I arrived home from Seattle to an interesting email from reader Bob F. The email included two articles that were very bearish on Las Vegas housing, predicting that Las Vegas house prices will fall further. I will be the first to tell you that house prices in Las Vegas will drop further. While we may be reaching the bottom of the market in the number of sales, we have not reached the bottom in price. Where the price bottom lies is a topic for debate.

According to the Case/Shiller index in late July, Las Vegas home prices were predicted to drop another 4%, roughly mirroring the 4% price drop of the previous 12 months. Within weeks, prices began to fall at a more rapid rate. Today, Professor Shiller is predicting that house prices in Las Vegas may drop another 14%, with no relief from falling prices until late 2009. A study conducted by Applied Analysis for southern Nevada home builders suggests that Las Vegas will experience a housing shortage by late 2009; we all know what happens to housing prices if there are more buyers than sellers. These conflicting opinions by two credible sources highlight the only thing we know for sure—that no one knows for sure when our housing prices will begin to climb.

What I do know about Las Vegas is what makes me bullish on future real estate values. Las Vegas has a very resilient economy; we don’t mirror national trends. There are tens of thousands of new jobs coming online that will attract new residents who need places to live. People from all around the globe want to visit and live in Las Vegas. Our prices remain much lower than prices in California, and that will continue to attract people from the sunshine state who are looking for second or investment homes. But I will say once again what I always tell my clients—buy for the short term gain, but hold for the long term gain. I don’t care how low you price your home—there has to be a willing buyer. Right now your average homebuyer is scared to buy.

Savvy buyers are buying houses here for tens of thousands of dollars under appraised value. Even though there is a chance that some or all of the short-term gain will be eroded if prices slip another 14%, the long-term gain is a near-certainty. Houses go up in value. Any reversal of that pattern is always temporary. If you buy a second home for 20% to 25% under today's market value and the price drops 14% before this trend reverses, how much will that really hurt you?

One of my clients just closed on a home that he bought for about $58,000 less than that home is worth today. He's not going to break a sweat if prices drop 14%; he may lose some of the gain he'd made on paper, but his home will still be worth more than he paid for it. And when prices rise, he'll ask me to sell that home and find another great deal for him.

This is not a market for flipping houses. It is a market for buying houses for well under current market value, and then holding those houses. When prices will begin to rise is anyone’s guess. But the statistics indicate that pending sales are beginning to rise. Sales for January and February will be low, as they always are. If you are looking to buy for the long term gain, this is a great time to buy. Once buyers return to the market, the opportunity for the best deals will be gone.

The cuts to the federal funds and discount rates this morning should bring some welcome relief as banks and many homeowners will be able to refinance their debts at lower rates. When I called my friend Brandon Foor to ask if the sky was really falling in his area of expertise, the financial markets, he talked me off the ledge. It will be interesting to see where we stand when the markets close today. I just opened a small E-Trade account in preparation for my first foray into the stock market. I know next to nothing about the stock market; I rely on the experts like Brandon. So when I read that the sky is falling, I get a little nervous about my area of expertise. My pulse has returned to normal, and I’m off to close another deal.

And for those who inquired—my daughter is doing well. Thank you for asking.

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