DANISH HOME INTEREST RATES SPAWN NEGATIVE MORTGAGES
Since Las Vegas home interest rates continue to play such a leading role for buyers in today’s real estate market, any relevant news items bear watching. For quite a while, home interest rates in Las Vegas have cooperated nicely, dwelling at tantalizingly low levels. It’s been helpful to sellers and buyers alike. Meanwhile, some strange headlines about European home interest rates have appeared from time to time. They never seemed to make much sense, but it’s Europe, after all—and we have our hands full trying to clarify our economics right here on this side of the Atlantic. There are some headlines you just can’t ignore. Late last month, this one appeared in Yahoo Finance: “NEGATIVE MORTGAGE RATES IN DENMARK.” After pausing to be certain the item wasn’t under an April Fool’s dateline (it wasn’t), further examination didn’t dispel the feeling that someone at Yahoo had spent too much time reading Alice in Wonderland. The article said that bank interest rates had declined so far that home interest rates in at least one country had now fallen below zero. In other words, through the looking glass. Now, before leaping to the conclusion that home buyers in Denmark would, therefore, expect banks to pay themevery month, this seemed to be the point at which bringing a little common sense would be called for! Or not. That, according to Yahoo, is exactly what’s going on in Denmark. Since we’ve all been hoodwinked by silly news items on the web, here is where it was clearly time to check out other authoritative sites. A respected European blogger named Jan Oravec stated in no uncertain terms, “Many economists consider negative interest rates impossible.” But reading further, Oravec admitted that nonetheless they do exist. Per Market Realist: “In Germany, Switzerland, Ireland, Belgium, and [you guessed it] Denmark, it was about time we saw negative mortgage rates in Europe as well.” Bloomberg Business quoted Danish Business Minister Henrik Larsen: “There’s a need for us to create clarity over how we can best handle this situation going forward” (that seems to be something of an understatement). Yahoo got specific: “Nordea Bank’s IT systems need to be reprogrammed as it’s not accustomed to situations where the bank isn’t receiving interest payments on outstanding mortgages.” According to a Google translation of blogger gjohnsit, banks there “have had to pay interest back instead of charging them.” Reading our minds, he asks, “How is it possible, that someone could go to a bank, take out a mortgage, and expect the bank to give them money every month?” The answer, according to economists, is Euro deflation (but then again, wasn’t it economists who considered negative interest rates to be impossible?)… We might be tempted to wish for the same situation for our Las Vegas home interest rates, but I don’t know. There is an aura of something-for-nothing hovering over the whole idea. Besides, today’s mortgage rates are already quite reasonable—and a solid reason to give me a call!
BALANCE LAS VEGAS RENTAL INCOME WITH SOLID BUDGETING
Owning a Las Vegas rental property owes its popularity to the distinctive financial attributes it offers investors. Like a dividend-producing stock, it’s a holding that stands to produce a regular income stream. It’s also a real asset in the truest sense of the word—one with solid collateral value. For adroit Las Vegas rental property investors, it’s also an asset that can build value over time. When it comes to quantifying a Las Vegas rental property’s income-producing potential after an investor has estimated the projected rental stream, there follows a less sunny exercise: expenses need to be taken into account. If a Las Vegas professional management service is going to be part of the equation, they will supply reliable budget parameters. If you will be managing the property yourself, doing a thorough job of nailing down this—the management budget—is as crucial to coming up an accurate bottom line as was projecting income. Unless you are prepared to be at the beck and call of your renters 24/7, it’s a good idea to budget funds for a skilled general maintenance person. The ideal candidate can deal with a myriad of issues, from electricity outages to clogged garbage disposals. If the Las Vegas rental property is an apartment building or set of condos, it’s often a good idea for the maintenance pro to be kept on retainer. For single-property rentals, this handyman (or gal) can usually be hired on a job-by-job basis. Specifics for every Las Vegas property differ, but it’s considered prudent to reserve between 10%-15% of gross rental income for maintenance and repairs. This part of your budget includes remuneration for your maintenance person. Getting a rental home back to status quo isn’t always easy—especially because it’s in both the landlord’s and renters’ interest to place a premium on speedy rehabilitation. That’s not cheap! There are also two words that belong in any rental property management budget: property insurance. The right formula may include a sizeable deductible number (you’ve already budgeted an ample reserve for lesser emergencies), but it’s also vital to take into account the possibility of any large and unexpected emergencies that you or your maintenance person can’t handle alone. It may be common business wisdom, but over large parts of the country, this past harsh winter once again demonstrated the wisdom of the practice. Tenants are encouraged to insure their property, both inside and outside the rental property, but the landlord’s policy should cover repairs to the entire structure, any small sheds on the property, landscaping damage, and the like. This is the traditional time of year when many of the most promising investment properties go on the market. If you are looking to the future—a future that includes owning a lucrative Las Vegas rental property—now is the time to start looking…and to give me a call!
RESEARCHERS FORESEE HEIGHTENED RESIDENTIAL SALES DEMAND
Residential sales in Las Vegas —in fact, all real estate dealings anywhere—remain the most local of commercial transactions. If your house is in San Francisco, a price spike in suburban Newark is probably of little interest unless you plan on moving anytime soon. Even so, the new projection for overall U.S. residential sales had to perk up area homeowners’ interest. The “best home sales market in eight years” was the forecast—along with “mortgage originations that will likely rise” and “larger gains in newly built home sales.” Las Vegas residential sales may make up but a tiny fraction of the data contained in CoreLogic’s analyses and data announcements, but any Las Vegas homeowners looking for a strong spring market couldn’t help but be buoyed by last week’s prognostications. The basis for the surprisingly robust residential sales prediction was supported by a number of other data sources that have gradually confirmed solidification of the overall economic picture. With many economists agreeing that the U.S. economy “is poised to grow by close to 3%” this year, a heightened level of housing demand is bound to result. If that mark is achieved, it would be for only the second year in a decade. Gains in employment (in the 3-to-3½ million person range) are also expected. The improving economic projection for 2015 was ascribed to three forces. The halving of energy prices that began last summer was deemed “unlikely to jump back up this year.” Anyone who’s been enjoying the freefall in prices at Las Vegas pumps will appreciate the immediate impact that has on family wallets. The second positive force is psychological and very real. The rise “in consumer and business manager confidence” in the recovery has been widely noted: the Conference Board (“up 4.9 points”); U.F.’s Confidence Index (“the highest reading in 10 years”); Small Business Optimism Index (“3rd highest reading since 2007”). CoreLogic’s third factor was one that hasn’t been much talked about until now: governmental. Apparently, tax receipts have been stronger than expected, freeing state and local governments to spend more. That’s an unexpected economic stimulus—and of a kind that should be more welcome than some of the previous “let’s just create more money” variety. CoreLogic puts residential sales growth in the area of 5%. Will our Las Vegas numbers match those projections? One reason to think so is the Las Vegas mortgage rate phenomenon. Rates remain tantalizingly low—but apt to begin creeping upward. That’s the kind of spur to home buyers that are apt to work as effectively as merchants’ “limited time sale” technique: Tick! Tick! Tick! If you have been delaying wading into the Las Vegas residential sales arena until the time is right, 2015 certainly looks like that time has arrived. I’m standing by to help you take advantage of the many opportunities this spring market is offering. Why not give me a call?
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