So, do you want to know when the real estate market will start heading south, way south? Read on.

As of right now,  the real estate market in the US is anything but clear. Here is just a few articles from today’s paper to prove my point.

• The mini-boom in housing is already over: Realtors
• Home Sales Climb as Americans Rush to Lock in Rates: Economy

 

Confusing at best, isn’t it?

The reason real estate data is all over the place is because the real estate market is undergoing a topping process. As I have mentioned earlier,  that is the way the bear market in anything works. It sucks investors back in before slamming the door and resuming it’s decline. Once again, this stage of the decline should at least 2X the magnitude of the previous one between 2007-2011.

The million dollar question is….when will it happen? Thanks to our friends at Doctor Housing Bubble we might have an answer.

They have correctly identified Las Vegas Real Estate Market as the one to watch for the first signs that the overall (nationwide) real estate market is about to roll over and start it’s decline. Here is why…

Reason #1: Las Vegas market has seen the fastest real estate appreciation in the nation over the last year. Up 34% in just the last year alone. That is a stunning pace of appreciation.

Reason #2: The majority of buyers in the Las Vegas market are investors/speculators.  The number is estimated to be at 50-70%.   With about 60% of buyers paying in cash.

What does it all mean? 

Las Vegas market is experiencing a speculator frenzy with 50-70% in cash buying from investors. There are no fundamental reasons for that to happen in Las Vegas. One can argue that real estate there was especially depressed but I don’t find that argument valid based on the median price and median income at the time of 2010-11 bottom.  Plus, there is no housing shortage.

Either way you slice it,  Las Vegas real estate market is driven by pure speculation and hot money. As such, it could be the first market to cool down and reverse itself  -OR-  it could just blow up.  

Therefore,  if you are interested in timing the real estate market with great precision it might be a good idea to start watching Las Vegas real estate like a hawk.   

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