Las Vegas Housing Parabola

Implications: With 45 percent of contingent sales identified as "short sales," or sales in which the lender will be required to accept less than the principal balance owed, we can't expect investor demand to grow. Investors currently have other more liquid and stable securities to place their bets, and these instruments are yielding strong cash-flows.

Analysis: The gravity of the investors desire to finance housing must be taken into consideration as a component of borrowers closing new loans on the existing inventory.

Most investors will rely on their lender/originators to mitigate loss. The shrinking inventory of homes and elimination of short-sale needs is a very good start, and will become the zero gravity point at which the investor will start to take a better look at the opportunities in real estate lending.

Inventory reduction will secure price/demand ratios, and stabilize those borrowers walking out on their obligations.

Employment stability and lower interest rates, with moderate entry prices will get the potential home-buyer back in the market.