Great Time to Purchase Las
Vegas Real Estate!!!
How can this be?? The markets are in a
turmoil! We are in the midst of a liquidity and credit crunch! How
can it be a good time to purchase real estate?
Last week the Dow Jones Industrial fell on
Monday 207.61 points to close at 13,028.92. On Wednesday, the DJI
fell another 167.45 to close at 12,861.47 It hit a low on Thursday to
close at 12,845.78, then on Friday the Feds lowered the discount rate by .50
and the market reacted positively to close at 13, 079.08...up 233
points.
Inflation remained neutral with wholesale
inflation rates up 0.6% (0.1% was expected), but the core wholesale inflation
rate (the most important indicator) rose only 0.1% (0.2% was expected).
Bonds rose, with the yield on the benchmark
10-year treasury note falling to 4.73% from 4.78% late Monday. (Mortgage
interest rates soften when the bond market rallies)
The current financial market upheaval has been
fueled by defaults of mortgages primarily in the "Sub-prime" and "Alt A"
markets, but has spread to the "Prime" as well as the "Commercial A" paper
markets. Globally, Central banks have injected well over $400 billion
USD to keep markets in a "liquid" state. On Friday, when the Feds
lowered the discount rate, they also increased the repayment period from 1-30
days, givng banks a much needed breather to keep themsleves solvent until they
can re-balance themselves. This noticeably helped
Countrywide Financial,
that had widely be reported to be on the verge of bankruptsy. It was
reported by
MoneyNews.com
that Countrywide had tapped its entire $11 billion lines of credit to keep
itself in a position to operate.
Merrill Lynch downgraded
Countrywide to a "Sell". Other financial institutions, such as
Thornburg Mortgage,
CitiGroup , Impac
Lending are all experiencing significant revenue problems as well.
With all this negative news, where is the
"Silver Lining"? Even though parameters in the mortgage industry have
tightened, there is still alot of good programs available for individuals who
have managed their money and their credit wisely. Interest rates are
holding steady in the "Prime" markets. We still have interest rates that
are at a 20 year historic low. It is widely expected that the Feds will
cut the internal discount rate again in September. These cuts do not
affect the mortgage rates, but do affect revolving debt making it easier to
pay off credit cards and other personal loans. It also gives the banks
the ability to stay more liquid thereby allowing more opportunity for lenders
to work within their parameters.
Las
Vegas has been rated to be one of the most resilient Las
Vegas real estate markets, nationwide. Historically, we have seen a
resurgence in our Las Vegas real estate markets whenever "Mega-Resorts"
open. Palazzo at the Venetian, is scheduled to open toward the end of
this year. Encore at The Wynn, is scheduled to open in the early part of
2008, and Project City
Center is scheduled to open in 2009, with many more projects to open such as
Echelon by
Boyd Gaming to name just
a few. Our economy is "Job-Driven". We currently are in a "Buyers
Market". It is definately the time to purchase real estate.
Mortgage applications climbed for the second straight week according to
Reuters. Do we have the potential for more issues? Definately, but
with our resilient local market, in due time, our real estate inventory will
drop. When we see the re-balance of our local real estate market, real
estate will be a strong investment. Remember, you make money in real
estate on the "Buy", NOT the "Sell".
Bob Ratliff - RE/MAX Advantage - Las Vegas,
NV. - 702-807-5528
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