Looking for the burst bubble

I have heard and keep hearing about the "housing bubble" followed quickly by "the burst housing bubble"...I've pulled the statistics for Clark County, (basically Las Vegas and Henderson) and I definitely see a rapid increase between 2003 and end of 2005, but I'm having a tough time trying to find the rapid decrease, or that "burst" thing. What I found surprised me, because even though I've never bought into all of the doomsday rhetoric, I have noticed a slow down and a drop off in prices...here's what I found statistically;

I looked up the year end median sold price of detached SFR and Condos;

(Definition: Median is a mathematical result that indicates that one half of the group is higher and one half lower. Median price of 101 sold homes would be that price which is lower than 50 of the prices and also higher than 50 of them.)

Clark County SOLD Median Price

year end 2004

Single Family Detached-$275,000 Condo/Townhome-$170,000

year end 2005

Single Family Detached-$312,500 Condo/Townhome-$204,000

year end 2006

Single Family Detached-$306,100 Condo/Townhome-$196,000

June of 2007

Single Family Detached-$306,000 Condo/Townhome-$194,250

I think if you look at those statistics, you will also be a bit confused about that whole bursting thing...I mean when I eat too much and I "burst" out of my jeans, there is usually a loud ripping noise as the button blows off and of course the inevitable flow of protruding gut over my belt line...what I'm seeing above just makes me think of a slight bulge of gut still trapped behind my jeans after I've eaten a little more than I should. In other words something pretty obvious...picture Rosy O'Donnell in Paris Hilton's bikini...(now that would be a bursting)

Of course generalizing our market like this doesn't necessarily give a clear view for individual areas. There are subdivisions in Las Vegas and housing types that have actually gone up in value this year. The Spanish Trail subdivision is an example of a sub that has gone up, but where we are seeing strong sales right now is in High rise and mid rise living. As a whole though Las Vegas/Henderson has seen big slow downs in SALES VOLUME and a slight decrease in values. The averages I've seen are anywhere from about 2% to as high as 14% depending on sub.

Again, I'm just tired of hearing about how prices have dropped off so dramatically...subdivisions that had incredible increases, will also show more dramatic fall offs, but as whole over the last 4 to 5 years, values will be up. Unfortunately we live in a world where people stand in front of microwave ovens screaming, "Hurry Up, I want in NOW DADDY!!!!" (pardon the Verruca Salt reference) Real estate is an investment that you have to hang onto for about 3 to 5 years, usually, to see dramatic increases in value...Of course if anyone can show me statistical information supporting this bursting thing in Clark County, I'd love to see it....

Low balling

Most buyers in Las Vegas are under the impression that sellers will take a hand full of pocket lint and a smile to get out from under their mortgage. While there is quite a bit more room to play and sellers are definitely having to take the short end of the stick at this time, they aren't "giving away the farm". I'm always surprised when a home may already be under value and a buyer offers $20,000 less than the sold comparables for that house, along with closing costs, warranty's, inspections, appraisal and hey by the way could your kid come mow my lawn for life. Obviously its a buyers market and asking for closing costs or a lower sales price are expected. If however you are asking for closing costs and a lower price, keep in mind the closing costs usually come to around 3% of the sales price on the buyers side of a transaction, so if you are looking at a house valued at $300,000, and are asking for closing costs, you are already asking for a $9,000 price reduction. If you then offer $280,000, you have effectively asked the seller to entertain dropping the price roughly $30,000.

Too many times, buyers low ball with an offer that does not have the possibility of being accepted and in some cases won't even be countered...see above....

The best way to make an offer in any type of market...buyers or sellers markets is to first look at the SOLD COMPARABLES. Especially if you have good comps within a 6 month range...this gives you an idea of what a house will appraise for...just offering $20,000 below the asking price without checking comps could still put you in the position of overpaying. Also, if a comparable of a home you are looking at sold for $20,000 above the list price of the subject property, its highly unlikely you will get another $20,000 off. Most likely another buyer will see it is already undervalue and make a good offer that leaves the "low ball" offer in the rejected pile.

There is nothing wrong with taking a shot at a seller right now, but base it on something other than a "hunch".

You want to write an offer that can either be accepted as is, or will at least get some concessions in the counter offer. If you write a ridiculous offer, expect a ridiculous counter offer to come back. Additionally, if the offer is too low or asks too much, the seller may decide you aren't serious and refuse to negotiate with you at all. If they reject your offer outright and you are forced to write a completely new offer, you will lose some of your ability to bargain, because the seller now sees you have an attachment to the house and are unwilling to walk away.

This is definitely a time that favors the buyers, but that doesn't mean that sellers are willing to just bend over and smile.