Fed Cuts Interest Rates

The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, slashed a key interest rate by three-quarters of a percentage point on Tuesday and indicated further rate cuts were likely.

The surprise reduction in the federal funds rate from 4.25 down to 3.5 percent marked the biggest funds rate cut on records going back to 1990.

Analysts said the fact that the Fed did not wait until its meeting next week to cut rates underscored the seriousness of the situation.

"Many analysts said if the carnage continues in stock markets, the Fed will move to cut rates again at its Jan. 29-30 meeting.

"This move is not an instant fix," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "The economy is still staring recession in the face, but at least the Fed now gets it."

In addition to cutting the funds rate, the Fed said it was reducing its discount rate, the interest it charges to make direct loans to banks, by a similar three-quarters of a percentage point, pushing this rate down to 4 percent.

Commercial banks responded to the Fed's action on the funds rate by announcing similar cuts of three-quarter of a percent on its prime lending rate, the benchmark for millions of business and consumer loans. The action will mean the prime lending rate will drop from 7.25 percent down to 6.50 percent.

Fico scores to change formula

Fair Isaac Corp., the company responsible for the popular FICO credit score is changing the way the score is calculated. It is anticipated that it will do a better job at calculating and predicting the likelihood of a borrower defaulting on a loan. In fact, it should help decrease default rates by 5-15%.

The new score will be more lenient on occasional misses but more strict on repeat offenders.

The latest version of the FICO score

will largely look and feel the same to consumers and lenders. Scores will still range from 300 to 850 -- the higher the better -- and the model will continue to look at the same factors, including consumers' level of credit indebtedness and payment histories, length of credit histories, number of recent credit openings and inquiries, and the type of credit used, to determine scores.

Millions of people will be affected by the shift. It should help the economy over time, lenders who don't want defaults and in the end the consumer may get cheaper rates and those who have a great history with minor blemishes will not be punished as hard. It could be good for many

Nevada heads population growth once again

Nevada has been in the news a lot lately for problematic reasons related to the mortgage industry and residential real estate issues. But after a long drought it again has something to cheer about. It once more is the fastest-growing state in the union, after being edged out last year by Arizona. The official growth rate is 2.9% for the calendar year closing out July 1, bringing its total population to over 2.56 million, as was reported by the Census Bureau.

The trend is expected to follow the same path in the coming years. Clark County, home to Las Vegas, holds well over 70% of the state's population and is its growth engine. Currently there are several mega resorts and condominium projects under construction or will soon break ground on or near the Strip that will add thousands of jobs and bring more people to the valley, according to UNLV's Center for Business and Economic Research.

In the national growth picture Arizona claimed second place with 2.8% rate, leaving it only a half step behind Nevada, so the race is close. Western states continued to show their attraction power as Utah and Idaho took the next two spots on the list.

Las Vegas housing market has been suffering lately from overbuilding and this favorable population growth trend will undoubtedly provide a catalyst to pull it out of the morass. As builders are cutting back the supply is diminishing and new arrivals will help improve the demand side which then will bring more balance to the equation. And perhaps even start putting upward pressure on prices.

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Fed might cut rates next week

The next phase of the subprime workout plan could come next week, when the U.S. Federal Reserve Board is widely expected to cut its benchmark federal funds rate to 4 per cent.

In a statement, Fed chief Ben Bernanke called the mortgage rate freeze a “welcome step

One Las Vegas

• Location: South Las Vegas Blvd
• Bldg. Type: Condo/High Rise
• No. of Towers: 5
• No. of Stories: 18-20
• No. of Units: 961
• Unit Sizes: One, Two. And Three bedrooms
• Price Range: $275K -$1 million
• Square Footage: 831 sf -2857 sf
• Status: Pre Construction sales – Phase II
• Estimated Break Ground Date: Broke Ground APRIL 2006
• Estimated Completion Date: Phase I (TOWER I AND II) LATE 2007, Phase II (TOWER III) Early 2008, Final 2010
• Developer: AmLand Development B.S.R. Group
• Renderings: Click Here
• Official Website: http://www.one-lasvegas.com


Project Amenities
• On-site concierge service and valet service
• On-site maintenance personnel
• Two guard gated entrances with 24/7 attendants and roaming security
• Two pools with lush tropical landscaping, private cabanas and outdoor hot tubs
• Lighted tennis and basketball court
• half mile fitness trail perfect for walking or running
• Landscaped open spaces with event areas
• State-of-the-art health and fitness facility
• Party and special event rooms
• Billiards room and multi media theater room
• Controlled access to assigned garage parking
• Large garage accessed storage units available

Project Status
• SALES: FINAL SALE TOWER I AND II
• CONSTRUCTION: grading, excavation and underground utility work at the site
• RESERVATIONS START AT: $450k WITH AVERAGE PRICE AT $500 TO $520 PER SQUARE FOOT
• AGENT CO-OP: 3%
• DEPOSIT SCHEDULE: 15% DEPOSIT IMMEDIATE CONTRACT
• HOA FEES:Estimated at $0.37 per square foot/per month



Developer Bio
AmLand and B.S.R. Group have come to together to create their vision, with both International and Local reputations behind them.
B.S.R Group has nearly four decades of building and engineering experience in the international real estate market. B.S.R Group has a strong reputation for making large-scale real estate projects a reality. Their accomplishments include Waterfront Square in Philadelphia, the Icon Toyota Tower in Tel Aviv, and the Osiedle Europejskie in Krakow, Poland. B.S.R Group has entered the US market with plans to build high rises on an even grander scale.
Wayne Krygier and Chet Nichols of AmLand Development are established in the Las Vegas market after successfully pioneering urban condo living in the South Las Vegas Strip area with the development of Park Avenue. The success of this project has prompted expansion with additional buildings under construction. AmLand Development is also responsible for the Vila di Lago project at Lake Las Vegas, which was recognized by the National Association of Home Builders as the official New American Home Partnered, AmLand's expertise and local resources and B.S.R Group's engineering strengths and financial resources form a strong alliance. Added to the probable success of this project, is the phenomenal growth of the South Las Vegas Boulevard. area with residential, retail, commercial and casino projects underway and a projected population growth of over 37% over the next five years.

Project Description
The master plan calls for five 18- to 21-story private residential towers, 200-room boutique hotel and 200-unit condo-hotel to be operated by the same company, a 20,000-square-foot health club and spa, two restaurants and retail services.
ONE Las Vegas is designed with balance, creating a community that caters to the uniqueness of Las Vegas and the lifestyles of people who live here.
ONE Las Vegas, planned in one of the fastest growing areas in Las Vegas, is expected to provide its homeowners the luxury of living on the Las Vegas Strip while also offering the convenience of community services, shopping and the airport. Urban living with resort style pools, health and fitness club, and lush gardens, the ONE Las Vegas community is designed with luxury inside and out for balance in life.
Residents of ONE Las Vegas will enjoy spacious and sophisticated lifestyle condominiums in a superior location, featuring a wealth of luxury resort style amenities and contemporary designs.

Project Financing
$142 million first phase financing for One Las Vegas has been in place for weeks with Corus Bank of Chicag

Builders Say "yes"

Builders are sparing little expense in a bid to entice hesitant buyers into a soft housing market.

Virtually every major builder in the Las Vegas Valley has pushed big sales this fall, and the price breaks have been steep.

Pulte Homes marked down prices 15 percent on certain models, with discounts of up to $80,000 on some completed new homes during one October weekend. The builder's Del Webb subsidiary sliced $55,000 from some of its asking prices. Rhodes Homes has offered as much as $100,000 off on finished houses. Lennar Corp. has slashed prices on some models by about a third; Lennar cut the cost of a 5,000-square-foot home in its Earlstone community from $911,490 to $662,490, and a 4,498-square-foot home in its Silver Creek subdivision went from $807,290 to $612,290. Centex Homes has clipped $25,000 to $100,000 off the prices of some of its existing homes, and is ponying up as much as $21,000 in closing costs on some models. American West Homes' valleywide "liquidation sale" on Nov. 10 and Nov. 11 featured savings of up to $143,000.

So are the sales boosting traffic and clearing inventory?

Builders say yes.

After Astoria Homes dropped prices on standing inventory by as much as $200,000, or 27 percent, Oct. 12-14, traffic at least doubled across the board at Astoria communities, and even tripled in some cases, said Tom McCormick, the company's president.

The sale helped make October Astoria's best sales month since 2005. The builder averaged about four sales per neighborhood during its discount weekend, compared with an average of half a sale to a sale per week before the price cuts.

Astoria's available inventory dropped from eight weeks or 10 weeks of supply to around four weeks or six weeks. The sales are "sticking," too, McCormick said, with a cancellation rate of 10 percent, down from about 30 percent before the sale.

Astoria hedged its bets by accepting only buyers who didn't need to sell existing homes to close the deal.

Pulte Homes had an "exceptional" weekend during its "Monster Sale" Oct. 19-21, said Nick Parks, the builder's local director of marketing. Sales doubled when compared with the four prior weekends.

"It's a new market, and you need to provide the consumer with new value propositions to be successful today," Parks said.

"There are people out there who need homes and want to buy homes, and I think our success with the Monster Sale demonstrates that there is consumer confidence in the market if they're provided the right value proposition.

"Generally, it's a positive indicator that the market isn't as depressed as some want us to believe."

Numbers from tracking and consulting firm Home Builders Research show steady increases in new-home sales in the fall, as builders intensified their cost cutting.

The local market moved nearly twice the number of homes during the week ended Nov. 11 as it sold the week ended Aug. 12, an increase Home Builders Research President Dennis Smith attributed to widespread, continuing sales.

Companies that haven't held or advertised sales are not reporting significant increases in purchases.

D.R. Horton, which hasn't publicized any sale-price reductions, has 42 local new-home subdivisions and posted net sales of just four homes in the week ended Nov. 11 and two homes in the week ended Oct. 14, Home Builders Research found. And despite total traffic through models of between 500 and 600 people weekly, Toll Bros., a luxury builder that also hasn't marketed any discounts, had zero net sales in the week ended Nov. 11 and a negative net-sales rate of two homes in the week ended Oct. 14.

That means the company, whose homes are priced from $345,975 to more than $1 million, had two more cancellations in Las Vegas that it had sales.

Toll officials declined to discuss local sales volume, noting that they release regional data only quarterly. Spokeswoman Kira McCarron said sales of new homes and standing inventory "are consistent with current marketing conditions."

D.R. Horton didn't respond to an e-mail seeking comment on its low sales volume and whether it's planning special pricing events.

Ken Perlman, vice president of Sullivan Group Real Estate Advisors, said builders might skip sales for various reasons.

The cost of land might prohibit lower price, or perhaps a builder has met sales quotas for the year and doesn't need to push for additional closings.

Also, national companies could find that strong sales in some markets allow for more-sluggish sales in other cities.

For most local builders, though, lower prices were the last frontier in ginning up home sales, and Smith said builders are telling him the discounts are drawing out reluctant buyers.

"They tried incentives and they tried financing," Smith said. "Now, they've gotten to the price, with sales to get rid of inventory, and it's working."

Sales generate traffic and closings more effectively than incentives do, so builders are wise to drop prices, even temporarily, Perlman said. The consumer who can't qualify for a $350,000 house won't have an easier time getting a mortgage just because the builder tosses in a free swimming pool and a trip to Hawaii. The buyer still can't afford the home. The only solution: a lower price, Perlman said.

While those price breaks help buyers afford homes, they don't add to a company's bottom line.

McCormick declined to discuss his private company's profits. He acknowledged, though, that construction and land costs mean Astoria couldn't replace the discounted homes for the low prices they commanded during the builder's sale. He added that builders across Southern Nevada are experiencing a similar disconnect between sale prices and building costs. Yet, the earnings sacrifice is essential to keeping the doors open.

"As much as we may be selling homes below replacement cost, we're in the business of building and selling homes," McCormick said.

"We aren't like the homeowner who can decide to wait six months or a year to sell. It's hard to justify keeping everyone employed when you're not selling and building homes. Like everyone else, we've been through layoffs. We want to minimize that as much as we can."

Builders' drive to survive could translate into more price drops.

Most local builders no longer have several months of standing inventory, Smith said, so gains in available homes are coming mostly from cancellations, as jittery consumers back out of the market or stricter lenders tighten loan-qualifying criteria.

Smith believes sales will "pop up continually, off and on" over the next 12 months to 18 months, as cancellations wax and wane along with the performance of the market or changes in bank guidelines.

At least one local builder is already considering another sale.

Pulte is contemplating an event near the beginning of December with price breaks and incentives similar to the October reductions.

"It's important to provide the consumer with confidence, and when we offer them these limited buying opportunities, it gives them confidence to make a decision," Parks said. "If you give the customer an exceptional opportunity, it helps them feel good about their purchase and make wise decisions about their home."