Real Estate: A Long Suit in Vegas?
MADELEINE BRAND, host:
I'm Madeleine Brand.
For many years one of the hottest housing markets was in Las Vegas. Your chances of finding a house were about as good as beating the house. But now interest rates are up, sales of existing homes are down, and real estate experts are predicting that Vegas will soon be a dead zone.
NPR's Alex Cohen has the story.
ALEX COHEN reporting:
People in the Las Vegas real estate business love to tell stories about 2004. Interest rats were low then and the appeal of Nevada's warm climate and lack of state income tax drew investors and home buyers in droves. Those days it wasn't unheard of for buyers to pay in cash, for a property to attract up to 30 bids on its first day listed. Bob Hamrick is president of Coldwell Banker Premier Realty.
Mr. BOB HAMRICK (President, Coldwell Banker Premier Realty): Two years ago, when we would go to a seller's property and say Mr. and Mr. Seller, your property is worth $400,000, they would say list it for 450. And a week later it would sell for 465.
COHEN: Homes are staying on the market a while longer now, but Hamrick still radiates confidence. At the mere mention of the word bubble, he brandishes a recent magazine article charting job growth in the U.S. over the past five years. Nevada leads the country with 19.3 percent.
Mr. HAMRICK: One of the keys that Las Vegas brings to the table is job growth. It's much more difficult for property values to decrease when you've got new people coming to our marketplace who have to own real estate, who have to buy, who have to live somewhere.
COHEN: But others are much less sanguine. At the office of Realty ONE Group, salesman Kurt Lehman mulls over another set of charts and graphs, ones that show Las Vegas home sales down nearly 40 percent compared to a year ago.
And there are nearly eight times as many available properties here now as there were in the heyday of 2004. Many of those, Lehman adds, are foreclosures, a result of people who took out adjustable rate or exotic mortgages and can no longer afford them.
Mr. KURT LEHMAN (Agent, Realty ONE Group): The number of available listings is up considerably, probably 40 percent, of a year ago. Interest rates are floating up, which is having an impact. But we have too much inventory and not enough buyers. And there's a buyer mentality that says hold off, maybe prices will come down.
COHEN: Most sellers, he says, are reluctant to drop their prices, especially knowing what sort of offers they might have gotten on their homes not too long ago. Instead, Lehman adds, many sellers are desperately trying to cling to their original list prices by throwing in added incentives.
Mr. LEHMAN: Like, you know, new carpet. We'll make an allowance for new carpet or all new appliances or put a pool in at this price.
COHEN: Lehman says realtors with an upbeat outlook are just trying to put a positive spin on a market that looks increasingly grim.
Mr. LEHMAN: My prediction? I don't see it crashing. No, I don't see one huge bubble that's going to pop. I see a lot of air pockets. So a lot of adjustment has to happen.
COHEN: Lehman estimates that home prices will drop at least another 10 percent before the market normalizes. In the meantime, the one thing he and most other realtors do seem to agree on is that right now Las Vegas is a buyer's market.
But not for every buyer. The median price for a home in Sin City now stands at $310,000. And that's way more than Perry Sunberg(ph) can afford. Sunberg teaches second grade in downtown Las Vegas. His wife works at a domestic violence shelter. Sunberg says they've been house hunting for over a year.
Mr. PERRY SUNBERG (Resident, Las Vegas): It's kind of like looking at a menu and then not ordering anything. It's getting very frustrating.
COHEN: Sunberg's frustrations are echoed by fellow teachers, nurses, police and firefighters, who say they can't compete with those working in the gaming industry.
Mr. SUNBERG: I've had friends ask me, you know, should I move there. And I say only if you want to be a valet at a casino. Only if you want to be a dealer. If you want to be a teacher, no. Go to Tennessee, go to Kentucky, go to somewhere where you can actually get a job and a house.
COHEN: Of course, if the city can't retain employees, that could make Las Vegas an even less attractive option to potential buyers. But there's no need to panic just yet, says Devon Reese(ph), president-elect of the Greater Las Vegas Association of Realtors.
Reese points out that earlier this month, state legislators drafted a bill to build affordable housing on federal land. As for the slowdown in home sales, Reese says it's all about perspective. Compared with the past two years, the market may look dismal, but compared with the past 20 it looks quite normal.
Mr. DEVON REESE (Greater Las Vegas Association of Realtors): I've been here all my life, and I've seen it go through its peaks and valleys. And right now we may be down a little bit, but I can't imagine it being this way for very long. It never has in the past, and I really don't anticipate it to be that way in the future.
COHEN: Alex Cohen, NPR News.
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