it’s easier for them to find another job. When you have high un-employment, you have less people employed and if you do loose your job, it harder to find another one ’cause there a lot of people looking for jobs. So the first question is, where does employment stand? Historically it’s really poor. Historically it’s where much below. So it’s not because we have great employments. So the next thing you’re gonna have to ask yourself is, Well what about increases in income? So the next thing is people are starting to have increases in income, home prices go up. ‘Cause if their income goes up, they can afford more in house payments. And the truth is, income right now is not going up. Incomes are steady or slightly declining. So the you have to scratch your heads and say, Well have low/we have high unemployment and incomes aren’t rising while prices are gong up. Well, it’s very simple. Right now, 5-10% of the population is a distressed home owner. That means their upside down in the house, or they have stopped making payments, and this is national. Nationally, some markets it’s much higher, some market it’s much lower. And what that’s caused is it’s caused banks to control the property flow a little more. Especially here in Nevada. And so what’s happened is we have an artificial low inventory. That artificial low inventory has caused a temporary increase of prices. Now, we don’t know if this is gonna continue. If inventory stays low, artificially, it could continue to rise or it could level off, or properties could start coming back on the market. It could decline, but the bottom line is there’s a lot of factors here so, really what you have to look at are the numbers. The numbers are these right now. If you’re buying a residential property as as investment property, you have rented it out to somebody, first is having your money sit in the money market for 1%, are you getting it better for 1%? And the numbers show that you will probably get a gross of 12-15%, you’ll net 8-12% somewhere in that range on your money which is pretty good. You’re not gonna get that anywhere else. As far as whether the home prices are gonna go up and down, nobody knows. You know, long term, we’re below the long term trend. We’re below the long term trend. So we might get a short term declining prices, we might not. But I just wanted to sort of share that with you because I don’t know that just because prices are going up they’re gonna keep going up. There’s a lot of factors that are involved in that. And we really don’t know. We’ll/you know, we knew a year ago that they weren’t gonna crash. ‘Cause that’s wahat we’re being told that we crash. But we kinda couldn’t see they weren’t, because we were/we just didn’t have enough inventory for prices to crash. We can see tons of people making offers on properties; that’s what we’re seeing right now that’s causing this mini/maybe it’s a mini bubble, I don’t know, I don’t wanna make that prediction because I can’t tell you in a year if they’re gonna/prices are gonna go down. I do know this, in the last year I have an investment properties, and I’m not looking at selling them right now. If I did, I think prices are gonna go down in 6 months or a year. Maybe I would try to sell and wait a year and then buy again. Some people are doing that. But then again the transaction cost to get in and out of a Real Estate transactions, commissions and things like that are pretty high. So you have to loose a lot of value potentially before that makes sense. So that’s sort of my update for Las Vegas investor properties and whether prices are gonna go up and down. I know that very nebulous but fundamentally prices go up. If you’re gonna buy long term in Real Estate, this is what you need to know, when you start seeing job reports where there are more jobs being created and unemployment’s starting to drop, that’s when you want to get in the long term. That’s when you wanna buy a bunch of houses and hang on to them for 5-7 years. Just keep ’em as rentals because you have a greater chance overtime of those things being worth something and then the other thing we have to hope is the interest rate’s really low ’cause people now are used to paying 3-4% on a mortgage which is crazy low. They’re not/they just can’t go any low alright. FED already has a, I think the discount rate is half a percent or something crazy so, it’s very/to be very difficult for them to lower the interest rate in a meaningful way so, anyway, that is my update for today and hope to see you on another video. Thanks.