ANOTHER HEAD SPINNER FOR LAS VEGAS MORTGAGE INTEREST RATES
By the end of last week, with world financial markets quavering and Wall Street chalking up the worst start for any year ever, you’d think that the Las Vegas’s real estate outlook would be as worrisome as the rest of the economy’s. Not necessarily. For sure, there was enough to worry about. If world trade levels continue to unravel, it’s hard to see how the U.S. economy doesn’t head south—and that’s usually bad news for anyone trying to sell anything. For Las Vegashome owners planning to add their properties to this spring’s listings, seeing the stock market inaugurate the year with a full-blown correction would normally be unnerving. Yet there were two outside factors that worked to counteract such a reaction—and, at least, one of them had not been widely anticipated. The first factor is the textbook connection between financial assets (Wall Street’s stock in trade) and real goods (Las Vegas real estate is, if anything, the definition of ‘real’). It’s an inverse correlation. Not always, but often, the more insecure “securities” become, the more money tilts toward real assets: precious metals, commodities, real estate, agricultural land and oil. If for no other reason than the unanimous hand-wringing of the economic commentators, that should make holdings in property a more desirable place to park assets. At least in theory. The second factor was the widely unforeseen one. By last Friday, Mortgage News Daily’s Matthew Graham was writing about how investors were fleeing riskier assets “seeking safer haven” in the bonds that back mortgages. The result was one that affected Las Vegas mortgage interest rates—one of the key drivers of affordability for Las Vegas home buyers. “Mortgage rates surged lower,” Graham noted, “at the quickest pace of the year.” Ever since the Federal Reserve’s decision to tiptoe into the first interest rate increase in many years, nearly everyone had predicted a slow rise in Las Vegas mortgage interest rates—one likely to continue throughout the rest of 2016. Instead, by the end of the week, commentators were reporting mortgage rates approaching 7-month lows! It really was a head-spinner: 7 months ago was long before the Fed raised that supposedly crucial Fed Funds rate. And now the commentators were casting doubt on when the next rate hike would take place…if at all… Lest we fall into the trap of thinking we can predict what lies ahead, one distant mortgage branch manager, after being quoted as saying that the year has been “great for rates” so far, admitted, “Things could change quickly in markets like this.” That’s for certain—but for the moment, Las Vegas mortgage interest rates are one strong factor that makes buying or selling a more doable prospect than would have seemed to be the case just a month ago— as well as a great reason to stop putting off that call to my office!
ANTICIPATING MAINTENANCE ADD ONS TO HOME LOAN BUDGETING
When you first go shopping for a Las Vegas home, loan budgeting—figuring out how much a comfortable monthly mortgage payment would be—pretty much dictates the price range you will be considering. Some listings do the lion’s share of the home loan budgeting work for you through a ‘payment options’ box that provides a thumbnail mortgage payment calculation. You enter a percentage for the down payment, amount, and the type of loan—and at the speed of light, it calculates an estimate for the monthly payment. Those that also include the latest property tax bill and an insurance estimate comes up with a pretty definite picture of how affordable a given property will be. An associated cost that home loan budgeting alone doesn’t address is the additional operating cost every homeowner runs into—the maintenance figure. Since those costs are dependent on the type and condition of the property, most experts just advise future homeowners to anticipate 1% of the purchase price per year…a transparently made up number. There are a couple of approaches that can improve on it. The first way is to invest in a home warranty, which has a set cost. Home warranties are the forms of insurance that cover the repair or replacement of covered items. This can be a relatively economical way new Las Vegashomeowners can buy some budgetary peace of mind while familiarizing themselves with the ins and outs of their new Las Vegas home. But it’s also an occasion where it’s particularly important to read the fine print—the only way to be clear on what is covered, what is not, and what the deductibles are. It’s also important to get an idea of who the subcontractors will be. The other way to get a bead on likely future maintenance outlays is to anticipate likely major replacement costs. Wood shake roofs, for instance, should last about 30 years while fiber cement shingles last five years less (and rough weather conditions can lop years off those life expectancies). Wood floors last a century, as can marble and slate—while carpet usually needs to be replaced every eight to 10 years. When it comes to included appliances, most Las Vegas homeowners will agree that today’s models just don’t seem to last as long as they used to. It may be because electronics have added improved functionality…or it may be a result of flimsier manufacturing. At any rate, the National Association of Homebuilders’ research tells us that dryers (both gas and electric) have average life expectancies of 13 years—as do cooktops, electric ranges, and fridges. Washing machines last an average of 10 years; while microwave ovens last 9 years—as do dishwashers and compact refrigerators. Freezers last 11 years, garbage disposals, 12…but (uh-oh!) trash compactors average only 6. If the previous owner can furnish original warranties or purchase slips, it should be able to come up with a ballpark idea of when to expect replacement outlays. Home loan budgeting will deliver the all-important mortgage payment amount, but it’s prudent to leave ample some budget for the other inevitable expenses. But first things first—and calling me is a good way to start. Finding a Las Vegas home to fit all your requirements (including the budgetary ones) is, after all, job One!
NEW LAS VEGAS LISTINGS ARENT THE ONLY GAME IN LAS VEGAS
It’s probably inevitable (and may have something to do with the way our brains are wired) that when most people start looking for a home in the Las Vegas, they’re automatically drawn to the new Las Vegas listings first. Let’s face it: all things being equal, who wouldn’t choose a new car over a used one? That’s not to say the experience hasn’t taught us that ‘new’ isn’t always the best choice. Last year, NBC’s ‘new’ live version of “The Sound of Music” is one example where the new model couldn’t hold a candle to the original (even if we had seen that one a half dozen times). Yet the impulse to look for the latest, freshest product is as automatic as going to the fresh vegetables instead of the ‘day old’ bin at the supermarket. When you’re in the hunt for a Las Vegas home it’s just as likely that you will opt to check out the new Las Vegas listings before those that have been on the market for weeks or months. Now, there is really no reason why that isn’t a perfectly reasonable way to proceed. There is always the possibility, for instance, that a new Las Vegas listing has just come on the market, that it’s the most fantastically great property out there, and that by jumping on it immediately, you will steal a march on the other listing watchers—get the first showing, make the first offer, and wind up in the house of your dreams (it happens!). If you have an energetic Las Vegas agent (hint: like yours truly), you may be contacted as soon as a new listing in Las Vegas appears that meets your requirements. Or you may have set up an internet contact alert to produce a similar heads-up automatically. These are all good ideas, as any worm-gorged early bird will agree. But the point is, the brand new listings are not the only game in Las Vegas. Even if you have already combed through the Las Vegas listings so often that some of them have details you can recite from memory (oh, that’s the one with the “charming entry hall cathedral ceiling”), it’s worthwhile to occasionally revisit all the listings that fit your basic criteria. Among other reasons, Las Vegas listings that have been on the market for a while can undergo asking price reductions. Some which you haven’t paid attention to in the past can suddenly appear when they drop into your search price range. Others which had been listed as under contract may reappear when a buyer was unable to close the deal…In short, although it’s perfectly valid to review the real estate listings with the new Las Vegas listings at the head of the pack, thinking of them as intrinsically superior isn’t necessarily the case. Listings aren’t lettuce. In fact, there should be a bumper sticker: Listings don’t wilt. An alert and energetic real estate agent are an immensely valuable partner to have when you are on the prowl for a house of your dreams. So…call me!
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