Coldwell Banker Premier Realty

Some notes on Valuation


National Rankings and Trends
Posted: February 17, 2010 by John McClelland

Modern locomotives are diesel-electric hybrids where a diesel drive motor powers a generator that in turn powers electric motors at the drive wheels. Regional economies are dynamic motors that power the locomotive...the United States. While each wheel, the regional economy has its own motor, there is a drive mechanism at the top, chiefly monetary policy and with respect to Las Vegas's regional economy, national employment can be thought of as a drive engine. In Las Vegas we really seek a broad national recovery and a return of disposable income. While several local indicators show improvement, we have yet to experience a conclusive rebound and much of this is geared along with a weak national rebound. Thats exactly the reason why I like several real estate asset classes in the Valley. Its back to buy low, sell high instead of buy high, sell higher, which was unsustainable.

A popular article in CNNMoney reported the findings of PNC Financial Services and IHS Global Insight in which they estimated that Las Vegas was 41.4% undervalued (this is deeper than my own estimate of -28% undervalued but it depends on the weights you give each metric), number one for the most undervalued. Conversely, Atlantic City was pegged as the most overvalued. In overvalued cities in the midst of a recession, or at best a weak recovery, buying homes looks risky. I would probably be a renter in those markets unless I found a deeply below market deal. In Las Vegas we have seen levelling in prices due to first-time buyer demand and from investors. The tax credit has served as an artificial support but I think their is real organic interest here. When employment turns around and household formation re-ignites, we could be looking at some good absorption. The 20-City S&P/Case-Shiller index still appears to be above trend. Las Vegas appears deeply,deeply below trend. I think its more comfortable to buy when it this deep below trend and that the reward-risk ratio is out of balance on the reward side. CNNMoney Story - Click Here

Loading Comments

 Archives