I had the pleasure of hearing from Sean Becketti, the Vice President and Chief Economist for Freddie Mac at the National Association of Gay and Lesbian Real Estate Professionals conference in Ft Lauderdale this week. He shared some fascinating insights on the current housing market and future trends, which I think are of importance particularly to investors. At the luncheon, he took us through the things that worry economists at Freddie Mac the most. One of those things is the bubble market in areas like San Francisco. He said flat out that San Francisco is causing him to lose sleep at night. They're worried about that bubble developing and bursting because of the pace of price increases versus wage affordability.
He also showed a fascinating map of the United States comparing prices from market peak (2006 or 2007) to today. When you look at states across the country now vs peak prices, you find that places like California, Colorado, Texas, North Dakota, Florida, and others are all almost either at the peak prices from mid 2000s or in some cases (like Colorado specifically and N Dakota) actually already surpassed peak prices. Nevada, on the other hand, is still 32% below peak prices. This tells us that Nevada prices are nowhere near their peak yet and with unemployment dropping in the state, new housing starts still at an historically low level, and significant new job opportunities coming to Las Vegas, many are starting to predict a housing shortage in the state in the coming years. That bodes well for future prices in the next 5 years and the potential for long term appreciation gains for investors. Right now homes can still be bought in Las Vegas around $200,000. Price points that are impossible for investors in many west coast markets.