Given its place in American mythology, it's not surprising that Las Vegas has picked up a lot of nicknames. From "Sin City" to "Marriage Capital of the World," its various appellations highlight the town's temptations as well as its pitfalls. But Vegas' most important nickname may well be "the City of Second Chances"; after all, while the gambling mecca is famous for loose slots and blackjack, its real currency is not money, but hope. For the trusting, it promises that pennies can turn into fortunes, that cities can grow out of the desert, and -- for the most recent wave of pilgrims -- that property values can rise without limit.
For much of the past thirty years, it looked like that last promise would be fulfilled. Between 1980 and 2007, the population of the Las Vegas metropolitan area more than quadrupled, spurring a massive construction boom. With government programs encouraging home ownership, the city's population growth translated into rising home values.
As Harmony Homes' Rob Beville puts it, "Federal programs assist people to buy homes ... the more people qualified, the greater the demand. Once the demand started to shoot up, land values started to shoot up ... and prices started to climb. It basically got to a point where it couldn't sustain itself."
Just as Vegas flourished in boom times, it has been devastated by the economic crisis. For the last two years, it has led the country in foreclosures. Today, over 80% of Las Vegas mortgages are underwater, with homeowners owing more than the value of their homes.
Beville notes that banks foreclosed on 19,000 houses in Vegas through October, and that an estimated 50,000 homes are going to come back on the market at greatly reduced prices. With a flood of foreclosed homes competing with the abandoned and partially-constructed houses peppering the city, it doesn't look like housing prices in Las Vegas will rebound anytime soon.
The Las Vegas Sun's Tim Richardson echoes that grim prediction, noting that "No one expects there to be any increase in prices anytime soon ... I think everyone sort of agrees that it's going to be years before we see that."
As banks try to unload large numbers of unsaleable properties and abandoned homes rattle in the desert breeze, it seems that at least one Vegas truism has proved to be a lie: In the City of Second Chances, the house doesn't always win.