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Opinion
Apr. 28, 2008
Copyright © Las Vegas Review-Journal

EDITORIAL: Affordable housing

It's 2004 in Las Vegas all over again

Remember when home prices were swelling like a cleanup hitter on steroids? Just three to four years ago, the hand-wringers of the political class were mourning the death of affordable housing in the Las Vegas Valley. The days of blue-collar couples buying a sparkling-new, three-bedroom piece of the American dream were ancient history, they moaned.

Surprise -- it's 2004 all over again. The plunging housing market has sent prices back in time, to the pre-bubble days when detached homes sold for less than $100 per square foot.

It's true. Working men and women who were convinced only two years ago that they'd never be able to afford a new house in Southern Nevada now have an abundance of choices around town. In the northwest valley, one builder is selling homes from $149,900. In the northern valley, homes with more than 2,000 square feet start at less than $200,000. Homes with more than 3,000 square feet can be had for a little more than $300,000.

Naturally, builders and real estate agents are doing all they can to tout this buyer's market. "These prices won't last!" they warn.

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    • They're just a bit off the mark. It's not that these bottomed-out prices won't last. It's that they can't last.

    The land-supply pressures that helped drive home prices up in the middle of this decade haven't gone away. The valley is still an island of private property in a sea of federally controlled land. Yes, the Bureau of Land Management occasionally auctions property to the highest bidder, but even in this depressed market, raw land prices are still much higher than those of other Western cities. In the fourth quarter of 2007, the average sale price of undeveloped land away from the Strip was $939,000 per acre.

    So how can builders who, in some cases, paid much more than that for their acreage offer new homes for less than $200,000? How could these prices have returned when inflation has sent the cost of building materials such as cement, copper and plastic through the roof tiles?

    It's painfully simple. Builders are giving the land under their houses away and, in some cases, they're taking a loss on their labor and lumber costs.

    Home builders have their own bank loans and property taxes to pay. So companies are clearing out their existing inventory, taking whatever they can get for their product now in order to survive until the housing market recovers.

    When businesses lose money with every transaction, they go out of business. Just as high fuel prices are sending airlines into bankruptcy, low home prices are killing the home building industry and all the jobs that depend on it.

    These prices can't last. Eventually, the valley's bloated supply of new and resale homes will shrink, robust job growth will return, and demand for housing will rise. When that happens, builders will resume raising new subdivisions from the desert floor.

    And prices will go back up. They always do.

    "I guarantee you every home you buy is going to be worth more down the road," said Jim Letchinger, president of Chicago-based JDL Development, which is building midrise condos in the southwest valley. "I can't say when -- three years, six years -- but in the history of the world, land prices go up, construction prices go up. Las Vegas is a unique city, unlike any other city in the country and always will be. Take advantage of it."

    The days of discounted new housing are nearing an end. At some point in the next few years, consumers will have to pay full price. And when that happens, the hand-wringers of the political class will moan, "Remember when you could get a new house for less than $200,000 -- in 2008?"



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    nic wrote on April 28, 2008 09:06 PM: Helen,
    You are an idiot. Nice try with the starting police salary!


    Money Trees grow in Fantasy Land (USA) wrote on April 28, 2008 07:00 PM: Look BJ Clinton just pandered to certain "minority" groups, which is part of the problem. We need to eradicate "entitlement" (victim) mentality in the county, which in part says everyone is entitled to the same loan, same home etc etc. This mentality started in the 60s with the Civil Rights Movement (including feminism) and coninues to this day! It was all a SCAM perpetuated by a few loud, gifted speakers (like MLK) who just angered the masses and therefore did a lot of damage to his own race, and society at large (racial tensions, and massive US debt to support various programs). There is no real victim, except for maybe the real minority: the White Male. He is the only one who cannot hide behind vague words, the only one who has no chance at some "automatic" entitlement for being among some victim "class". The majority (victim class): blacks, hispanics, western indians, and all women. Rarely, however, do asians claim victim in my observation, as they were never brainwashed as "victims". The word "minority" is a vague, abused word and part of a SCAM. It is typically used by blacks, who want to gather the support of hispanics. All politicians pander for votes. The cycle continues. Affordible Housing: some must rent, and some are not entitled to ownership, which requires hard work, personal responsibility etc.


    David Johann wrote on April 28, 2008 05:58 PM: FOR SALE:

    One crystal ball, low miles. Looks and runs great. Predict the future! Amaze your friends! Only used once by Mike L. who borrowed it just before he posted below.

    No reasonable offer refused.


    David Johann wrote on April 28, 2008 05:19 PM: If Bill Clinton were president we wouldn't be in this mess.


    Shannon wrote on April 28, 2008 05:17 PM: Me and my husband just bought a 5 bedroom foreclosure for $170,000. Is this the greatest time to buy? Probably not, but with 4 kids we need stability in housing. My 1400 mortgage is the same as the rent I was paying, so why not? I think right now is a foolish time to buy for people who plan on moving or down sizing in 5 years or less, but I plan on staying in my house for at least 15 years. I have a hard time believing my house won't be worth what I paid for it in 15 years. My advise buy for stability, not investment. Even as a long term investment is a bad idea if you are planning on renting the property.


    just facts wrote on April 28, 2008 02:56 PM: this morning on CNBC, Maria B. was interviewing Eli Broad, founder of KB homes (Kaufman & Broad). He said insofar as the the housing market in the US is concerned, the current downturn will be the biggest/deepest since the Great Depression.


    John F wrote on April 28, 2008 02:30 PM: Helen,

    Double check your figures. Go to:

    http://ccsd.net/jobs/LLPsalary.htm

    and see what teachers earn. You need to have a master's degree and eleven years on the job before you make $50,000. With a PhD you max out at about $64,000 after sixteen years of service.

    Where else do people with doctorates make as little as $64,000 after sixteen years?

    Take a look at the pay table on the web site. For teachers to be averaging $50,000 per year, there'd have to be an awful lot of them with an awful lot of seniority.


    walt wrote on April 28, 2008 01:10 PM: I WONDER HOW LONG IS DOWN THE ROAD.LETS SEE THEM PUT THAT IN THE SALES CONTRACT.THIS GUY HAS MORE PIE IN THE SKY THAN THE GANG RUNNING FOR PRESIDENT.


    Mike L. wrote on April 28, 2008 10:37 AM: There has NEVER been a credit bubble like we have today. House prices will fall for many years. Anyone buying this year or next is a fool.


    Lee Yarbrough wrote on April 28, 2008 10:02 AM: All I can figure is that many readers/posters here are young. This is not the first time housing prices have fallen and it won't be the last. I have seen it three times in my life and it always comes back just as strong if not stronger.

    Normally you will find the prices back at their peak in about seven years. Buy your house, live in it and don't worry about what it is worth. It is your home, not a cash bank account. In the future you will get your money back and a good return.

    Helen never has facts, just things that she makes up here and posts.


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