One Man’s View:

Woes at Lake Las Vegas a sign of dried up economy

Richard Brian

The empty pads carved into the hillsides along Lake Mead Parkway near Lake Las Vegas.

By Tim O'Callaghan (contact)

Friday, Feb. 6, 2009 | 6:16 p.m.

Tim O'Callaghan

Lake Las Vegas Resort

A few Sundays ago, my bride asked if there was anything I wanted to do that day for my birthday. I told her a bicycle ride on the River Mountain Loop trail at Lake Mead might be fun.

We packed up the bikes and lunch to eat on the way to the trailhead. As we drove past Lake Las Vegas, she noticed the grass was turning brown on the golf course and asked if the course was closing.

I told her I didn't think the judge had ruled on it yet.

However, according to a story by reporter Jeremy Twitchell, federal Bankruptcy Judge Linda B. Riegle ruled Jan. 15 that Lake Las Vegas can close The Falls golf course at the main entrance of the project.

It sounds as though Lake Las Vegas will let the course dry up and brown out, which would match the rest of the landscape along Lake Mead Parkway. For the record, I don't think Lake Las Vegas will allow the entrance to lose its luster entirely. I would expect the front of the course, closest to the road, to be kept green.

To my disbelief, however, I noticed how development has encroached upon the desert area heading to the lake, and now that building has stopped, it's left an unsightly mark.

Developers have scarred the desert mountain landscape east of the entrance toward Lake Mead to an irreparable state.

During the boom of speculation and colossal financial leveraging, developers hacked out giant steps in the hillsides leading down to the entrance of the Lake Mead National Recreation Area, before the economic collapse of 2008.

Now the land stands scarred and undeveloped, ruining the view of the hillsides. The result of unbridled growth and speculation will be around for a while, I'm afraid.

If my memory serves me correctly, our real estate crisis started back in 2002, when the nation was recovering from the terrorist attacks on Sept. 11, 2001.

The spawning of economic recovery through high-leverage financing and interest-only sub-prime loans turned what was just a crisis into economic disaster. Those balloon payments came home to roost, starting the unstoppable domino effect, in 2007.

The housing boom across America created a Pandora's box for Las Vegas, either unbeknownst or perhaps flatly ignored by most. People were flocking to Vegas either to be entertained or buy real estate.

But how were they able to afford the weekends in Sin City or the purchase of a second or third home in the city where the streets are mythically paved with gold? My guess is they took advantage of those hot mortgage deals and raided the equity in their homes.

The Ponzi schemes people played on themselves in hopes of making a comfortable future for themselves have quickly collapsed — leaving families and businesses financially scarred much like those hills gutted until the next cycle of prosperity hits America.

The real question is, when will that occur? By my account, if we only look at the mortgage crisis, it could be another three to four years if homeowners and leveraged business can't get refinancing. Sub-prime loans and other risky leveraging were still being transacted in fourth quarter of 2007. My guess is that we have seen the height of the tsunami but have yet to imagine the carnage when it completely recedes.

Tim O’Callaghan, co-publisher of the News, can be reached at 990-2656 or tim.oc@vegas.com. He writes a regular blog at tocomv.blogspot.com.

Discussion: 7 comments so far…

By bdover

2/8/09 at 12:40 p.m.

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Exactly correct. LLV is a disaster facilitated by the City of Henderson. The city spent 33 Million of our taxpayer dollars for infrastructure construction like sewers and water. Now LLV is going down big time. One Henderson city doofus has assured us that "not one penny is in jeopardy", since they levy the 33 Million cost on the homeowners. Gee, there are already over 100 homes in LLV in foreclosure. Do you think that the remaining homeowners will cough up increasing surcharges while looking out over a golf course turned into pasture? No, they will decide to go into foreclosure, too. In the private business world, the Henderson goofs would be terminated immediately-somehow, however, I think they will remain sucking on the public trough, secure in the knowledge that unless you can prove intent, they cannot be prosecuted for stupidity. Sad....
By Danita

2/8/09 at 1:59 p.m.

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After living in Las Vegas for 39 years now and being a 3rd generation Nevadan, I have always been able to sense what communities were going to make it and the only one i know thats worth living in today would be the community within Maryland Parkway, Charleston, Eastern and E. Sahara. The rest are suffering from Capitalist greed and are stricken with poltergeism. You can sense what any particular part of Las Vegas will do financially if we strive for a natural way of living with a humble soul. Many just think because we have a lot of money or good credit, we can settle anywhere in these Truman Story type communities and be prosperous. After Reaganomics, if we didnt see what was coming, then we are just reaping Karmatic Justice today. There's so much more i can say on this subject but why should i, for we are all simply receiving our Darwin Awards right now, something no one can dodge today in our Great Comsic Universe
By Unk

2/8/09 at 2:09 p.m.

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I don't think this was a Ponzi Scheme. There was and still is demand. The product is still wanted. Buyers and Developers had 70 years of positive rising RE History backing their decisions. Traditional lending put risk in RE at max 20%, thus the standard down payment. The decisions made were not as uninformed and ridiculous as the Media now wants everybody to think.

The fundamentals have never really changed.

The real story here is who turned off the lending. Not only to Real Estate, but Industry and most Trade.

I think the real story here involves Bank Robbery (Bailouts), Wall Street and a handful of Bankers. The US Economy was pumped and now dumped. The "crisis" has the all the earmarks of junk bond dealers and other assorted white collar criminals. Bernie Madoff is not alone.
By jfnance32

2/8/09 at 2:44 p.m.

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Everybody has their own take on what happen.

I believe it started with Clinton. He pushed hard on financial institutions to lower lending standards so that minorities can get into homes.

Bush continue that social engineering and failed to push hard for new lending regulations.

Clinton also signed several financial laws that reduced degregulation and allowed sub-prime loans to placed into complex deviratives packages that poison the world financial markets. Bush did not try to reverse those laws.

Interest rates by the FRB were pressured to be very low especially after 9/11.

All this pumped up demand for housing and land. The speculators step in to make quick profits on flipping houses and land. The housing and land prices went up, up and up.

Mortage brokers were making riskly loans and selling them at a quick profit to Fannie Mae and Freddie Mac.

The bubble started to burst when gas prices went up. People were starting to get laid-off. The FRB was worried about inflation caused by higher energy prices and they pressured interest rates to go.

That was the beginning of the end. The ARM sub-prime loans started to go bust. The banks started to pull back on lending. Speculators started to leave the market. Foreclosed homes started to hit the market. Housing and land prices have been in a freefall ever since.

We should never return back to the boom era of speculation and loose lending standards.

We need to get back to stable and slow growth housing market...20% down...verify income.....good credit score...make sure that 20% down came from the person and not some secret loan.
By Babyboomer

2/8/09 at 4:03 p.m.

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JFnance said it all in the closing comments.I'll agree and leave it at that !!
By azsk8fan

2/9/09 at 8:45 a.m.

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Nance, I don't think the problem lies with the 'lowering standards' as long as the loan amount doesn't exceed a reasonable percentage of income. If lowering the standard meant making it easier with those who's credit wasn't so good, or giving a loan to someone who has little to no money down, that still wouldn't be a problem as long as the amount of the monthly mortgage is kept to an amount not unreasonable based on a persons income. I think the problem lies with those who took 'lowering standards' to an all NEW low by borrowing amounts that, based on a persons income, and irregardless of their credit history, even people with GOOD credit were not going to be able to meet. There's nothing wrong with trying to make it easier for people to be eligible to buy a home at all - it's just the application of the process that is at fault. I, personally, do not have the most stellar credit history - in my younger days I wanted it NOW - and that attitude got me in a lot of trouble - but I did buy a house with a payment I could make based on my income (it was actually cheaper than what I'd been paying in rent). And then I eventually sold the home and am once again a renter - haven't had credit in over 20 yrs. and don't miss it a bit - have a visa DEBIT and that's all I need to book a room, rent a car, book a flight etc. So in conclusion it's not always the policy that is at fault but rather how it's applied - and that's no presidents fault but rather the irresponsible banks and mortgage companies.
By SmartAz

2/15/09 at 7:33 p.m.

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Remember Bro, the last thing out of "Pandora's Box" is hope.

Tony

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