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Housing: Naturally, when there was an opportunity for greed and mortgage fraud with all those crazy home loans, Las Vegas was out there in front, and now it's usually cited as the number one foreclosure state. In the 2003 - 2004 time period Californians (that's who the papers always blame) came here and bought up real estate to flip, including brand-new houses and condos on the Strip yet to be built.
Now they are walking away from their mortgages and deposits, so there are foreclosure properties that have never been lived in, and the completed condo projects don't know how many of their sold units will be closed on. I just hate Dubya's plan to pump billions into the new home industry when there are so many completed units in inventory.
In the wake of those loan scams are ones where someone 'buys' your house to save it from foreclosure and you make your payments to him, but he doesn't pass them on to the bank like he says he will, he just takes the money and when you get kicked out by the bank, you're out of luck. Sometimes he 'sells' it to someone else, so he gets not only what you paid him, but what they pay him, and the new buyer doesn't rally own it, the bank does. There are a lot of people renting houses that get foreclosed on and find themselves homeless without the cash reserves to rent a new place. And they abandon their pets because their new rental doesn't allow pets, or they move out of town and don't want to take them on the road.
Several of the high-rise condo projects that threatened to Manhattanize the Strip (meaning you would have to look straight up to see the sky) have gone bankrupt before the ground was even broken, so that's a good thing. Donald Trump just opened a new condo project tower, but is holding off on building the second tower. Ivana Trump had a condo project that went belly up about 6 months after it was announced back in 2003 or 2004. I'm sure The Donald had a good laugh over that.
Trump's tower on the left:
Illegal Immigrants: This statistic surprised me: 100% of the people employed in new residential construction were Hispanic. Nobody is sure how many of them were illegal, but the estimate is between 60 and 80%. Many of them are returning home to Mexico, and this is affecting the businesses that catered to them: grocery stores, payday loans, that kind of thing. Some of them are trying to stay here so their children can learn English and have a better life, but they are having a hard time of it.
Casinos: The casinos are laying off employees, some of them announcing it, others not filling openings that come up. We can see cutbacks in the offers we get, and the slot club benefits are less. Some of the expensive shows are offering cut-rate tickets to locals, which is a small benefit, and Mr. Troutbend has a locals pool pass to the pool at Mandalay Bay so he doesn't have to be a guest at the hotel to get in to the pool.
For a while they thought this February showed some growth over last year, but then they realized it was because this is a leap year and that extra day accounted for the growth.
I always thought that Las Vegas was recession-proof, and if a person wanted to make the move here, there would be jobs, but this is no longer true. A large proportion of the economy depends on Californians driving here for the weekend, and with higher gas prices and all that, there are less of them coming. The fly-in tourists are fewer, and several big conventions have moved to other cities because the hotels got greedy and jacked up the room rates for business travelers and charge a lot for business-related expenses.
Some huge projects that will add thousands of new hotel rooms (some of them in those condos) will be completed in the next two years, and it will take a while for the demand to catch up. Some experts remind us that there were times in the past that pessimists said the Strip was overbuilt, but demand caught up, so they are sure this will happen again.
We were at a state park the other day that was one of those divorce ranches in the 1940s, when people came and stayed 6 weeks to establish residency and get a Nevada divorce. The business ended because various states around the country loosened up their divorce laws.
Now, Las Vegas no longer has a monopoly on gambling: you see more and more Indian casinos and other legal gambling showing up in states all over the country, so people don't have to come here to gamble. Several of the large casinos have built replicas of their Vegas venues in China, so the big gamblers from there don't need to make the long journey to the USA to get the experience and spend a lot of money. For now, the US government has banned Internet gambling for money, and you can bet the casinos here are spending a lot of PAC money to keep it that way, but there is always the possibility. They also invest heavily in opposition to local casinos in states other than Nevada.
Of course, if a new casino gets built in Illinois or California or Mississippi, the big guys from here try to make sure they get to run it, thereby keeping their fingers in all the pies.
State and Local governments: Because of less sales and other tax revenue, the state has a $900 million (that's almost a billion) shortfall this year, and they're cutting programs right and left. This is not good news for the education system where 95% of high school students cannot pass an easy standardized math test, and the teacher shortages are massive.
Health care here sucks because there are lot of plastic surgeons but try to find a primary care doctor that accepts your insurance. And the privately owned hospitals are rated very very low in quality of care and service. Don't forget that greedy doctors running several endoscopy centers exposed 40,000 people to HIV and hepatitis through re-use of syringes and vials of single use medicine. I thought it was really crappy when several hospitals in California announced they are moving some of their liver transplant centers to Las Vegas to treat all the new hepatitis sufferers they expect to have here, not an 'if it will be needed' situation, it's a 'when.' Thank goodness I get all my health care in Colorado.
I expect it will still be worth the trip to see the excess of Las Vegas, and all the glitz, and celebrities probably need a place to waste their millions of dollars, but it's going to be interesting to watch how all this plays out in the next couple of years.
You can tell I am looking forward to driving out of here tomorrow. Gas is $3.47 for the cheapest unleaded in case you wonder.
