Tsunami From California Approaching Vegas
Nearly half the buyers in Las Vegas in the last 6 months were Californians cashing out of their huge equity increases. California cash buyers are no longer even kicking the tires here in Las Vegas because their equity gains have decreased dramatically. Every market in California is seeing a decline and there will be more to come according to WolfStreet. With no new buyers flocking to Vegas, inventory will continue to increase and it prices will continue to drop.
Primary buyers still in the game got trounced with the mortgage hikes. They smell blood in the water and primary buyers are going to wait for prices to fall more. According to the Review Journal, over 8,000 houses were on the market at the end of August with no offers. There will be even more inventory as we slip into the winter. Investors will have to give it away if they need to unload a property. One of our investors didn’t get out in time and was unable to unload his property at 2020 prices. He put it back on the market to rent.
Like any tsunami, it’s best to reach for high ground and wait it out. The last tsunami lasted about 5 years and the time to pick through the debris will probably be about 2026.
Newly Built Homes Dropped 61%
According to the Review Journal, August was the fourth consecutive monthly sales drop sine the beginning of the pandemic. The number of permits pulled is down 50% which will trigger industry layoffs. The builder pipeline will slow to a trickle by January. This means all the folks in the trades will likely migrate to other parts of the country to find work. There will be an increase in unemployment and some of our tenants will be giving notice. Las Vegas historically slows down in the fall and winter so new jobs will not be forthcoming.
Rental Season Is Over
All the kids are in school and the rental season is over. We do expect rental prices to flat line for the next few years. Since most of our owners are catching up with market rent, the majority of our customers will continue to see an increase in rent until the end of 2023. In the last downturn, rents remained flat even though many houses went into foreclosure. It is highly unlikely to see a decrease in rent for the next decade. If you currently have a vacant rental, it’s time to slash the price before November 1st.
No Reason to Panic Over Water
This is an outstanding video of why we are not concerned about water in Las Vegas. My water is CHEAP. Even with a pool and all my desert landscaping, it’s nothing compared to what we pay in power.
It’s difficult to explain Burning Man to people or the reasons why I have been going for the last 20 years. It started off just exploring a unique event in the middle of a remote dry lake bed. I went because I was convinced the government would shut down something centered around anarchy and alternative lifestyles. It also appealed to my hippy upbringing.
The experiences have always exceeded my expectation. The people I have met, art discovered and the rejuvenation that comes from being off the grid for a week is beyond description. The event is difficult to attend and even harder to live through. 100 degree days coupled with huge dust storms is no picnic. People who attend are very well educated and have the resources to create unbelievable theme camps and works of art. Every time I come home, I’m more compassionate, more kind and more compelled to give back to the community. “Leave no trace” and “civic responsibility” are just some of the principles engrained from Burning Man.
There is no denying the quantity of hedonism that goes down during the festival. However, that was never my goal in attending. In order to learn and grow, I have to change the way I think. Rebuilding thinking patterns is no easy task and extreme changes in an environment are often necessary to accomplish this task.
The other benefit to being off the grid for a week is that it tests our systems at Limestone Investments. Redundant, consistent and efficient processes insure our investors continue to earn money even if I’m not at the wheel. By going off the grid, I discover what processes need more attention. Giving the team more responsibility and all the authority to make decisions without me benefits you in the long run.
“Burning The Man” is about reinventing oneself and it has run its course for me. 2022 was my last burn because the amount I learn is very little now compared to the huge amount of effort it takes to go. It’s time for me to move on. Chances to learn different property management techniques from around the world are my new aims. Providing our customers with better service, fresh ideas and improved processes await!