Thursday, April 13, 2006

Real Estate Investments in Vegas, Stay in Vegas

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As foreclosures increase in Las Vegas, there are surely a lot of worried Los Angelenoes who saw opportunity in Sin City during the boom, bought houses there, and now have no tenants. It was the top cocktail party discussion for months — buy a house in Vegas, rent it out, make a few hundred thousand in a matter of a couple years. The problem is that so many people did it that the number of homes exceeded the number of renters and all anyone seems to have proved is what you spend in Vegas, stays in Vegas.

Here's an excerpt from a press release for a real estate research company that highlighted the foreclosure rate:
The number of foreclosures in Clark County, Nevada, increased by 36 percent in the first quarter of 2006 compared to the same period in 2005, according to Default Research (, the rapidly growing real estate research company for foreclosure properties.
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"All bets are off in Las Vegas now. With rising interest rates and lower appreciation on the properties people own, it is obvious that the area could see an increase in foreclosures for the next several months," said Serdar Bankaci, president and chief executive officer of Default Research, Inc.

Another problem in Clark County that is contributing to the rising foreclosure number relates to the housing shortage in 2003 and early 2004. According to Bankaci, during that time, many investors bought up properties hoping to cash in as the property values went up through basic supply and demand.

"That gamble did not pay off because the housing shortage ended and these investors, who had no intention of living in the houses, were stuck with overpriced properties," said Bankaci, whose company provides foreclosure data that arrive two to three weeks ahead of the competition.

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