Las Vegas Tribune
October 26, 1999
GLUT OF CHEAP NEW HOMES DEVASTATE LAS VEGAS' RESALE HOME VALUES!
LAS VEGAS' RESALE HOME VALUES ROSE ONLY 1.8% IN 1999 COMPARED TO 5% FOR THE REST OF THE NATION!
Local politicians are giving corporate welfare to home builder/campaign contributor friends at the expense of long time Las Vegans and our downtown.
New home prices in LV are so artificially low that they are ruining our older neighborhoods. We are being taxed to subsidize new schools, new parks, new libraries, etc., for the benefit of new home builders who compete with our older neighborhoods for homebuyers.
Many Las Vegans are reluctant to improve their older homes because resale home values are not keeping up with inflation, therefore a disproportionate number of our town's older homes are becoming rentals, or worse -- repossessions.
Our city is rotting from the inside out while the developers and politicians celebrate.
As an example consider a recent transplanted Downey, California family who the Tribune interviewed for this editorial. The family had lived for three generations in the LA area, and had been successful in a family run retail business that was passed down from father to son. They longed for a change of scenery and decided, like many, to move to Southern Nevada.
The family had owned two houses in Downey, one purchased back in 1956 for $17,000, and the other more recently purchased in 1989 for $85,000. The 1,400 square foot 1956 house that they rented out was sold in 1997 for $325,000, and the 2,300 square foot 1989 home brought $500,000 this year. Both homes were free of mortgages.
With close to $600,000 from their residential real estate sales in the bank after taxes, our example family then moved to Las Vegas. They first looked at pre-owned homes in the areas near St. Louis and Oakey Blvd. They loved the mature landscaping, big houses, and large lots. They found several that fit their needs but decided to look elsewhere because of the number of dilapidated rental houses in the neighborhood.
Our family finally settled in Summerlin in a 3,200 square foot four bedroom, three bath with a three-car garage and a large swimming pool in a gated development. The house was a never-lived-in model home for a well-known, politically connected homebuilder and came completely furnished for $195,000. The only drawbacks were the time it took to drive across town and the small lot, but new still won out. Our buyers paid cash for their new home.
Our family was also thrilled to find that a new elementary and middle school were nearby, along with a brand new seven-acre park, community college, several hotel casinos, a fire and police station, and a new shopping center.
The above example could not have been possible if our family had found that the first or second home they looked at was price competitive to the newer neighborhoods. The only reason that they may have then opted for the older home was if the Summerlin home was more in line with California home prices, but it wasn't. It sold for far under the national average for a home its size -- a real bargain and one of the reasons that over 6,000 new residents move to Las Vegas each month.
Our family found older homes that were in beautiful tree lined neighborhoods but were lacking state of the art schools nearby, or attractive shopping centers within walking distance. And of course, the neighborhoods were a patchwork of newly refurbished and dilapidated houses selling for what they sold for twenty years ago. The artificially low price of a new home was too compelling so they went the route of most homebuyers in Las Vegas and bought new.
It is obvious to the Las Vegas Tribune Editorial Board why our inner city is decaying. How can our downtown compete with taxpayer subsidized new neighborhoods with all the amenities when our resale values are less than C.P.I.?
The irony of our editorial is that in twenty more years of taxpayer subsidized new home development, those new neighborhoods including Green Valley and Summerlin are guaranteed to look like the older neighborhoods in downtown. Why? Because the resale home values of our newer previously owned homes in neighborhoods in Green Valley and Summerlin are also well below the national average because of even newer home competition!
This dilemma is guaranteed to continue until homebuilders run out of vacant land to build on, or until new home buyers are made to pay for their own schools, roads, parks, etc., through impact fees.
Our local politicians are giving corporate welfare to home builder/campaign contributor friends at the expense of long time Las Vegans and our inner city shows the results every passing day.