Main Stages of a Real Estate Bubble (With Specific Respect to Las Vegas High Rises)

I'd like to summarize an interesting article someone just emailed to me. Here's a timeline for the anatomy of the real estate mess we find ourselves in as a nation:

1. Take Off: 1998-1999
2. First Sell Off: 2000
3. Media Attention: 2001-2002
4. Enthusiasm: 2003
5. Greed: 2004-2005
6. Delusion: 2006
7. Denial: 2007
8. Fear: 2008
9. Capitulation: 2009-2010
10. Despair: 2011-2013
11. Return to the Mean: 2014

Sounds about right. Backed up by 500 years of economic history, the timeline applies pretty well to the current real estate bubble. In fact, 4 main stages can then be identified:

1) The Stealth Phase: With better access to information and a higher capacity to understand it, this is where the "smart money" gets in, often quietly and cautiously. As prices gradually increase, larger positions are established as the "smart money" insiders realize that the fundamentals are sound and they have a winner on their hands. The general population has no idea what's happening at this point.

2) The Awareness Phase: This is when investors start to figure it out and bring additional money that push prices higher and higher. You also see short-lived selling off periods as the "smart money" people cash in on their first profits and during each of these "sell offs", the smart money people take these opportunities to fortify their portfolios. They do this until the media gets involved and brainwashes the general public that they're just as sophisticated as the "smart money" group - which they're not and never will be.

3) The Mania Phase: Thanks to the lack of an unbiased opinions in the media, everyone seems to be making money in an "investment deal of a lifetime". Getting into the deal is a "no brainer" and future price increases are "guaranteed", which of course goes against all the laws of supply and demand. Money from all avenues gets pumped into the deal, often from those who can't afford to do so, as the "smart money" people are gradually pulling out and selling to these nouveau "sophisticated" investors. People see enormous paper profits and greed sets in, so everyone starts to use debt and leverage to bid up prices and jump into the deal, despite their lack of knowledge of market dynamics and fundamentals. The bubble is at its breaking point.

4) The Blow Off Stage: This happens when someone finally "gets it" and convinces everyone else at the same time that the situation has changed, often resulting in the classic "reality check". Many will try to reassure the public that it's just a temporary set back and that the naysayers don't know what they're talking about. The house of cards collapses and the late comers to the party (a.k.a. - the general public) are left with the bag while the original "smart money" has pulled out a long time ago. Prices plummet, over leveraged investors go bankrupt, people are afraid of making any types of investments, eventually resulting in a totally depressed market which many then consider "a significant buying opportunity". The problem now is that thanks to the media and the constant biased opinions they face each day, the general public now thinks of this opportunity as "the worst possible investment" which allows the "smart money" to once again acquire assets at bargain bottom prices.

The bottom line is if you've arrived late to the dance with the hope of getting something for nothing, bubbles can be very damaging. It helps to be in the "smart money" class. If you're not - and you know who you are - visit this website and register today

ATTN Seasoned Real Estate Developers and Texas Real Estate Land Investors

How is this blog post related to Las Vegas high rise condos? It really isn't, except that one of our clients (a Las Vegas high rise condo purchaser from Texas), just made me aware of a very interesting development opportunity in the Dallas Fort Worth area of Texas and wanted me to send out some feelers with the hopes that a seasoned real estate developer or serious land investor may read this post and see a fit.

It's a 200 acre parcel of land in an amazing location just waiting for the right developer. And it's priced right as well. You can view the details at www.dfwtexasland.com

Brokers are welcome on this project, so if you are looking for a Land Development Opportunity in the Dallas Forth-Worth area of Texas, then you need to look at this 200 acre parcel situated in close proximity to the Dallas Forth Worth Airport and adjacent to major highways -- A Texas land developer's dream!

Call Frank toll free at 866-363-4657 for info or send an email here.

Everyone's To Blame for Failure of Las Vegas ManhattanWest Condo Project

What happens when you let a software engineer develop a high profile Las Vegas condo project? You end up with a non-completed mid-rise eyesore where the developer faces more than $30 million dollars in liens attached to his Las Vegas condo development.

Now developer and former computer dot-commer Alex Edelstein says he's looking for investors to help him finish the job. His lien holders, however, say he's no where to be found and won't return phone calls. There's nothing worse than a developer who doesn't know how to develop and that seems to be the case with the ManhattanWest project.

But Edelstein surely isn't the only one to blame for this yet another Las Vegas condo fiasco. It seems construction issues had become quite severe during the entire build - and no one caught them until ManhattanWest's project manager finally started to investigate, finding some 58 building code violations that hadn't been resolved in over 18 months!

With faulty structural concrete and an inadequate fire safety system that was installed by unlicensed subcontractors that did not meet code requirements, Manhattan West turned to E&E Fire Protection who then saw an easy score and (rather than make some modifications) decided to replace the entire system and is now owed about $3 million.

Then there's Hydro Pressure Cleaning, a company that charged the project $500,000 for seismic repair on concrete columns. $500,000 for a third party construction service!!!

And by the way, where were the Clark County building inspectors during all these violations? How could the project have come this far to begin with?

Now I don't blame Edelstein for not paying for sub-standard work or excessive bills, but it seems to me he should have performed a complete audit on what was going on with his development - a process that all the big timers do all the time.

With this kind of followup, I'm afraid it's going to be difficult for him to find the "bona fide" investors he's looking for to bring real offers to the table and get the money needed for project completion. I'm reminded of OJ looking for the "real killers"...

If you're one of those high rise condo or mid rise condo investors who bought into this ManhattanWest project (or the original Manhattan Project on the South Strip for that matter), please contact me for a special investment update. (name and phone number please)

Competition Non-Existant at the 2009 REMAX Convention for Las Vegas Real Estate and High Rise Condos

To put it mildly, I'm simply amazed! I know times are tough and all - and many real estate companies are struggling just to stay in business. But how amazing is it that our office is the ONLY Las Vegas real estate brokerage exhibiting at this year's REMAX Internation Convention?

And for those of you who aren't aware, the conference is actually being held... IN LAS VEGAS!!! It's not like other offices had to even travel to get here. Like I said, I'm just amazed. Not disappointed, mind you, because although attendance at this year's event is noticeably down, the people who've stopped by our booth to talk to us and the connections our office has already made at this event has been outstanding.

People have actually stopped by asking about referring clients to us who are interested in buying Las Vegas real estate. We've gotten inquiries on Las Vegas foreclosure bargains, Las Vegas investment properties, and - believe it or not - Las Vegas high rise condos. It's nice to be the only game in town (or at least at the MGM Convention Center for 4 days!!!)

In fact, an agent in our office just set an appointment this afternoon to tour Turnberry with a perspective high rise condo client who just visited our booth this morning. Yesterday alone, we added about 50 people to our investor database and one agent got a lead on a institutional buyer for a 12 million dollar land deal.

I wonder how many of these potential clients we would have received if we had any competition at the show. Viva la recessionne!