Sunday, June 12, 2005

Gambling & The Housing Market

One of the "The biggest price increases in the HPI during the past year occurred in Nevada, with a 4 quarter increase of 31.2 percent" (HPI = Housing Price Index) OFHEO Report. What is Nevada known for? Gambling. How appropriate. In some markets the housing market has become a new form of gambling. Las Vegas is not only gambling on money but housing stock as well. When the economy takes a hit, one of the first things that gets hit hardest is tourism. Las Vegas has profitted tremendously off of the reckless consumer spending and will be one of the hardest hit areas when the consumer spending takes a dive.
Posted by David at 12:54 AM

8 comments:

  1. AnonymousJune 12, 2005 12:05 AM

    "Las Vegas has profitted tremendously off of the reckless consumer spending and will be one of the hardest hit areas when the consumer spending takes a dive."

    I'm unsure if this is true. The way I heard it, spending on entertainment doesn't fall nearly as much as you'd think in recessions. (ie, it's less elastic than other goods)

    -DMZ

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  2. DavidJune 12, 2005 12:20 AM

    When there is a recession, what items are the first items to be cut from the household's budget?

    ReplyDelete
  3. AnonymousJune 12, 2005 11:27 AM

    "When there is a recession, what items are the first items to be cut from the household's budget?"

    Not entertainment items. Consider our own most recent recession - was there any serious decline in the entertainment industry? Answer: no, there was not. This was _also_ true during the Great Depression.

    _Savings_ are the first thing to go. Just look at the personal debt numbers. People simply do not lower their standards of living that quickly. It can happen over the long term, but by definition, a bubble pop is a short term event with (perhaps) long-term consquences.

    -DMZ

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  4. DavidJune 12, 2005 11:39 AM

    _Savings_ are the first thing to go. Just look at the personal debt numbers"

    But this time there is so little savings, that there won't be savings much to go. Something else will have to be hit.

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  5. AnonymousJune 12, 2005 3:04 PM

    "But this time there is so little savings, that there won't be savings much to go. Something else will have to be hit."

    Again, you make the assumption it's going to be travel and tourism. I don't think that's an assumption you can make, unless you're going to back it with some numbers.

    -DMZ

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  6. DavidJune 12, 2005 3:13 PM

    do you agree that "this time there is so little savings" ?

    I'll try at get some number to back up the tourism and travel issue. Thanks for your comments

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  7. AnonymousJune 12, 2005 7:10 PM

    Hey DMZ How many starving people have you seen at the movies or at a fancy restaurant?

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  8. AnonymousOctober 03, 2006 1:12 PM

    hi nice post

    ReplyDelete

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