LAS VEGAS HOUSING IN A REVERSE BUBBLE

Home prices in Las Vegas continue to fall, and the month to month decline is accelerating. The average decline since the declines began in '06 is 2% per month. BUT, the average decline in the last six months is 5% PER MONTH! Whatever your property is worth today, it's worth 15% less in three months.

And I don't see a bottom any time soon. The price graph is a straight line down and has not even hinted to start to curve back up.
And with another record of pre foreclosure notices in January, we have at least four more months of record numbers of actual foreclosures. PLUS, realtors reported the other day that since the FHA moratorium ended a few weeks ago, the market is being flooded with even MORE foreclosures.

At this rate in these conditions, prices are going to drop at least another 20% and 30% isn't out of the question.

Man, how low can they really go? What is a theoretical worst case bottom? We've already blown by cost of construction. They can't go to zero.

GREED IS NOT THE ECONOMIC BOOGIEMAN

We've been hearing for a while now that greed caused this current economic crisis. Fiddlesticks.

We're all a little greedy, aren't we? We have so much more than just the basics we need to be happy (take a look at the Amish, who consistently rank themselves among the happiest on the planet). Going after anything beyond those basics is greed. Do you wear Calvin Klein instead of WalMart brand? Greed. Drive a BMW instead of taking the bus? Greed. Live in a 3000 SF house instead of a smaller home in North town? Greed.

Did you cause this mess because you sought a better life, a better house, greater status? Of course not. We don't consider it greed when we do it. We call it "prosperity." It has a nicer ring to it. "Prosperity" sounds ordained, like a blessing or reward for hard work. Greed just doesn't sound so good. Try it. Say it over and over a few times. "Greed. Greed. Greed." You just feel icky saying it, don't you?

The fact is it's easy for politicians to blame greed because it's a theme that sticks. Greed is a boogieman that political spinners use to tarnish systems that contradict their political philosophy. Greed makes an easy target. After all, it's one of the Seven Original Sins. And it aligns itself with an easily identifiable and attackable minority -- rich people. It's ok for us to try to improve our standing, but it's not ok for the rich to improve theirs. A reaction that Darwin would call a competitive survival instinct I think.

But we benefit from greed. Is anyone greedier than an entrepreneur who starts a software company with the hope that he can one day become the wealthiest man in the world? Yet along the way, he creates hundreds of thousands of jobs and spawns technological advances that make the world safer, healthier and more productive. Greed in that case, seems to work just fine.

When the national homebuilder, who (once upon a time) makes several billion dollars in profits, builds you a house, he sells it to you at a rock bottom price. It seems in his greedy desire to sell as many homes as he can, he has to lower his price to match or beat his greedy competitor across the street. And in so doing, he produces a high quality, low cost house you can afford, all the while putting hundreds of thousands more people to work. Greed still working.

When you buy your Escalade, your Prada, your Kobe burger, you are supporting jobs and helping the economy. You may call it prosperity, but it's still more than you need, and that makes it greed.

So if greed has helped us for the past 200 years become the most productive country ever, how could greed suddenly double cross us and bring us down? Are we to believe there was a sudden evil spike in "greedom?" Some sort of moral collapse where greed for the good of the whole suddenly gave way to greed for the individual? Or course not. Greed is self interested and individualized. Always has been. It is fairly consistent and fairly predictable.

And nothing has changed about humans in the past 24 months that made them suddenly more greedy. It would be hard to imagine someone wanting more than all the money and power in the world, wouldn't it? But even the greediest have brought benefit to our lives. Henry Ford's cars affordable for even the poorest, Thomas Edison's light bulb burning in everyone's living room, Michael Dell's computers for only a couple hundred bucks opening the doors of the internet in a stargate type leap forward.

The Wall Street guy who rounded up the money to lend you a mortgage on your last home wasn't any greedier than other titans of America. He wanted to better his life too. He wanted to take his kids to Disneyworld, give his wife a nicer diamond on their 10th anniversary and maybe upgrade his car to his childhood dream. He was looking for a better way to get you a loan in a way that benefitted you so you would buy your loan from him instead of his competitor. That's how America works. In his greedy quest to make the most money, Mr. Merchant has to always be better and cheaper than the next guy. He has to innovate, change, find new ways to help you. That's a great system. It provides the best, most efficient, most desired things we want (and need) at the best possible price.

So don't buy the political hype. There are some very rational explanations why our market is in the tank right now. But greed ain't among them.