Just heard on the news this morning that loan applications are down for the second straight week in a row nationally. This is the lowest it's been in four months, while interest rates seem to be on the rise.

Times are tough out there, but I think it's important to remember that real estate is still a very wise investment. Throughout history, it's the most reliable. In my market, the Las Vegas, Nevada area, including Henderson and the rest of Clark County, we are taking a beating in the media.

Let's re-cap for the past Las Vegas market: 2004 = record breaking appreciation, up 40% in some areas. 2005 = still a bit of appreciation. 2006 = leveling off. 2007 to date = market corrections, 3% depreciation in some areas.

This is not a good time to sell. I hear consumers constantly commenting on what a horrible deal they're in because they can't sell the home they purchased in the last 2 years or less. Let's be frank, that's called Flipping. When you own a property for less than two years you will have to pay capital gains (check with your CPA), not to mention all your other closing costs including transfer taxes, title and escrow fees, re-conveyance, and possibly a commission to an agent. That's asking for a lot of appreciation in any market to be able to sell in such a short amount of time, about 7.5 to 8.5% on average, just to close. 

All the experts I've heard , like Suze Orman, recommend holding onto a property for at least 5 years. My clients that bought homes in Las Vegas or Henderson even in early '03 have plenty of equity to be able to sell today. Plus, they'll get a great deal on the buying side now. The problem we're seeing also is the homeowners that re-financed to take all their equity to make other purchases, or worse pay another mortgage, and didn't invest the money wisely. Homeowners are using their home as a bank account. That is not a good idea. Now I've got sellers that got bad advice from someone else about buying their current properties that are upside down, meaning they owe more than what they can sell the home for, also known as a Short Sale (must have bank approval). That equity could have been their retirement money. Now they are having to start over. They may not be able to get a tenant to cover their entire mortgage if it's not their primary residence.

Earlier I said that Real Estate is still a wise investment choice--even in Las Vegas. In Part 2, I will discuss some rules of thumb to remember when investing in Real Estate. Stay tuned.