Housing analysts discuss local impact of meltdown

There’s a little of both in most of the reports, local housing analysts said Friday at a panel discussion presented by the Las Vegas Hi-Rise Condo Association.

“The concept of the recovery package is positive. That part’s fact,” Tim Sullivan of Sullivan Group Real Estate Advisors said. “It’s not going to change overnight. That’s fiction. It’s going to take months and months.”

For the first time in decades, Americans have lost confidence in their economic system and the government has taken the first step to restore that confidence with the $700 billion bailout, Steve Bottfeld of Marketing Solutions said.

It’s like a parent comforting his child after a bad dream, Sullivan added.

“I’ve got to believe things will eventually get back to normal,” said Larry Murphy, president of Las Vegas-based research firm SalesTraq. “We may fail to recognize the new paradigm. What if the world never gets back? That’s a possibility. It may take another year to get back to normal, it may take another two years.”

Sullivan said Las Vegas needs to get back to the core fundamentals that brought people here in the first place: job growth and affordable housing.

Las Vegas once boasted more than $30 billion in developments planned for the Strip, but projects such as Boyd Gaming Corp.’s Echelon and Elad Group’s Plaza Hotel have been delayed or stalled, leaving MGM Mirage’s $11 billion CityCenter carrying the torch.

Like it or not, the outside world is looking at CityCenter as the bellwether for Las Vegas and the media needs to recognize that, Sullivan said.

Richard Lee of First American Title Co. of Nevada said he doesn’t know whether CityCenter will make much of a difference in household income and housing numbers. But, he said, the project will give people a “positive attitude” about Las Vegas.

All four panelists agreed that many of the high-rise condos for sale will be converted to rental units in the short term.

“It’s relatively simple,” Bottfeld said. “It’s called carrying. You build a building, you carry the mortgage and you’ve got to find a way to pay it, ultimately by renting units.”

Las Vegas is not the only market in the nation with an oversupply of condos and shouldn’t be ashamed of it, Sullivan said. It’s a natural evolution in the market because supply and demand are never at an equilibrium, he said.

Fliers at the presentation advertised a “blow-out” sales event for Newport Lofts with prices starting from $199,000.

“You have an opportunity to bid on Newport Lofts for $200,000,” Murphy said. “If we meet here again in five years, it’ll be the same conversation. Boy, what was I thinking? I could have bought those for $200,000.”

Sullivan said he doesn’t think the real estate market is in position to rebound until it bottoms out, which will come when people believe their property values won’t drop any further. They’re still looking for an “economic cornerstone” to make those purchasing decisions, he said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.