Monday, May 21, 2007
Two real estate friends of mine (yes, there is a differnce between real estate friends and "regular" friends) just got back from Vegas where they put deposits down on 3 condo hotel units. One development in downtown and the other on The Strip. The sales pitch attempted to counter the negative media news of slumping sales in that market. Suggestions were varied as to why the market is doing better than what is being reported. Examples: 1. A large number of "sales" are pre-construction contracts, which will not close (and hence, record) for a year or more. 2. Volume may well be down, yet average sales prices are holding firm. (I believe in supply, demand & price curves - sorry I don't believe this unnatural phenomena) Builders need to hold recorded sales prices high so that the rest of the development will continue to sell at similar prices. That is why many units are sold at higher prices because the developer is kicking in extra bling (upgrades, upgrades, upgrades). Finally, they countered the concern of the glut of hotel rooms. They're reply was "if we build it, they will come>" Sure, to an extent. I have a hard enought deciding which hotel to stay at now. I only imagine the hell when there are 5 Bellagios side by side.