Living in Las Vegas

Rarely does an article stop me in my tracks, but today when I browsed over to this Las Vegas Sun article, “Whether to walk away: Housing’s moral minefield,” by Brian Eckhouse, I stopped.  The comments on the article were actually as interesting as the article itself.  Basically, it discussed how the forclosure crisis is affecting homeowners in Las Vegas.   More specifically, homeowners like this reader:

By pilauguy
3/22/09 at 3:34 p.m.

“Purchased my home the ‘old-fashioned way’ prior to the boom days: credit/employment/financial verifications…the whole 9 yards. Today my owner/occupied home is under-valued in a neighborhood of foreclosed homes. While there is enough blame to trash around, there seems to be no practical assistance for people like myself. I’m ready to damn’ morality,the right thing and latch on to a ‘ME FIRST’ mentality!” 

Author, Mr. Eckhouse, posed many thought provoking questions, “If your mortgage is greater than the value of the house, why pay it? . . . Is your greater responsibility to your family’s financial well being, or keeping your word to the bank? . . . Do I violate personal ethics and walk away from a contract that I signed with my eyes wide open?”

Two readers posted their very practical and very opposite side of the moral spectrum, solutions to the problem:

By James_P_Reza
3/22/09 at 10:17 a.m.
“If the government wants to address the economic downturn that is at least in part caused, and perpetuated, by the speculator-caused housing crisis, and if the government wants to spend billions of taxpayer money to “bailout” portions of the economy, then the government should consider these steps:
1) appraise every single owner-occupied residence in the US
2) provide a new FHA mortgage at that amount to the owner-occupant
3) pay off the difference to the mortgage holder
Housing crisis, done. Is it morally appropriate to bailout homeowners who used their homes as ATMs? No more or less than bailing out banks who made it possible by providing low-doc and no-doc loans - loans from liars to liars.
Moral outrage is everywhere because behavior on all sides has been morally questionable through this whole mess. The point is, we’re already spending money in morally questionable bailouts, so why not spend some where it will do some good? Otherwise, even the morally upstanding will consider the immoral, and then what?”

By jk1313
3/22/09 at 10:26 a.m.

“It would be best for most everybody to get the “deadbeats” out of homes as fast as possible, please, walk-away, the faster you do the faster we get to a bottom.
Now, if one really wants to have fun and games with the banks, play it this way. Don’t pay your mortgage, taxes, insurance, HOA, LID/SID, only utilities. Wait until the lender’s foreclosure sale (not Notice of Default) is going to happen, you must be notified within 30 days of the sale by law, then the day or two prior to the sale file Ch. 7 bankruptcy. All processes are “stayed”, the lender has to basically have a hearing to even begin the foreclosure process again, meanwhile, one is still not paying on the mortgage, HOA, taxes, SID/LID. The Ch. 7 will eliminate the mortgage, and will in addition, give one an extra 7-10 months of free living in the home on the banks dime. The best part is that one can still maintain their credit card and auto payments if the home mortgage is the only debt that one would like to have dismissed. Consult state and fed. bankruptcy laws for complete details on income levels, and protected assets.
If done properly, one can live for free in their home for nearly 18 months. Make sure the lenders and banks know how much they are appreciated.”

Although I do not have to personally make a decision like this myself, I can see both sides of the story. Everyone in Las Vegas, homeowners and renters alike, are being affected by this crisis.

So, dear loyal readers, I am curious, what are your stories and your thoughts?

First of all, I would like to say “Welcome Back Mercedes!” to Mark and Mercedes on Mix 94.1.  As you may know, they are my favorite morning show out here and Mercedes has returned from maternity leave.  I enjoyed Blair and Drea very much, but it’s nice having Mercedes back.

Our unemployment rate has hit another record high, topping out at 9.1%.  Bill Anderson, an economist with the Nevada Department of Employment, Training and Rehabilitation , said some of the biggest contributors to the high unemployment rate the housing market, construction jobs, the leisure industry, and the failure of Mervyns, Linens-N-Things and Circuit City.  So for those of you that are part of the 128,000 Nevadans looking for a job, the Las Vegas Review Journal and Sun are hosting a job fair at the Tropicana Hotel & Casino tomorrow, January 27, 2009.  It will be opening at noon and runs until 4:00 p.m.  Good luck!

On a happier note, I had a chance to check out the 1-bedroom suite at Palms Place and I was super impressed! The view was amazing and the room is about 1200 sq. feet with a full kitchen, laundry closet and an awesome two-person shower.  The rates are totally reasonable right now with prices as low as $159 a night!

Several buyers of the luxury Streamline Tower Condos in downtown Las Vegas are facing an interesting, or more like unfortunate, problem. The condos are no longer worth anything close to what they need to be sold for.  The question is, whose fault is it? 

On October 1, 2008, 48 buyers filed a breach of contract lawsuit in Nevada District Court against Streamline, LLC and Executive Locations, LLC.  One of their main allegations seems to be that Streamline misrepresented their ability to be able to lease the condos out for a rate of $3,500 per month.  They are trying to terminate their purchase agreements and get back their deposits ranging from $30,000 to $90,000 each.

The Streamline Tower Condos are part of many ongoing project to basically “remodel” downtown Las Vegas which, let’s face it, has pretty much been the pits for as long as I can remember. Fortunately Mayor Oscar Goodman has been very aggressive about cleaning up downtown and part of that redevlopment project has included some really nice condos.

Streamline opened May 1st of this year, but the buyers were told it would be open by December 2006.  To put it mildly, the housing market has changed considerably since then.   It seems like some of the buyers may be involved in the suit to get out their purchase agreements because they are having problems getting a loan now. 

The condos are listed on Streamline’s website at prices ranging from $400,000 to over $1 million. I think this excerpt  from an article in the October 27, 2008 issue of the Las Vegas Business Press sums up the main problem:

“However, the situation faced by two of the buyers, Violetta and Nathan Mordukhay of Encino, Calif., points to the hurdles posed by the price structure. They agreed to pay $469,900 for a one-bedroom, 832-square-foot unit, but received two appraisals of $355,000 and $386,000 when applying for a loan. The appraisals were conducted in April, but prices generally have continued to deteriorate since then.”

Do the Plaintiffs deserve their money back? Would they be suing if the real estate market was still booming? Did Streamline actually do anything wrong? Is this luxury condo project in downtown just a money pit and everyone needs to cut their losses?

From the same article - U.S. District Court Judge Lloyd George wrote, “The irreparable harm of which the (buyers) complain is conjectural at this point.“ 

Stay tuned, the next hearing on a temporary injunction is scheduled for November 24th.