You’ve heard the reports. Las Vegas leads the nation in foreclosures and unemployment. Some statistics say that Southern Nevada homeowners are more than 70% upside down with no hope in sight. Major construction projects have been halted and the massive City Center complex is not doing nearly as well as hoped for. Well, stop spreading that news.
While all of the above is true, there have been a number of bright spots of late. It seems that things are changing as the region adapts to a new reality. While it is doubtful that Las Vegas will ever again experience such a boom in construction of homes or resorts, there are positive things happening as the city finds a “new normal.”
Real Estate Re-Set
Foreclosures on the lower end of the market are being snapped up so fast that there are actually bidding wars. Real estate agents are complaining about a lack of inventory as investors are swooping in with wads of cash. What’s missing is the insane escalation of prices that were seen during the boom. Investors want the real estate but only at the right price. Why are investors so eager to buy? Long-term, the outlook for Las Vegas isn’t so dismal because the tax climate is still favorable and it is a warm weather area that people want to move to. The re-set of real estate to a lower price point means that investors can get positive cash flow for the first time in decades.
The hi-rise segment of the market is also undergoing an interesting shift. Projects that have gone bust because of the market collapse are seeing new life. New investors have acquired many of the projects through foreclosure or distress sales and have turned them into profitable ventures. On project, Newport Lofts, just officially sold out. Others are experiencing an increase in sales after lowering prices to market levels.
The rapid pace of the market does make it difficult for out of town investors if they don’t have “boots on the ground.” There are a lot of traps for the unwary trying to buy at foreclosure auctions. Some areas of Las Vegas are better than others in terms of investment opportunity and that means doing your homework.
I reported on some changes in an article a couple of months ago. One item was the shoe company Zappos relocating their headquarters to downtown Las Vegas. That pending move is sparking new interest in downtown business ventures and housing. Increased cultural events have drawn more people to that part of town. An area that was often thought of as the sleazy side of the city is becoming the place to be for many people.
On April 28th a new, upscale shopping center, Tivoli Village, opened amid much fanfare. There has been much greater than expected interest by consumers, merchants and prospective tenants. The employment picture seems to be brightening. Resorts that experienced massive layoffs have been hiring in fairly large numbers as tourism rebounds. Local businesses have also picked up the pace of hiring. There is certainly a long way to go but the turnaround seems to have started.
When real estate peaked and started to decline there were quite a few people who refused to see the writing on the wall. Many insisted it was only a temporary dip before resuming a perpetual climb. They touted all sorts of reasons why this had to be so. We know how that worked out. Now as things are starting to rebound there are a lot of people insisting that this is only an aberration and everything will soon turn gloomy again. The funny thing about market turnarounds, they are rarely recognized until long after the fact.
The reports of my death have been greatly exaggerated. – Mark Twain