It will be some time before the skyline of the Las Vegas Strip is again dotted with construction cranes the way it used to be during the boom years. While a 20-year construction binge has come to an end (for now), this doesn’t mean that things have gone dead on the most dynamic street in America, not hardly. The emphasis now is on making the most of what we already have and that involves a continuous cycle of upgrades and improvements. Here are some examples of what is going on in a city that is supposed to be dead in the water. Between now and the end of the year the Bellagio will complete a $70 million project to upgrade and renovate every room in the hotel. Caesars Palace recently announced that the Centurion Tower will be completely transformed into a 180-room Nobu boutique hotel complete with opulent Japanese elegance and of course a Nobu restaurant and lounge for the finest Japanese dining in the world. A new project has also been announced that will create a retail, restaurant and amusement venue across from Mandalay Bay (spanning 11 acres) complete with the Skyvue Las Vegas Ferris Wheel at 475 feet with 40 viewing cabins. Last but certainly not least, the “Linq” has just been announced by Caesars Entertainment as a $550 million fully financed “open air” entertainment village right across the street from Caesars Palace. The completion date is 2013 and will also include a massive Ferris wheel aptly named the High Roller. All of these projects will generate hundreds and hundreds of construction jobs during the building phase and as many or more once they become fully staffed and operational. All of this is welcome news for the Las Vegas economy and the Las Vegas real estate market due to the fact that they both suffer from a number of ailments but none more prominent and significant than a currently weak job market.
Archive for August, 2011
According to a study just released by Trulia, the Las Vegas real estate market is #1 in the nation from the standpoint of purchasing a home as opposed to renting your residence. On the basis of this side-by-side cost comparison, southern Nevada is now considered to be the most affordable housing market in America. As perhaps the most dramatic indicator yet that housing across the entire United States has corrected severely (and some say over corrected at this point), in a staggering 74% of the 50 largest cities nationwide, buying a home is now cheaper than renting a home according to the Trulia analysis. Here in Las Vegas, the fact that newly purchased homes can be turned into rentals at rates that exceed the monthly mortgage by a handsome margin explains why investors are trolling our city with gusto and accounting the majority of all completed transactions. A positive cash flow investment in one of the most unique and exciting cities in the world is a hard thing to resist for real estate players, especially these days. Second home – vacation home buyers are also highly enthusiastic about purchasing Las Vegas homes at prices significantly below replacement cost and why shouldn’t they be? The moribund state of the Las Vegas new home market makes clear that current prices on short sales and foreclosures are so far below what builders can compete with that there is literally no point in trying. Thus far in 2011, sales of new homes across southern Nevada have been at rock bottom levels and are on track to set a new record low by years end. Taking all this together, you might be wondering why every person in Las Vegas with a decent job and a decent credit history isn’t finishing their rental lease and buying a home straight away. The answer to that question has nothing to do with data and everything to do with emotions. People in Las Vegas and indeed across the country feel highly uncertain about their future economic prospects in many cases. This explains why record low interest rates on mortgages have done so little to stimulate housing demand. Many people are worried about their jobs, worried about their future and in no mood to take out a 30-year loan despite the fact that the cost of money is incredibly cheap. Even incredibly cheap money doesn’t look tempting if you are uncertain about the ability to pay going forward in a very cloudy economic environment. It should also be mentioned that accumulating a 20% down payment in this economy is not the easiest thing to do for many people either. All this explains why cash is king and why the majority of homes scooped up at fire-sale prices in Las Vegas are bought by out-of-state investors rather than local owner-occupiers. It will probably continue that way for awhile longer still.