What’s happening in Las Vegas sounds just like what’s happening in California, Florida, Arizona, New York, and all the other parts of the country where real estate prices got much higher than fundamentals. Hubble Smith of the Las Vegas Review-Journal has the story on the Vegas condo market:
First, condo investors can’t get the financing that was available a few years ago:
“I would love to close (escrow) and stay in the project,” Cowan said. “I’m in real estate and with a stated income, you can’t get a loan. Maybe if you put 50 percent down. Call it whatever, reality is what it is.”
Cowan isn’t the only condo buyer in that sinking boat.
Tighter credit requirements squeezed some buyers out of financing. They could have qualified for a mortgage when they bought a unit in the preconstruction stage, but not now.
Prices are down 50% in many cases and in “free-fall with no end in sight.” Some condo projects are bankrupt.
“Owners wanting out are having a horrific time unloading them,” Hawks said. “One reason is many have dropped in price, so much that they owe more than it’s worth. Units that were once $1.4 million are now $700,000 and units that were $600,000 to $900,000 are now $350,000 to $600,000 and are continuing to free-fall with no end in sight.”
Buyers at Mira Villa condos, a project by HDB that filed for Chapter 11 bankruptcy in January, are worried they may never see their earnest money again.
If you think real estate prices are going to recover anytime soon, read the whole article and see if that changes your mind.