Work ebbs and flows. Last week it was a flow…
Today, at lunch, I visited one of my favorite sites on Las Vegas, the Las Vegas Casino Death Watch. I used to also regularly visit the Las Vegas Strip History website, but ever since the site kept being stolen, the webmistress made it an IE-only site, and since I use Mozilla…
In any case, Nick had a batch of interesting updates the reflect the real changing state of the town, and what I believe is the real affect of Indian Gaming. Remember, in the 1950s when Vegas was Vegas (and Elvis was in the building), the goal was to serve all: high rollers, low rollers. The operation of a facility was seen as a unit: some aspects (coffee shop, room rates) were loss leaders for the profit centers (casinos, shops).
So, what was in the news since I last read it. Well, the Greek Islands (nee Debbie Reynolds old place) may become luxury condos. Phil Ruffian, owner of the New Frontier, will likely tear it down to build a new luxury resort to compete with Wynn Las Vegas and the Venitian. Similarly, Boyd has indicated that the Stardust isn’t long for this world either, as the entire parcel will be redeveloped. Downtown, the venerable Horseshoe name, now owed by Harrahs, is being retired and the joint is being renamed Binion’s Gambling Hall and Hotel (echos of the Nugget, across the street).
Remember I mentioned Indian Gaming. The town is being configured for the high rollers, the folks who want the luxury. You don’t get that at tribal casinos, who cater to the low-market. I don’t think this is a good trend.
Life goes on, and things change, but I miss the past. There isn’t much of “old Vegas” left. Aztar is talking redevelopment at the Tropicana, which will likely get rid of the remaining low-rise units and the museum there. The 9-story tower is left at the Riviera. I’m not sure what’s left at the ‘dust, except perhaps for the original casino. Everything else has been extensively redone (except for the El Cortez downtown, which will seemingly never change). Nothing of the original 1950s structure is left at the Flamingo, the Sahara, or Caesers, and many other of the name joints are long gone (Sands, Dunes, Hacienda, Desert Inn).
Sigh…
I’ve also been trying to descern the tea leaves regarding Los Angeles property values. Part of this is because we may be exploring moving to a larger place soon; part of this is because I want to make sure that ellipticcurve makes the right move as she does her home buying. According to the Los Angeles Daily News (and echoed by a similar article in the LA Times), the median price of a Southern California home hit a record $425,000 in February, the 13th consecutive annual gain of 20 percent or more. The appreciation rates are still higher than expected, and most analysis expect them to start slowing down. The article noted that has been the case for months, buying activity and the biggest rates of appreciation were strongest in the least expensive neighborhoods. The analysis showed that indicators of market distress are still largely absent. Foreclosure activity has bottomed out, but is still low, down payment sizes are stable as are flipping rates – buying a property and quickly selling it – and nonowner occupied purchases. Yet they still expect the markets to cool. This particular article noted that in February, Southern California buyers on average committed to a $1,905 monthly mortgage payment, up from $1,822 in January and from $1,542 a year ago. When adjusted for inflation last month’s amount is about 10 percent less that the payment in the spring of 1989 during the last big market boom. Need I say that we bought our last house in August 1989, just before the bust.
However, economists are predicting a recession. Another article in the Daily News noted that the outlook for California mirrors the national picture. Economists see modest job growth and a slowdown in the state’s hot housing market, with sales cooling and prices flattening out. A recent UCLA Anderson School report argues that real estate prices in California and the U.S. are unsustainable partly because property values have climbed far faster than personal income. It predicts that rising interest rates will hurt the residential market this year and that a national recession is “quite likely” by the end of the decade. Indeed, interest rates have started to rise slowly. The Fed is slowly raising rates, and they recently noted that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 3.24% last week from 3.2% the previous week.
Some think it will be a tapering, instead of a fall (like we had in 1989). It’s like the death of the Internet: doom-laden predictions about the bubble bursting have abounded since the market really began to sizzle. And, as I noted, prices are still going up. Folks just expect it to slow. The signs are starting to be seen. Nationwide, refinancings have tapered off since peaking in 2003. Fewer than 20% of Californians earn enough to afford a median-priced home using conventional financing and a 20% down payment, according to the California Assn. of Realtors. In fact, what is often being touted today are teaser loans with an artificially low payment and negative amortization (more info). Neg-amort loans are OK if you have the discipline to get additional income (roomates) and make a full payment, but are like “minimum monthly payments” on credit cards for those with no discipline. And many people today have no discipline… and the government is on the side of the credit providing agencies, as witnessed by the recent bankrupcy bill.
Still, the question remains: when to sell, when to buy, where, and for what price? I wish I could read tea leaves.
