I was very impressed by the New York Times this last week as they presented graphs and a balanced look at the current and historic real estate market in many Major U.S. Cities for the last 20 years.  This is what good balanced reporting is all about which seems to be missing in much of this countries reporting of late.  Please take a look at the video and charts for “Home Prices Across the Nation.” Please notice the light blue bars which shows the Las Vegas market was under preforming from 1996 to 2003 based on the national figures and then soured over the national average through 2005.

What the chart does not show is how extremely low interest rates and very liberal lending practices affected the Las Vegas market.  Because interest rates were so low during this period, payments were acceptable even when purchase prices increased beyond the normal national levels.  This allowed home prices to increase at a very rapid rate, with investors, builders and flippers watching as inventories in our valley began to shrink further driving price inflation. As more and more people started investing in the Las Vegas real estate market we became famous for our real estate appreciation, which in turn fueled more appreciation in the residential real estate sector. 

This chart is also interesting in that you can see the market start to shut down approximately 3 years from when it heated up.  This could have to do with the 3 year adjustable rate mortgages that were being taken out to purchase these homes and which have been driving up foreclosures in the last 18 months.  If you plot a 3 highest peaks in sales from the 2nd quarter of 2004 through the first quarter of 2005 and project those 3 years to consider when the greatest number of three year ARM’s will reset we will see when the bottom of the market will occur in Las Vegas (the time of the most foreclosed inventory and defaults).  This will mean the best time for the Buyers will probably be in the first or second quarter of 2008.  At that point it is likely that inventory levels will begin to shrink and prices will stabilize.  Keep in mind that Las Vegas has a huge employment growth projected for 2009 which may very well bring the residential real estate market back to a healthy level in a very short time.