David Streitfeld of The New York Times reports:
Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.
Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more.
Las Vegas is trying to recover by building what it does not need. It is an unlikely pattern being repeated in many of the areas where the housing crash was most severe.
I can't see Vegas recovering unless the rest of the country recovers. I don't understand building because of what Alan Greenspan would call "irrational exuberance".ReplyDelete
Here's some more from the article that makes you wonder just how stupid Americans are. Keep in mind most of this is happening in cities with no sustainable water supply:ReplyDelete
"Brent Anderson, a marketing executive with another Southwest builder, Meritage Homes, said it bought 713 lots in stricken Arizona last year, and was on the verge of starting construction in a new Phoenix community called Lyon’s Gate.
“We’re building them because we’re selling them,” Mr. Anderson said. “Our customers wouldn’t care if there were 50 homes in an established neighborhood of 1980 or 1990 vintage, all foreclosed, empty and for sale at $10,000 less. They want new. And what are we going to do, let someone else build it?”
"All of this goes contrary to the conventional wisdom, which suggests an improved market for builders is years away. Nationwide, new home sales at the beginning of this year plunged to a level below any recorded since 1963, when the figures were first officially tabulated."
I haven't been to Vegas, but I think I may safely assume that there is another facet to the problem: the houses built during the "boom" are often junk.ReplyDelete
Ask anyone who built one or bought one. I estimate that 50% at least were junk and/or built by inexperienced and incompetent people...as the city inspectors were ok'ing everything they saw and didn't see.
Exactly how high do we expect the price of junk to recover to?
No doubt, Montag. I've seen some of the boom buildings in San Francisco, San Jose and Jacksonville, Florida. Not exactly quality workmanship. Given the pace of building in Las Vegas, it's probably worse there.ReplyDelete
Believe it or not, the building codes in Las Vegas were very strict during the boom (I was born and raised there). I know this is is blog where people should voice their opinion, but most opinions are like a$$holes....ReplyDelete
I never understood the huge boom of building cookie cutter houses. There was once even a commercial where a man walked into the wrong house because they all looked the same.
I knew the housing mortgage market bubble was about ready to burst when a lender gave my brother a loan on a house, the same house I grew up in. Five years later, he re-financed the home with a loan shark on an adjustable rate mortgage when the property values doubled to purchase a Harley. He now rents a room from a friend.
Nevada is now #1 in unemployment, topping Michigan. At least Michigan isn't the best at unemployment any more.