Sunday, April 30, 2006

‘Market Needs ... Buyers, Rather Than Flippers’

Link To This Post.
Market Needs ... Buyers, Rather Than Flippers.

The Los Angeles Times did a huge Home section in today's paper ("Home" is the LA Times' version of a House and Garden section) with many stories about the history of LA Real Estate. The online version is anchored to a piece headlined A History of Paradise. It's worth checking out, particularly the flash presentation titled A Look Back at Real Estate.

Also in the Times this morning was a piece in the Real Estate Section headlined Highrollers Are Folding In Sin City, which asks whether the recent cancellation and/or delay of seven different condominium projects in Las Vegas is a bellweather of a real estate slowdown.

Here's an excerpt:
In the last several months, at least seven marquee Las Vegas condo projects have either been canceled or put on hold, causing a dust storm of rumors to swirl through the city and elsewhere as investors wonder if this is a harbinger of a slowdown. The reasons for the projects' retreats don't bode well for the larger picture: lack of buyer interest and escalating land, construction and labor costs.

But is this really the beginning of the end of the Vegas market? Experts say no and are eager to put things in perspective — an act made more difficult by the fact that the latest high-profile project to halt sales is the $3-billion Las Ramblas luxury hotel and condominiums. The planned casino, boutique hotel and sprawling residential project, backed by actor George Clooney and partners, was to include 11 towers on 25 acres. The resort was billed as a throwback to a bygone era when jackets and dresses were de rigueur at dinner. Today, its future is anybody's guess.

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Spiraling costs are a major culprit. Developers who locked in construction prices are faring better.

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Speculators also have played a role in the current high-rise slowdown. Buyers looking to flip units for a profit, rather than make Las Vegas a first or second home, flooded the market in 2004, raising prices. Most are expected to sell the units when the projects open their doors, some as early as this summer, said Bruce Hiatt, the owner of Vegas-based Luxury Realty Group. At least 20% to 30% of the units were sold to speculators.

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"The market needs more first-, second- and third-home buyers, rather than flippers," Hiatt said. "This will stabilize the market."
Read the whole story at this link.

-- The Boy in the Big Housing Bubble/Los Angeles and Beyond