One Man’s View:

Las Vegas is still a good investment

Monday, March 2, 2009 | 2:54 p.m.

Tim O'Callaghan

Forbes: Las Vegas is America’s ‘emptiest’ city (2-16-2009)

For many of us calling Las Vegas home, it is no surprise that Forbes magazine named it America's "emptiest" city. A part of Las Vegas' unprecedented growth was built on speculation — that is speculation the building boom would last many more years.

Many people speculated by buying multiple homes in hopes of flipping them for a nice profit. How could they resist, drunk on the Kool-Aid whipped up in the sink of the media-spun hyperbole? The house- and land-flipping overinflated the values of real estate, whether commercial, residential or otherwise.

The economic train was certainly chugging away with a full head of steam generated by coal that was no more real than the houses built of cards by overzealous and profit-drunk builders. It wasn't just the builders that were driving the economy under the influence of false prosperity, either. Local governments were also fairly tanked up, too, creating huge parks and infrastructure with future dollars in the form of development fees, while older parks and infrastructure lost priority.

Yes, the Las Vegas Valley has the best of the best anywhere, but it's now waking up from its unbelievable binge at the bowl of tainted punch. The skeletons are visible in the forms of empty building pads, lifeless steel structures and the barren wood frames of unfinished homes.

What about all those empty houses in Las Vegas pointed out by Forbes?

I say, so what? No big deal, unless you own one or two of them. I still believe Las Vegas is a great buy, especially now that some sense of truth in home values is returning to the market.

Some say Las Vegas will never be the same again. To that, I wonder, compared to when? Three years ago? Perhaps not, but it's feeling a lot like 1989 again, and to a native Nevadan, that's not all bad. Life seemed a little simpler then, didn't it?

The construction boom has ended, forcing the skilled and unskilled labor forces to leave to seek greener pastures in other job-barren states. This is not urban flight, either, because Las Vegas is more suburbia than metropolis.

Las Vegas will recover at some point. Folks tired of bitter winters will continue to look at Las Vegas for retirement, because there will be great deals on homes to be found and the weather is marvelous.

If you look close enough, you will find many positive aspects to this mess we're in. We will have more time to address the issue of water and where to get it. It will give us more time to come up with better energy solutions, too. These are important issues in light of the effects of the drought plaguing the West.

It is disturbing enough to think about Lake Mead drying up, but before that happens, Hoover Dam would lose is capacity to produce energy. That is an entirely different crisis brewing.

Still, unlike the naysayers, I know the Las Vegas economy has not totally derailed in a smoking heap. Sure, we are going to suffer for awhile, and many Nevadans will be out of work. But there will be many more who will rise in the new economy.

Now is the time not only for Las Vegas but all of Nevada to start sketching and molding what it wants to be after this economic meltdown.

Las Vegas doesn't have to be the emptiest place in America. What started out as a dusty watering hole on the Union Pacific Railroad was actually a desert paradise with flowing artesian wells that sustained many settlers passing through by the wagon full. Just as it sustained ancient native Americans with the gift of life in a hostile environment, Las Vegas will continue to provide for those who are willing to brush the dust from themselves and pick up a shovel, hammer, trowel or perhaps dig into the ol' cookie jar, if it isn't already empty, to help in this remodeling of our economy.

Perhaps once we get our train moving again, we should slow down enough to pull up a neighbor. Then, in time, we may be the fullest city in America again.

What's that saying? The community that rebuilds together, prospers together, or something like that.

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

Discussion: 11 comments so far…

By SmartAz

3/2/09 at 5:34 p.m.

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I seem to have missed the "empty" part of Las Vegas.

I was born in Las Vegas and a few years ago moved away, but I visit often. A trip to The Strip took me over an hour to get into a parking lot. The sidewalks and hotels were packed with people.

Tourists are still coming to town, but those who are counting the visitors shouldn't be greedy. Pay attention to those who are in town and treat them well. Not only will they return but they might bring friends. They might even stay and buy a home or two.
By andyv

3/2/09 at 5:38 p.m.

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After the "irrational exuburance" in the housing market, who is left to pick up the pieces but the folks that actually live here. The 94% that played by the rules, bought the house they could afford and made their mortgage payments on time are now being asked to save the ones who gave in to the greed of the moment, based on the premise that financial firms that fueled this process "are too big to let fail."

The free market system's "risk/reward" theory has been turned on its head and replaced by a system where we "privatize" profits and "socialize" losses. It's Gordon Gecko's "Greed is good" mantra to the nth degree.

Number one in home foreclosures, highest precentage of "underwater" homes, massive state budget deficit...etc. Despite all the challenges we face, I still think my adopted home (I have lived here now for almost 11 years. I am almost a native) is a great place to live. Half-empty...half-full...no matter what national publications like "Forbes" might say about us, its for us to determine what's ahead for this town we call home.
By sarahpacatte

3/2/09 at 7:26 p.m.

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You know, Nevada is hard to beat. Being a native Californian, having lived in Nevada for 17 years, I long to return. Home means NEVADA. I've never not been able to find work in Nevada, and I don't see it's economy failing like I do ... Californias!

Sarah Pacatte
By Tim O'Callaghan (Staff)

3/3/09 at 7:28 a.m.

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SmartAZ said,
"Tourists are still coming to town, but those who are counting the visitors shouldn't be greedy. Pay attention to those who are in town and treat them well. Not only will they return but they might bring friends. They might even stay and buy a home or two"

I believe you are right about bringing friends, but, I would caution against buying more than one house, that is one oar that helped get us get into turbulent waters.
By Tim O'Callaghan (Staff)

3/3/09 at 7:45 a.m.

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andyv said,
"Number one in home foreclosures, highest percentage of "underwater" homes, massive state budget deficit...etc."

I'm sure you recall my predictions of this mess on my news radio program on KNEWS 970 a few years ago. I recall people calling me an "Alarmist" whenever I talked about the bubble bursting.
By jfnance32

3/3/09 at 7:53 a.m.

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If you are:

Renting
Have decent credit
Have some money for a down payment
Have solid income and not fearful of losing that income
Plan to live here for at least 10 years

Then you should buy a home either this year or next year.

Housing prices will continue to fall because people are still getting laidoff. This adds supply via foreclosures and weakens demand. Layoffs most likely will continue until fall 2010.

Interest rates are low but are already starting to go up. Once the $3 to $4 trillion in new Federal bonds start hitting the market in the next 2 years then there will be heavy pressures for interest rates to go up.

So one needs to factor in how much more prices will go down vs. how much more interest rates will go up.

The next two years will probably be the best time to buy a house.

That is if you can keep your job/income.
By Tim O'Callaghan (Staff)

3/3/09 at 7:59 a.m.

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Nance,
Well said. But, you do realize there are a few really BIG "If"s in that statement, don't you?
By OhSee

3/3/09 at 12:09 p.m.

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Let's not be too quick to throw Mr. Forbe's observations out of the window.
Joe A.
By stevem

3/3/09 at 12:53 p.m.

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all the people that lost their homes to foreclosure are not going to be able to buy a house in at least 5 - 6 years.

now add all the people that have lost their jobs.

now add all the baby boomers that lost the equity in their homes and 401k that now have to work another 5 years.

now add the month after month decline in visitor volume and you'll see that it's never going to be like it was from 2000 - 2006.
By Tim O'Callaghan (Staff)

3/3/09 at 2:09 p.m.

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stevem,
I don't think 2000-2006 was real. Perhaps, surreal, with the boom in the economy that was more facade than structural economic growth.

One day I may write about my experience re-financing my mortgage in 2003. That was surreal!!

I think I've pointed it out a dozen times, so here it is one more time. Las Vegas boomed on the home equities of millions of Americans over inflated home values. In the same manner as the auto manufacturers prospered selling folks Hummers, other large capacity SUVs or even economy cars.

Folks emptied the equity from there homes as though it were free money. Buying trips not only to Las Vegas but more exotic spots too. 2002 to 2008 was a period of great excess.

What's the saying? Pigs get fat and hogs get slaughtered. Unfortunately, millions of Americans are looking at the front gate of the slaughter yard.
By TNani

3/29/09 at 1:05 a.m.

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As long as the a**wipes (like the Baptist Pastor and his wife) think that Vegas needs to be "sin" city, it will always suck.

I hated being in the Vanderburg elementary school parking lot hearing the Korean mother of a second grader arranging a "date" and offering to show up in a schoolgirl costume for an additional $100.