Las Vegas housing bubble: Episode #352

Todd explains that there isn’t a housing bubble in Las Vegas.

Las Vegas home prices

Hello. Welcome to Todd Miller TV. I want to talk about the Las Vegas housing bubble or at least that’s what people are saying. They’re saying there’s a bubble here in Las Vegas. I don’t agree with it and this is why.

OK. So home prices went up last year 20 something percent and the last time this happened was in 2004 and then 2005, they went up 50 percent. Then we ended up being way above where we should be. So now prices are going up. To people on the street, it looks the same, multiple offers. So it’s a bubble. It’s a bubble. Well, not the case. This is why.

So this I got from Zillow. They have all the stats and they have a pretty cool graph on their website. So I grabbed Zillow’s data and you will see the trend. This is 2008. OK?

To put in perspective where we were in 2006, we would have to be like up here somewhere. OK? Prices were at 300 and 15,000 median. This chart only goes to 220. So in the bottom of this is 100. So you basically have to like double this. OK? This is where prices were and this is where we are now. We’re way down here. Where we should be is probably right about here.

This is 200,000. If we were here, I would say we’re probably safe and if it went above that, I would say we probably shouldn’t be there. What’s happening is the market is low. We’re down here. You can buy a house for a $132,000. It’s a median house. That’s a three-bedroom, 1600-square foot house. They’re out there. OK?

So the thing to keep in mind is that we are trying to get up to this number so that’s why prices are going up. The fact that we have a shortage of inventory in Las Vegas is what’s causing the insanity as far as multiple offers and having to overbid on list price and the fact that last month alone they went up two percent. That’s what’s causing this but remember we’re just trying to get back to equilibrium. Markets always try to get to equilibrium. That’s all that’s happening here. There’s nothing else going on. There are a lot of political things happening. There’s what happened – the deal the banks made with the states and now they won’t foreclose.

So the bottom line is there are still houses available. There’s over 4000 on the market. People are still getting houses. It’s just not easy. So if you’re a real estate agent, that you’re probably frustrated because your job is going to be a little harder and if you’re a consumer, you’re probably frustrated because you’re having to make offers on a bunch of houses and you’re not getting them for what you see as being a deal. But as far as the housing bubble, I don’t believe it. I’m going to post this. You can take a look at it.

If you go back also a few videos, you will find another chart where I showed the long term trend of where we should be and it says we should be up here. We’re still below it so – and none of my investors that I’ve worked with in the past have called me and said, “Todd, we want to sell the portfolio.”

I don’t think anybody thinks prices are going to go down at least in the next couple of years. So no one could predict what’s going to happen. I don’t think we’re in a bubble but anything could happen. There could be a flood of properties to hit the market. If that happens, they will be absorbed more than likely because prices are still really low. We will know more in a year when we see what this does, what this trend looks like in a year.

But anyway, I just thought I would share that with you. That’s my opinion on the housing bubble potentially that we may or may not be going into. I don’t personally believe it’s a bubble. I just think we’re just correcting and I also predicted – if you go back here to the end of 2011, right here where it shows this at the bottom. I call this the bottom. If you go back to probably November of 2011, somewhere between October and December, I came in here and said, “We’re at the bottom. It’s going to go up.” Then guess what happened. It went up.

So that is my update for today and hope to see you on another video. Thanks.