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Monday, September 10, 2007

MMI: The Vegas Temptation

by Tanta on 9/10/2007 09:38:00 AM

Not only is it impossible to write about Las Vegas's real estate problems without engaging in casino-talk, it also appears irresistible to talk about real estate speculation as if it were only a form of slot-machine playing but with bigger tokens. The former might merely be annoying, but I wonder if the latter mightn't be causing a certain conceptual problem. For one thing, it erases the complicity of those who asserted that real estate price appreciation is a matter of "fundamentals" and the land that they don't make any more of and demographics and so on (Hi, NAR!), leaving the impression that speculators thought it was all just a matter of probabilities and chance, like throwing dice. However good an idea it was to listen to NAR, the fact is that they and a lot of their stenographers in the press were claiming that RE appreciation was not random or chance. Treating those failed speculators as mere crap-shooters now, it seems, is kind of convenient for the "House" experts.

This reflection arises from this Chicago Tribune article on Las Vegas's RE woes, which also informs us that:

Gamblers willing to bet on a property or two were rewarded with almost immediate payoffs. The guy who sold Karen Lewis her house for $435,000 in June 2006 raked in a $200,000 profit after holding it less than two years, she figures.

"Houses were really cheap. Loans were really easy," said Lewis, who moved from California. "These were investors who didn't ever live here. Now, they're totally walking away." . . .

From her front door, Lewis stares across Arcata Point Avenue at the for-sale signs on two abandoned houses in foreclosure. The house next door stood empty for months as well, until a couple of out-of-town cops started using it for an occasional vacation getaway.

Between 15 percent and 25 percent of the homes in her 3-year-old gated community are for sale, she estimates, many behind on loan payments and an alarming number deserted, their lawns burnt out and trash untended.
Does anyone else want to know what "a couple of out-of-town cops started using it for an occasional vacation getaway" means? You know, I'm not sure I do.