Lisa Simpson
Jun 14,2010
In: Foreclosure

There are Grave Doubts About a Building in Las Vegas

Although an article in the New York Times dated 16th May claimed that there is a building boom in Las Vegas, there are grave doubts about it. Las Vegas does not seem to in the middle of another house building mania.

Eyebrows were rasied when the article was published about a boom in a city of empty foreclosed houses. Local builders are not overbuilding according to experts who follow the activities of the real estate market in Las Vegas. Construction of single family units have been slow to pick up because the median price is over $80,000 more than the current homes.

The study in the Times publication made use of numbers provided by Metrostudy. It told a reporter of the Sun that new houses numbering 9,517 were lying empty. It included 215 units in Pahrump and few in northern Arizona – all included in the metropolitan region of La Vegas. But of the total, a mere 1,017 are single family units in Las Vegas. The rest (8,285) that have been built are condos that have not been occupied. There are also condo hotels in areas like CityCenter and other development areas of high rise buildings.

These units were not in competition with the single family houses in Las Vegas and should not be included in the total figure. The inventory of current homes have gone down to a supply of less than three months.

Gregg Gross of Metrostudy said Las Vegas had been over built and the constructors had under them 10,516 units undergoing work during the first three months of 2006. That was the time when the market started to fall. By the close of 2007 and the start of 2008, building activitity slowed down dramatically as the developers began to focus on disposing of the houses that had already been built. This is corraborated by the number of house permits given for new homes. 30,149, 20,999, 12,836 , 5,551 and 3,776 were taken out respectively in the following years of 2005, 2006, 2007, 2008 and 2009.

In 2010 activity has been picking up but till April 1,918 permits have been issued – it being below 500 per month that is the average. No doubt there has been a slight rebound but that may be because of the tax credit offered by Washington to first time buyers.

The last thing that builders want to do is to build a new house and sit on it.

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