Bumper Crop of New Casinos
LAS VEGAS – Mortgage-loan officer Alon Natanel recently got rid of his convertible BMW for a more affordable SUV.
Natanel said the new vehicle better suits him now that he's a father – not least because of what the slumping Las Vegas housing market has done to his income, which fell from six figures to four.
“You cannot put a baby in a convertible,” the 32-year-old said. “Especially when you cannot afford the payments.”
Nevada's nation-leading Las Vegas foreclosures rate is squeezing real-estate professionals like Natanel. Yet the ice-cold housing market hasn't slowed the steady stream of inbound planes laden with gamblers and other tourists, and that gives the economy – and people like Natanel – a glimmer of hope.
“It's going to turn around,” Natanel said. “It's just a matter of time.”
One think tank already is predicting a housing shortage by late 2009, assuming workers flock to the state to fill jobs created by billions of dollars of new construction on the Las Vegas Strip.
“We're merely at the bottom of one cycle and heading back up on another one,” said Jeremy Aguero, one of Applied Analysis' principals.
He points to the stream of Strip mega-resorts planned to go up over the next few years, from Las Vegas Sands Corp.'s $1.8 billion Palazzo, opening this month, to Boyd Gaming Corp.'s $4.8 billion Echelon in 2010.
In all, the surge is estimated to add more than 40,000 hotel rooms by 2012 and create around 100,000 direct and indirect jobs, according to Deutsche Bank.
“Typically, people read the papers,” said economist Jim Shabi of Nevada's employment department. “They know when Vegas is building casinos and they come to town to find jobs.”
According to Shabi, specialty trade contractors employing such workers as roofers and siders shed nearly 14,000 jobs in Nevada's residential construction sector in the second quarter from a year earlier. But commercial sector trade jobs rose 5,600, fueled largely by construction on the Las Vegas Strip.
Benito Del Toro is an example. The 28-year-old concrete-finisher foreman arrived from Mexico 10 years ago to work in the busy homebuilding industry.
When his hours slipped below 30 a week this summer, Del Toro joined the Operative Plasterers and Cement Masons International Association, which quickly put him to work on a new casino tower. His hours and pay more than doubled.
“More hours, more job, more benefits. It's better,” said the husband and father of a two-year-old. “Why would I go back?”
In the wider economy, the housing slowdown has hurt.
For the first time since after the Sept. 11, 2001, terrorist attacks, Nevada is facing a major downturn in its retail sales tax collections, prompted by falling sales of autos, furniture, durable goods and homebuilding materials.
Home sales in the Las Vegas area were down 37 percent in November from a year ago, with median prices down 11 percent, according to the Greater Las Vegas Association of Realtors.
Meanwhile the supply of single-family homes and Las Vegas condominiums rose nearly 19 percent to 29,484, as foreclosed homes seeped back onto the market.
RealtyTrac Inc. counted 6,694 foreclosure filings in Nevada in November, up 167 percent from a year ago.
At the Sedona Style furniture shop in Las Vegas' Safari Business Park, four furniture stores within a block have closed in the past year, according to owner Ted Duke. He said his $50,000 to $75,000 in monthly sales is “half what it should be.”
“Six months ago all the forecasters were predicting the downturn in housing would be over in '08. Yesterday they were saying late '09,” Duke said. “Everybody's worried.”
LeaseTrader.com, the Web site that allowed mortgage-loan officer Natanel to ditch his $1,200-a-month lease and find a vehicle for $500 a month, said Las Vegans are downsizing to cheaper leases on cars to ride out the market trough.
“What you're seeing in Las Vegas, you're seeing all over the U.S., especially the bigger cities in south Florida, like Miami, the Fort Lauderdale area, as well as on the West Coast,” said the site's founder and chief executive, Sergio Stiberman.
The company expects to handle 35,000 lease transfers this year, up from 20,000 last year. In Las Vegas, 20 percent more people than a year ago are swapping high-cost leases for lower ones.
“People are saying, 'Let me just cut down on expenses, let me take it easy for a little bit, and when things get better, I know I'll be able to go back and get another vehicle,'” he said.
Some real estate agents haven't been able to ride it out.
After doubling in number from 2003 to 2007, membership in the Las Vegas Realtors was down to 15,825 at the end of November, from the peak of 17,557 in September 2006.
Ben Correa, a 35-year-old Realtor, quit a job as a television reporter three years ago after hearing stories of the market surge just as it receded. After working six days a week full time, he's managed to cut 10 deals this year – enough to pay the bills. Still, he's optimistic.
“I missed the wave pretty much,” he said. “But I'm waiting for that other one, which I believe is around the corner once we get through these foreclosures.”