It's Been a While Since Karen Nelson Bell Blogged On

Hi Guys,
I've been in Clearwater, Florida, studying the market here. I think there will be a boom in the next two years, but right now, the market is definitely a buyer's market. I just bought a condo for a $125,000 discount over the asking price six months earlier. And I got about $12,000 in credits from the seller! It was a nothing down deal (of course), and even though I bought through a Realtor, it was pretty darned creative. I moved in in less than 24 hours from the time of making the first offer! Wow!

People around Clearwater think it's not the right time to be buying real estate, but I disagree. I LOVE buying in a buyers market and selling in a sellers market!

Love, Karen Nelson Bell

Home Values in Las Vegas Defy Predictions

Here's a wonderful article for anyone who invested in Las Vegas lately. It will be interesting to see what prices prevail at the BLM land auction on August 2!

Home prices won't fall Values still going higher in Las Vegas Valley
By JENNIFER ROBISON REVIEW-JOURNAL
Jul. 21, 2006Copyright © Las Vegas Review-Journal Analysts:

Despite historically high inventory, the cost of housing in the Las Vegas Valley increased in the first half of 2006 and will continue to rise through the end of the year, according to housing analysts.

At the quarterly Crystal Ball housing-trends seminar on Thursday, market watchers said the valley's residential real estate market has defied detractors who said the good times couldn't last.

"Home prices are still going up in Las Vegas," said Larry Murphy, president of real estate monitoring firm SalesTraq. "That flies in the face of bubble theorists. There never was a bubble in Las Vegas, and there isn't one in the future." (Las Vegas has ALWAYS defied predictions, because of our unique economy.)

In June, the median price of a new home in Las Vegas reached $337,250 -- a 17.2 percent increase over the $287,761 median of June 2005. The big jump came despite relatively flat sales: The number of new homes sold in June was 3,502, a 1 percent increase when compared with 3,467 closings in the same month a year ago.

Through the first half of 2006, area builders closed on 18,295 units, up 7.3 percent over the 17,048 homes they sold in the first six months of 2005.

The median price of a new home in the first six months of 2006 was 12.7 percent higher than the median of the same time period in 2005.

In the first part of the year, the Las Vegas Valley's resale submarket showed some softness.
Buyers snapped up 4,152 existing homes in June, a 24.3 percent decline from the 5,482 resales that changed hands in June 2005. In the year's first half, homeowners have sold 22,547 existing homes, a 14 percent drop from 26,232 sales in the first six months of 2005.

Yet prices were up 5.7 percent year-over-year in June, from a median of $273,000 in 2005 to $288,550 last month. In the first half of 2006, the median resale price was 7.1 percent ahead of the same time a year earlier.

"Existing-home prices have not collapsed. They've come down to a more normal pace, especially compared to the 40 (percent) or 50 percent we experienced in 2004," Murphy said.
Steve Bottfeld, a senior analyst with research firm Marketing Solutions, said the price increases should continue through the end of 2006 even as sales decline.

Bottfeld predicted that the local market would finish 2006 with 50,000 resales, down from 54,828 resales in 2005. He also forecasted that builders will close on 39,000 new homes in 2006, up slightly from 38,705 units in 2005.

The overall falloff in closings will come as the market grapples with substantial inventory.
About 20,000 resales are on the market in Las Vegas as investors and homeowners with adjustable-rate mortgages look to trade in their properties.

"Speculators and people who bought homes with (adjustable-rate mortgages) in 2004 are in a lot of trouble and they're trying to get out," Bottfeld said.
(The strategy here is not to sell in this market... re-fi and recover when the time is right, in a year or two or five!)

Also propping up inventory of existing homes are sellers who want top dollar for properties they bought several years ago. They need maximum equity to move up to the pricier new homes they're eyeing, Bottfeld said. He noted that his market research in the second quarter uncovered for the first time local consumers who have canceled out of up to three new-home deals as they leave their existing home on the market in search of higher offers.

SalesTraq's Murphy said that though the tally of existing-home listings sounds high, the inventory totals 6.8 months of supply at current sales rates.

Housing supply is also abundant in the new-home sector.
Area builders were actively selling 503 subdivisions in June, a record high for the market and a 17.2 percent increase over the 429 communities they were marketing in June 2005, Murphy said.

The condominium-conversion market has a two-year supply of homes, with 15,785 apartment units designated as potential conversions, Murphy said, though he added there were no guarantees that all those rentals would change over to for-sale properties.

In the high-rise and mid-rise submarket, 37,307 units are in planning, marketing or under construction, SalesTraq's numbers show. But Murphy said that glut of supply isn't alarming because developers will take up to four years to finish those projects.

The sheer availability of housing options in Southern Nevada won't hamper appreciation in coming months, Bottfeld said.

He said he believes the median price of a new home will have risen 8 percent to 12 percent for the year by the end of 2006, while he expects the median for a resale to have gone up 5 percent to 8 percent.

With so many homes competing for buyers' dollars, why would analysts foretell price increases?
Bottfeld said three factors will promote appreciation.

Las Vegas has led the nation in job growth for 13 consecutive quarters. Local job formation in the first quarter was 7 percent, and the city has added nearly 65,000 positions in the last 12 months.

"We have a bigger demand for new people than anyone else in the country," Bottfeld said.
Also forcing prices upward are construction expenses.

Bottfeld said the cost of home building is rising 1 percent to 3 percent a month, and builders will need to pass at least some of that bigger tab onto buyers.

Finally, the valley continues to struggle with a lack of buildable land, so the cost to acquire vacant parcels will likely stay on its upward course. Bottfeld said some plots designated for residential development are selling for as much as $1.7 million an acre. At that price, a traditional single-family subdivision with a density of five homes to six homes per acre would carry a land cost per unit of more than $283,000.

"Prices have to continue to rise," Bottfeld said.

They'll Be Cryin' and We'll Be Buyin'

Welcome to the month of June! If you believe the media, it's a terrible time for real estate... oh dear, it's a down market. It's cooling off. It's already cold. It's a BUYER'S market. Hmmmmm... what do buyers do in a buyer's market?

WE ACQUIRE PROPERTIES TO HOLD! We acquire them at discounts! Sometimes DEEP discounts! We acquire them without having to use bank qualifying too!

Remember, we're contrarians... when the rest of the world is cryin', we'll be buyin'!

Love, KNB

Housing market is both good, bad LV sales are down, but prices are near records

This report included a quote from YOURS TRULY! Check it out!

May 26, 2006Copyright © Las Vegas Review-Journal
Housing market is both good, bad LV sales are down, but prices are near records
By HUBBLE SMITH REVIEW-JOURNAL

April's housing statistics for Las Vegas can be told as a "good news-bad news" story, SalesTraq President Larry Murphy said Thursday.
"The bad news is that new and existing home sales in April were subpar. The good news is that inventory appears to be at or very near its peak," he said.
"The bad news is that condo conversion closings are at their lowest point in 18 months. The good news is that both new and existing home prices are at or near record levels."
Sales of existing homes in Las Vegas have been slumping for several months. New home sales slipped to 2,595 in April, down 9.1 percent from the same month a year ago, Murphy reported. They're still 11 percent ahead for the year.
Existing-home sales continued to slide in April with a total of 3,715 closings, down 25 percent from a year ago.
New-home prices increased 18.1 percent from a year ago to $333,117. Existing-home prices have remained flat for the past 10 months, dropping slightly in April to $282,000.

Karen Nelson Bell, a real estate investor who's writing a book, "Nothing Down for Women," said waiting around for the so-called "bubble" to burst can be costly in the end.

"In order to predict a bubble or the bursting of a bubble, you have to look at many factors like demographics and economics," she said. "I guess you'd have to become an expert in those topics in order to know when or where bubbles are blowing or bursting. And guess what? All the experts I've read have said we're about to burst ... they've been saying that for two years now."

Price appreciation rates, which had slowed for five consecutive quarters, turned up in the fourth quarter, Murphy said.
"Why? Because the market senses that inventory is topping out," he said. "For the first time since May 2004, the number of new home subdivisions decreased."
Existing home inventory is at an all-time high of 17,161, but the rate of increase slowed to less than 1,000 units, Murphy noted.
The number of new lots in final mapping is just 4.2 percent ahead of last year and the number has declined for three consecutive months.
"In other words, inventory in the new-home sector has peaked and inventory in the resale sector is at or near its peak. And that is very good news," he said.
Inventory on a national supply basis was below the six-month threshold after being above in the prior two months, while the absolute level was up slightly, Susquehanna Financial Group home building analyst Stephen East said.

Housing market hangs in Fed's balancing act

Housing market hangs in Fed's balancing act
By Sue Kirchhoff, USA TODAY
WASHINGTON — Adjustable-mortgage products that made the housing market more resilient over the past five years have left it more fragile as interest rates rise, complicating life for the Federal Reserve.
As mortgage rates rise in response to the Fed's boosting of short-term rates, the central bank must be careful not to overshoot and tamp down demand too fast. Rising rates and slowing growth in home prices also make it more difficult for consumers to refinance out of adjustable-rate mortgages (ARMs) or to meet rising payments when their mortgage interest rates adjust higher. Already, defaults are rising in some areas of the country, including pricey California areas.
Further, a slowing housing market increases rental rates. In the Labor Department's formula for calculating the consumer price index, rents are a big chunk of what's called "core inflation," a measure that excludes food and energy. Higher core inflation, in turn, spooks bond and stock traders, who fear an outbreak of inflation, putting more pressure on the Fed.
The Fed must balance rising inflation, high commodity prices and a strong job market on one hand against a declining housing market and scattered signs of slower business growth on the other.
"The Federal Reserve realizes that the volatility and, to a large degree, the spike that we have seen in energy prices is really due to speculative elements that are beyond their control," says Fred Dickson, chief market strategist for investment firm DA Davidson, who in a recent presentation to clients gave 30% odds that the Fed could overshoot on interest rates, sending the housing market tumbling.
"Housing is more interest-rate sensitive and more directly impacted by the policy decision-making of the Fed," Dickson says. "They are going to be sensitive to how far they go."
So far, the housing market appears to be cooling but not collapsing. new-home sales in April, while up from March, were down about 6% from a year ago, according to a report Wednesday. Mortgage applications last week fell by the most in three months.
But Fed Governor Donald Kohn in a recent speech cautioned that the behavior of the housing market and the consumer response were "among the great uncertainties about the economic outlook."
Record home sales and construction propped up the economy during the past several years, bolstering employment and consumer spending. Housing, directly and indirectly, was responsible for about a third of economic growth in 2005, according to estimates from Moody's Economy.com. Home-equity borrowing and cash-out refinancing hit $900 billion in 2005, about 10% of disposable income.
Doug Duncan, chief economist for the Mortgage Bankers Association, says housing, or at least a slice of the market, is arguably more sensitive to interest-rate increases today than in past Fed tightening cycles. That's because of a plethora of new mortgage products and the expansion of higher-cost lenders.
About one in five homeowners have ARMs, with monthly payments that will climb with rates.
"The further we go (on rate increases), the greater the risk of some more significant slowing, especially in those markets which have high components of adjustable products," says Duncan, who expects overall home sales to cool by 7% to 10% from 2005 levels and refinancing to dip. That forecast, however, is based on the Fed raising its target for short-term rates to 5% and then holding.
The central bank raised rates to 5% on May 10 and signaled that more rate increases might be needed. Policy will hinge on economic data between now and the Fed's June 28-29 meeting. Mortgage rates are at 6.6% for a 30-year, fixed-rate product.
Fed Chairman Ben Bernanke in a speech last week said housing appeared to be cooling in an orderly fashion. But in Senate testimony Tuesday, he noted that about 25% of all mortgages are adjustable-rate products and about 10% will reprice this year as interest rates rise. He and Duncan say the biggest worry is borrowers with lower incomes or impaired credit who borrowed from higher-cost lenders.
Bernanke also cautioned senators, however, that if the Fed did not react to overall price pressures in the economy, inflation expectations could rise. The markets would then push up long-term interest rates, hurting the housing market.
The degree of risk in housing varies geographically, with the highest concentration of ARMs on the East and West coasts. Historically, the biggest factor in big housing cool-downs has been the overall health of the job market, which currently is strong. The unemployment rate in April was a low 4.7%.
"I think the Fed would have concerns about the risk of an outsized decline in housing activity and house valuations because that could then risk (hurting) economic growth," says Richard DeKaser of National City.

I Make Up Statistics!

There, I said it. I make up statistics. Of course, I'll TELL you I made up the statistic, which sets me apart from some of my writer friends.

Not only are the statistics suspect, when they're accurate, they're manipulated to support an opinion.

I read real estate news every morning, and every day, articles disagree with one another, commenting on the same set of statistics. What it boils down to is this:

YOU need to look at as many economic indicators as you can and then make your OWN predictions. Look at how many people are moving into your city vs how many are moving out. Look at what businesses are booming and which ones are closing down. Look at your weather and consider energy costs. Look at the for-sale signs up and down your block.

THEN, consider what savvy investors know: don't sell when the market favors buyers! BUY when the market favors buyers! Hang on to that property for long term value instead of committing a knee-jerk response mistake.

And P.S., don't tell anyone that some of us are BUYING right now, OK? We don't want a herd of investors swooping in to spoil our fun. "When everyone else is crying, we'll be buying."

Love, KNB

P.S. Of the people who read this blog, 87.53% will shake their heads laterally in amazement!

Can Slower Sales Bring Higher Prices?

Mr. Miller has observed correctly that the herd of stock market investors who invaded the real estate market in 2004 created the boom environment.

Can Slower Sales Bring Higher Prices?
by Peter G. Miller

The news that new home starts dropped 7.4 percent in April raises two interesting puzzles: Why the decline and what does it mean?

"The declines in starts and permits for April reflect a natural pay-back for the weather-related surge in production earlier in the year, as well as builder adjustments to eroding demand and rising inventories," said David Seiders, chief economist with the National Association of Home Builders. "We continue to believe that the evolving slowdown represents an orderly adjustment toward more sustainable levels of housing production, following the record surge in 2005 that was fueled by extraordinary demand for single-family homes and condo units by investors/speculators."

Separately, Seiders also said the following a few days earlier:
"NAHB surveys of builders are documenting a fall off in investor purchases, rising sales cancellations by investors/speculators, and resales of units owned by investors/speculators as the prospects for price appreciation deteriorate. The cancellations and resales are adding supply to markets already experiencing an inventory run-up as demand by prospective owner-occupants cools in the face of deteriorating affordability conditions."

To me, there's a huge difference between a decline in sales because the weather is not as good as it had been earlier in the year and a decline in sales because weak and vulnerable investors are fleeing the market.
In an odd way -- eventually, at least -- those defecting investors are likely to be good for the marketplace.

One of the reasons for 2005's soaring home prices, especially with condos and new-homes, has been the large number of investors who entered the market. If you take natural demand and add hordes of excess investors you simply have more demand. That pushes up prices and those rising prices attract more investors who want to get in on the action. Unfortunately, swiftly rising prices can also freeze out those who "merely" wish to be homeowners.

As investments go, new homes and condos look awfully good because they require little maintenance and until recently the market for them has been largely excellent. You can buy 'em by the bunch and not spend a lot of time with repairs, mowing and such. For investors who see condos and new homes as commodities, something on which to bet instead of pork bellies or Enron futures, such properties are dandy investment vehicles.

They are also risky.
If you buy investment real estate the purpose of your purchase should be to gain value (a higher re-sale price or more equity), rent (positive cashflow) or both. That means such properties must either be rented or re-sold. Reduce the market for either tenants or buyers and suddenly investment properties can be vacant, unsold and very expensive to keep.

The recent decision by builders in many markets to sell homes at discount means that investors can no longer flip properties because buyers can get better deals from builders. Worse, such properties can be extremely difficult to rent at anything approaching a positive cashflow because many markets are brimming with look-alike new properties and condos. In such an environment, buyers and renters rule -- and fad investors with little cash will sell, sell at a loss, rent at a loss or will be foreclosed.

One local community I follow has about 35,000 people -- and now has more than 700 homes for sale. That's a huge volume of inventory at one time, and you can see a major reason for such numbers by looking at the property descriptions: such as new, never lived in, rent-to-own, price reduced, $5,000 to selling agent, seller will pay $10,000 in closing costs, $50,000 in incentives, former model, several available, etc.

The good news is that the marketplace is forever in the process of self-correction. When it tips too far in one direction it begins to tip the other way, always seeking a cosmic sense of balance.
It will take time to clear out the inventory now held by weak investors -- and by investors who will weaken under the burden of ongoing monthly costs. This is simply a healthy culling of the investor herd. In some cases, there will be local price declines and price declines by property type, but hopefully the worst result in most areas will be a general slowing of appreciation to something just above the rate of inflation. This would be an ideal situation for both sellers and buyers, a market with reasonably rising prices -- and something largely unseen during the past few years.

For more articles by Peter G. Miller, please press here.
Published: May 23, 2006

Top 2% of Market Still SellingAs Overall Sales Volume Falls

This is good news for anyone investing in higher end homes, and yet, hear the advice that while high-end buying can produce some spectacular results, it's not for the beginning student investor. To minimize risks, it's better to invest in something that many people can afford to rent, lease/option, or buy!

Top 2% of Market Still SellingAs Overall Sales Volume Falls
By Troy McMullen From The Wall Street Journal Online

Despite growing indications of a cooling housing market, one niche continues to sell briskly -- multimillion-dollar homes.

Over the past few months in the overall U.S. real-estate market, more homes have crowded the market and sales volumes have fallen in areas from Houston to Boston and Washington, D.C. Freddie Mac, the government-sponsored provider of mortgage-loan funding, predicts total home sales this year will be down by about 7% from 2005's record levels. Yet one area of the market appears immune to all that: In many locations, homes on the ultrahigh end of the price scale -- those costing $3 million and up -- have been selling in increasing numbers.

In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, according to real-estate information service DataQuick. In Jackson, Wyo., that number rose to 21 homes from 17, according to Jackson Hole Real Estate and Appraisal. Higher up the scale, 10 homes at $5 million or more in Palm Beach, Fla., sold in the first quarter, up from eight last year, says the county assessor's office.

One factor in the growth could be that median prices of all homes have risen, pushing more homes into the luxury end. Also, inventory is up across the board. But at a time when the overall number of home sales has declined in many markets, the number in the ultra-high range has continued to grow. One possible message: Just as it is often said that the rich aren't like the rest of us, the real-estate market of the rich appears to bear a decreasing resemblance to the one experienced by most Americans.

Paying in Cash
Homes at $3 million and up represent less than 2% of the overall market, estimates the National Association of Realtors. Activity at this small upper end has traditionally been a leading indicator for the broader market, says Gregory Heym, chief economist for the New York real-estate brokerages Brown Harris Stevens and Halstead Property. Now, he says, there may be less of a connection between the two segments. The stock market has created new wealth and the number of millionaires has grown, so more buyers are paying in cash. (The National Association of Realtors found that 8% of home buyers paid in cash last year, up from 6% in 2003.) That has left luxury buyers mostly insulated from economic factors such as rising short-term interest rates.

Mark Zandi, chief economist at forecasting firm Moody's Economy.com, says the segment of high-end buyers "won't be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically."

Walter Molony, a spokesman for the National Association of Realtors, says the highly volatile high-end market serves as a poor market indicator. Activity among first-time home-buyers, he says, is more telling. "That segment provides liquidity for people to be able to trade up to larger homes," he says. "Without strong entry-level activity, the market would sink."

When Todd Michael Glaser listed his 11-bedroom Miami home in February, overall sales volume in the city was slipping -- sales fell 21% for the month over a year earlier. But he wasn't concerned. He listed it for $40 million, well above Miami-Dade County's record single-family home sale of $27.5 million in 1999.

Mr. Glaser, a 41-year-old real-estate investor, figured the property would sell based on its amenities and location. The 20,000-square-foot home is one of the biggest on North Bay Road, where neighbors include Billy Joel and Matt Damon. A month after hitting the market, it went under contract for purchase. Brokers with knowledge of the deal put the price at over $30 million, though Mr. Glaser wouldn't reveal the number. "It's not a property for the everyday home buyer," he says.

In Los Angeles County, 217 homes priced over $3 million sold during the first quarter, up from 114 during the same period last year, according to Cecelia Kennelly-Waeschle of Sotheby's International Realty. That is the biggest first-quarter jump since the firm started tracking sales in 1988. For the same period, the number of all sales in the county fell 10.3%, according to DataQuick. Two homes priced above $10 million sold in Santa Barbara, Calif., during the first quarter -- including a $28.5 million, 17-acre oceanfront property to actor Kevin Costner -- up from one a year earlier. (The data in this and other markets do not show how long the homes spent on the market or whether they sold at their original asking price.)

Some affluent buyers don't limit themselves to what's on the market. When Henry Kravis, managing partner of New York-based Kohlberg Kravis Roberts, went shopping for a Palm Beach house in January, he didn't like any of the available properties. His broker, Lawrence Moens, identified a property that wasn't for sale, but fit Mr. Kravis's criteria: a 15,255-square-foot home on five acres along Lake Worth. "I just knocked on the door and said, 'I've got a buyer willing to pay a lot of money for your home,' " says Mr. Moens. A few weeks later, the deal closed for $50 million, public records show. Local brokers say it is the highest price ever paid for a non-oceanfront property there. Mr. Kravis declined to comment.

Not all markets are seeing a surge in high-end sales. In Manhattan, 212 homes priced above $4 million sold in the first quarter, from 226 in the year-earlier period, according to Brown Harris Stevens. Appraisers say that apartments are staying on the market longer.

Even where sales are falling, confidence hasn't always flagged. On the Nevada side of Lake Tahoe, sales of homes priced above $1 million fell 35% in the first quarter over a year earlier, according to Chase International Realty. That didn't stop Tom Gonzales from raising the price on his home in Incline Village, Nev. After staying on the market for a year at $60 million, he raised the price on the 4.5-acre property to $65 million last month, to account for the upkeep he's paid. "I don't think there's a shortage of people looking for a property like this," says Mr. Gonzales, 61, who co-founded software company Commerce One in the 1990s.

Yet in Fairfield County, Conn., Lake Forest, Ill., and San Diego County, brokers say many sellers are trimming prices amid a glut of pricey homes. Writer Jane Green and her husband, bank executive David Burke, cut the price of their Westport, Conn., property by $1 million after it sat for eight months at $5 million. Shortly afterwards, the property sold in January for $3.9 million, public records show.

Talk of a slowdown hasn't affected Sean Wolfington, a former Philadelphia Internet entrepreneur, who just outbid two other buyers on a six-bedroom estate in Key Biscayne, Fla., formerly owned by the singer Cher. The cost: $8.8 million, in cash. "Interest rates aren't a factor for me," says Mr. Wolfington, 34, who now runs an independent film company. "Waterfront properties like these are in limited supply. I saw this as an excellent buying opportunity."

Email your comments to rjeditor@dowjones.com.

MPC Action Weekend of May 19, 2006

Hi Everybody,

We've got a dozen people this weekend going through our 72-hour shopping spree, and three people did 8 deals on the first day! "I'll take it," is ringing through the air!

Many of the students this time around are working on the issues of FEAR, and I'd love to share one person's major win with you:

FEAR reduces with knowledge, responsibility, and control. The more you know, the more you can take responsibility for something, and the more you can invoke good control of the area!

And having a TEAM right beside you this weekend, and knowing that the TEAM will be there to support you for as long as you stay active yourself, WOW!

Will fear ever go away? As long as you're doing something new every now and then, fears can percolate. I'm doing a big deal right now unlike deals I've done before, and I have some trepidation.

My suggestion? Keep studying, keep connecting yourself with people who know something you can gain from, and keep exercising your risk muscle every day!

Love, KNB

P.S. If you want to know more about the MPC Action Weekend, call Suzan Hudson at 702-795-1020! Or go to www.MassivePassiveCash.com for a look around!