There are quite a few U.S. cities that are complete and utter economic disaster zones in 2010 (Detroit for example), but there is something about the demise of Las Vegas that is absolutely stunning. In recent decades, Las Vegas has become a symbol for the over-the-top affluence and decadence of America. But now it is a microcosm of the economic nightmare that has gripped the entire nation. When the subprime mortgage crisis stuck, no major U.S. city was more devastated than Las Vegas. When the recession went from bad to worse, Americans decided that they really didn't need to gamble so much and casino revenues plummeted. Suddenly unemployment started to increase dramatically in Vegas and even today it continues to soar. Like so many other cities that are highly dependent on tourism and entertainment, Las Vegas has gone from boom to bust. Local officials are hoping that the worst will soon be over, but the truth is that the worst is yet to come. As the U.S. economy continues to unravel, average Americans will be spending what little money they do have to put a roof over their heads and to feed their families. The truth is that the glory days of Las Vegas are over and they are not coming back.It's been obvious that the town has been struggling. I've seen that in the room rates which are probably as low as I've seen them in 10 years, and I'm frequently offered all kinds of special deals. That's good news for leisure travelers, but it sounds as though some of those many Strip hotels could find themselves going competely upside down if the economy doesn't begin to turn around soon.
Already, the number of unemployed in Las Vegas is reaching unprecedented levels. Unemployment rates for the state of Nevada and for the city of Las Vegas both set new records during the month of April. In Las Vegas the unemployment rate in April was 14.2%. For the entire state the unemployment rate was 13.7%....Elliott Parker, an economist at the University of Nevada, Reno says that the record-setting unemployment numbers in Nevada are just part of a larger trend...."Nevada has been losing jobs since March 2008, and we are continuing to do so."But where the state of Nevada and the city of Las Vegas have really been hammered is in the housing industry.It is estimated that a whopping 65 percent of all homes in the state of Nevada are underwater.Let that sink in for a bit.65 percent of all home owners with a mortgage in the state of Nevada owe more than their homes are worth.Talk about an implosion.Nationally, the number of homes that are "underwater" is about 24 percent. That is an all-time record for the entire nation, but it doesn't come anywhere close to the nightmare that is unfolding in Nevada and in Las Vegas.And the number of foreclosures taking place in Nevada is absolutely breathtaking.According to RealtyTrac, Nevada is still ranked number one for foreclosure filings. In fact, one out of every 79 Nevada homes received a foreclosure filing in the month of May alone.Nevada’s foreclosure rate is now five times the national average.By just about any measure, the economy of Nevada is a complete and total disaster.A reader recently sent an email describing the economic horror that is unfolding in Las Vegas. No matter what you may think about the city, the truth is that it is sad to see any great U.S. city fall to pieces like this....Las Vegas is a goner. The homeless population is out of control. The real estate is far worse than I have seen in the media (no surprise there). The towers of condos are ninety five percent vacant with zero activity. The streets and parks are in decline. Local governments are busy making cuts and fighting unions. When I ride the streets they are deserted, a big change from 2006. The major casino companies have all but moved the casinos out of Nevada. Rooms and restaurants have been closing for years, even while they finished the new projects. The entire town is a skeleton staff providing substandard service and decaying properties. I still work for one of the majors which is in bankruptcy. When the next wave hits there is nowhere to cut. It will be a game of dominoes with the Wynn properties the only ones left standing. I see the ninety nine cent breakfast making a comeback. The bullet train a day late and a few billion dollars short.
The new City Center properties have just opened in the last few months throwing thousands more rooms into the city's inventory. That will help keep prices down for everybody.
The convention business has been a big part of Vegas' income stream and Obama nearly killed that earlier in his reign with negative comments about the town on two different occasions. Businesses were afraid that holding conventions in Vegas would be seen as unnecessary extravagance and they didn't want to find themselves in the crosshairs of the Democrats. If the convention business doesn't recover, it may not matter what happens anywhere else.
Instead of a thriving, growing town, Vegas may end up being a narrow Strip of lights and entertainment surrounded by poverty and failure.
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1 comment:
I’ve lived in Las Vegas for 17 years and you couldn’t pry me out of here. As others have noted, this article is completely amiss.
Las Vegas went through a boom. Too many people moved here. Too many people bought investment property here. Too many new hotel rooms were built. Houses were bought at 300% over normal value.
People who bought during the boom were unwise and thought it would last forever (no boom lasts forever). Those of us who have been here forever saw the boom and bust coming from a mile away. (I sold my house at the top, have been renting, and now am looking to buy again. Sell high, buy low).
Note: I realize that a house is worth at any given time what people are willing to pay for it. Realistically speaking, homes are closer to actual (long term) value right now.
First of all, visitor numbers are up for 8 straight months. Visitors write us when they get home and say “I thought it was going to be a ghost town… and it was jammed”. Don’t take my word: Check out video from the past couple of months:
http://www.youtube.com/watch?v=8tazVAtCHxk (random crowd shots a couple minutes into the video)
We are doing 2004 numbers in both numbers of people actually employed and in the number of visitors. 2004 was considered to be a banner year. We simply had too many people move here for construction jobs. Now they are leaving.
The high unemployment is due to construction workers who are still in town. They will eventually leave as no new construction is on the horizon and their unemployment isn’t going to last forever. When they go, you’ll see the unemployment rate drop back to around the national average here.
I’d like to know where these deserted streets are when I’m out sitting in traffic. Don’t I wish. And, the streets and parks are in fine shape, thank you very much. I can’t remember the last time I saw a pothole driving around town.
Thousands of new rooms were added to Las Vegas this year, and the opening of Cosmopolitan later in the year will add 3000 more. The only room closures were a few hundred at Binion’s and The Sahara. So, anther serious error in this article.
Restaurants are opening all the time. I know, because we get the press releases. A new restaurant at Town Square (south end of The Strip) just hired 250 people.
So, all the hard data plus empirical data are at odds with what this article presents.
In fact, the housing “crisis” here is making Las Vegas a VERY affordable place to live and do business. Homes are dirt cheap. Commercial rents are dirt cheap. Entrepreneurs who can do their business from anywhere they have a computer and cell phone are coming starting to move in slowly but surely as the word gets out. And since they come here employed, they aren’t driving up the unemployment numbers.
I am a betting man, and if the author would like to contact me and place wagers on the movement of statistics noted (visitor volume up, unemployment numbers down, number of rooms open and other hard stats that we can revisit in 12 months), by all means contact me. I’ll be happy to take your money!
Ted Newkirk
Managing Editor
Las Vegas Insider Vibe
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