RICE

Carney,You mistakenly ausmse our buyers are all borrowing money. I can't recall the exact stats, but in Vegas it is around 50% and Reno something like 30% of buyers are paying cash. These cash buyers can easily pay more for the same house if that is what it takes to close the sale (and they think the value is there). At the lower end of the market, Reno homes have pencilled as investment properties for some time, fully covering the costs of ownership. If prices rise 10% (in six months or two years), the properties will still pencil as investment properties. The investment buyer is of course looking to pay the least possible price, but there are plenty of them in the market.As for the owner occupant coming to the table with a loan, you have twisted the logic inside out. If the former $200 k house now costs $220 k (in six months or two years or whenever), the $200 k buyer has no choice but to buy the former $180 k house. It is the old law of supply and demand from Economics 101.I laughed at the WSJ article. Shortage of inventory is bad for the market . No, shortage of inventory is good for the market and will eventually lead to increasing prices due to that interesting intersection of the supply and demand curves.The article is as dumb as all the other articles stating lack of new home starts is bad for the market. No, lack of new home starts is the only way the excess supply from the days of irrational exuberance will eventually become absorbed.While job creation has been and remains dismal during this Great Recession, the population continues to grow. New home construction is not keeping up with population growth which is a good thing given overbuilding in the Countrywide Liar Loan days. When we eventually get job creation (and I won't predict if that is one year or three years or ten years out), all those 20 somethings still living with their parents and all those 30 somethings and 40 somethings who moved back in with their parents or siblings due to financial stress will eventually want new homes. Increased demand will return and with it modest price increases. Unfortunately, the collective belt tightening of all the people paying the mortgages on their upside down homes is drastically reducing the amount of cash moving through the Reno economy. This negative wealth effect is keeping a strong damper on the prospects for local job creation, so Reno will be one of the last areas to bounce out of the unemployment mess.

Not Given