LAS VEGAS: A TALE ABOUT THE BOOM/BUST CYCLE

NO MORE MORTGAGE news about Las Vegas.

The lesson to learn here from NO MORE Mortgage mirrors the parable of the grasshopper and the ants. During good times, the silly grasshopper live high on the hog, with no care for tomorrow. On the other hand, the wise ants saved up for a rainy day, which surely came. When that happened, the grasshopper, who had no safety net, was reduced to begging for a handout from the ants, who were kind enough to take him in and feed him from their large store of reserves.

The recession has jolted Las Vegas in a fundamental way. Like other job-creating cities in the Sunbelt, Las Vegas saw its population, income levels and housing prices surge over the past decade. And like those cities — including Phoenix, Orlando and San Diego — it’s been battered in the bust.

But by many measures, Las Vegas’s rise and fall has been more dramatic than most. Last year, Clark County’s population declined for the first time in more than two decades. More than 10,000 people left Las Vegas between July 2007 and July 2008, according to Keith Schwer, director for the Center for Business and Economic Research at the University of Nevada Las Vegas. The unemployment rate in the metropolitan area tripled from 4% in May 2007 to just over 12.3% in June 2009, higher than the national rate of 9.5%. And after the median price of existing homes rose by 122% between 2000 and 2006 — more than double the national rise of 49% — sale prices fell by 50% between last year and this year, nearly wiping out the entire gain of the boom times.

The big bet that fueled Las Vegas’s growth for so long is the same one that’s now going bad: tourism. Vegas expanded into the lucrative market for business meetings and conventions, building massive exhibition halls and new hotels and casinos. Construction jobs multiplied and the housing market bubbled over. Now that tourism and business travel have collapsed, Vegas has little else to cushion the blow.

For the rest of the story visit:
http://online.wsj.com/article/SB124804383363363397.html

Douglas M. Rosborough
NO MORE Mortgage

Related posts:

1. MINUTES OF THE FEDERAL RESERVE JUNE 24 MEETING:
2. Foreclose or Rent?