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"WELCOME TO LAS VEGAS: BANK OWNED"
"Nevada's Economic Misery May Be America's Future"
First Posted: 07-27-10 04:20 PM | Updated: 07-27-10 04:33 PM
""So many homes in Las Vegas have been foreclosed upon that banks rarely bother to hang a "For Sale" sign on the front lawn anymore. Instead, visitors identify bank-owned properties by the brown grass and the 8.5 x 11-inch sheet of paper taped to the front door or the garage.
On a cul-de-sac in the once-pleasant neighborhood of Silverado Ranch, Larry Wood is the last remaining resident. Two of the four homes are in foreclosure and a third is a "party rental" only occupied by rowdy tourists on weekends. One of his neighbors made a few bucks before abandoning the home, he says. "They sold all the palm trees and just walked away from it," says Wood, sporting a "Freedom Isn't Free" T-shirt. "It's a great neighborhood. I guess that people weren't financially set up to get through the crash."
Wood takes little comfort in being the last resident. "Sometimes it's scary. There's a possibility someone would try to rob me and I wouldn't have any neighbors to help me," he says, recounting a previous attempted intrusion when his then-neighbor called to warn him not to answer the door because there was a group of thugs knocking. Armed and ready, he huddled near the door but the gang gave up and left.
Walking away is becoming a habit among law-abiding residents too. It's hard to find a home bought before 2009 that isn't underwater and very few landlords, when running credit checks, look for foreclosures or short-sales on a tenant's record. Otherwise, a manager couldn't fill a building.
Nevada has a greater concentration of economic misery than any other state. The state's unemployment rate, which in June edged up to 14.2 percent, has risen faster during the past year than it has anywhere else, and nearly six percent of all homes across the state's desert landscape received a foreclosure filing in the first six months of the year.
While the concentration of misery may be greater in Nevada, it was caused by the same unchecked housing bubble and unregulated financial gambling that brought pain to the rest of the country. If present trends go unchecked, Nevada is America's future.
The jobless rate would likely be much higher, say residents, if Nevada were not such a transient state. When folks lose their jobs and their homes, they often pack up and move in with relatives.
Others, though, have roots in the state. Robert Garcia, 58, moved to Vegas more than a decade ago to take a job with what is now MGM as a video producer. Back in Salt Lake City, Utah, he'd met his wife, an anchorwoman, on the set. She went to work for US Airways in Las Vegas. The couple, who have two kids, divorced several years ago and sold their home at a healthy profit, which they split. Garcia put $100,000 into a new home that he bought for $350,000. Making nearly six figures, he said, he had no problem covering the mortgage and the $2,400 in alimony and child support. In 2008, things took a turn for the worse.
He has been able to weather the downturn, he says, because he always lived within his means -- no credit card debt, no car payment. He has a "junky car," he says, that his kids are embarrassed to ride in.
"It's funny," Garcia adds, pausing. "Just before I was laid off, I was gonna buy a BMW." He pauses for another long moment as his eyes well up. Asked where he is living now, he breaks down instantly, tears pouring down his cheeks, knocking his contacts out. "Actually, I'm looking for a place. I'll be right back," he says, leaving to compose himself.
When he returns, he says that he's still in his home, which is more than 50 percent under water, but will be leaving as soon as the bank approves a short sale. He had an offer several months ago, but the buyer, a teacher, backed out at the last minute. She'd been laid off.
Garcia has applied for 200 jobs all across the country but, at his age, employers want younger workers, leaving him to scrape by on freelance work. He has nothing left, but one bright spot is that the devastation in Vegas is so profound that landlords tell him they no longer check credit reports for short sales or foreclosures. Garcia's wife, meanwhile, has been laid off by the airline, as fewer tourists fly into town. She's now on welfare, he says, and, as a consequence, half his wages are garnished. (Welfare policy requires such payments to be made through garnishment.) He doesn't mind, he says. His bigger fear is that the only job he'll be able to find will require him to leave Vegas and his children.
Meanwhile, the debate in Washington enrages him. It particularly galls him that Republicans say help for the unemployed must be offset with spending cuts elsewhere. Garcia, in fact, volunteers the term "offset," expressing a better grasp of economics than most of the deficit hawks in Washington. "It drives me crazy when they say that. There's nothing to take from! Where are they going to offset it?! What's the phrase? You can't get blood from a turnip," he said.
"This is my hometown and I've watched it struggle and go through so many challenges, particularly over the past two years," says Julie Murray, president of Three Square, a food bank in Vegas that distributes food to more than 300 partner programs and schools around town. "The way that this economic downturn has been different from others is that I've never seen the gaming industry be impacted. Our community would suffer when the economy suffered but gaming was always resilient."
Three Square delivered 10 million pounds of food in 2008; this year the food bank is on track to distribute twice that amount (some of the increase, Murray said, owes to the fact that Three Square is growing; the nonprofit was founded in 2006). Murray said corporate donations to the food bank have been down during this recession, but individual and foundation giving has remained steady. "We've been able to sustain distribution of food in a recession because of the sheer will and passion of the community," she said. "Things are dire -- we have more children who are struggling with hunger and more seniors and more families and more middle class families who never thought they'd need social services -- however, Las Vegas is rallying."
"Nevada was pretty much a growth economy for most of the past two decades," says Steven Horsford, the Nevada State Senate's Minority Leader, a Democrat who represents North Las Vegas. "When the financial crisis hit, it disproportionately affected Las Vegas because of our growth rate."
Horsford says the local economy is struggling not because fewer tourists are coming to Vegas, but because the people who do come are spending less money. (A cab driver complains that he doesn't have many fewer customers, just more families haggling over the $60 fare.) Horsford said Vegas needs to switch from relying on casino tourism to green energy and medical tourism.
"We were used to being able to help virtually all segments of our population get a job if they wanted a job, have benefits, earn money to put their kids through college -- we called it the Las Vegas dream," he says. "From a leadership standpoint, knowing that two-thirds of all homes are either upside down or are in foreclosure is one of the most humbling realities we are dealing with."
The decay in Vegas doesn't stay there: It reverberates throughout the state. "Coming Soon" signs have been pulled down across the city, because nothing is coming soon other than more foreclosures. The Nevada landscape is pockmarked by empty condos and casinos, some of them fully built and sitting there empty, others are shells frozen in time. When analysts talk abstractly about Wall Street sucking capital out of the real economy, these stalled construction projects are the on-the-ground reality. "60% Reduced Prices" promises one empty condo development.
The $3.1 billion Fontainebleau Las Vegas construction project sits nearly complete but the lender pulled out and everybody is suing everybody else. The first Ritz-Carlton in the company's history to shut down is in Las Vegas.
The city's dance clubs aren't empty, but there's less money circulating. "Saturn," an exotic dancer at Spearmint Rhino, says she and her fellow dancers are making roughly half what they were two years ago. The house she bought for more than $450,000 on an interest-only loan is now worth a third that. She's negotiating a short-sale with the bank.
The Dunkin Donuts that opened in Fabienne Chalaye's neighborhood five months ago is already empty. "Dunkin Donuts... It's all empty. Everything is empty," she marvels, while giving a HuffPost reporter a tour of the city.
Chalaye, a chauffeur, says her business is down roughly 60 percent over the last two years. It slowed down almost imperceptibly after 2006, then fell off a cliff in 2008. She hasn't made a mortgage payment in 15 months and expects to be booted from her home, along with her husband, her adult daughter and her daughter's boyfriend any day now. She bought the house in 2008 on an interest-only loan for $313,000; it's now worth $117,000 and her interest rate shot up to 12 percent. Both she and Garcia, however, say they're leaning toward voting for Harry Reid to return to the Senate, because they have no faith in his opponent, Sharron Angle. "'I wanna get rid of Social Security,'" Garcia quotes Angle saying. "How stupid is that?"
Garcia says a friend of his in the crane business told him he was offloading the hulking useless tools to builders in China because it isn't worth the cost of storing them. "Office Space Available" blares a sign next to a stalled office project.
A five-bedroom home with Spanish tile and a game room sits vacant on half an acre of land. "This property is Bank-owned. We reserve the right to prosecute any and all trespassers illegally accessing the property. Thank you for your cooperation."
The Nugget Casino in tiny Searchlight (population: 576), about an hour from Vegas, laid off a third of its 85 employees in the past two years to cope with reduced demand for the Nugget's slot machines and chicken fried steaks, says owner Verlie Doing, 86.
"We had a great banker when we built this place," says Doing, who opened the Nugget with her husband in 1979. Now, Doing says, she doesn't think Wells Fargo will give her a loan to fix the three air conditioners that recently failed. "I'm not gonna talk to the bank. I'm not even gonna bother to waste my time with 'em."
Doing, a friend and supporter of Harry Reid, is optimistic. "It's gradually getting better," she says. "Not noticeably a bunch better -- but it's getting better."
Sarcastic references to President Obama's 2009 stimulus bill can be seen throughout the Las Vegas area, from glossy Keno fliers at Vegas hotels to the mysterious sign by the front entrance to the Nugget advertising a "Great opportunity" to "stimulate yourself" and make money. "You won't need a bailout. Call Barry."
Reached by phone, Barry Bunnell of Chloride, Ariz. -- a town even smaller than Searchlight -- explains that he's been trying to hire people to sell his Easy Out Fire Protector product, a bottle of fire retardant liquid that's handy for snuffing out small pan fires, especially in RV trailers. Bunnell needs people who can go door-to-door demonstrating the product.
He says he received 37 responses to the Searchlight flier, but nobody was interested in sitting down for an Easy Out interview after Bunnell described the job. He suspects they'd rather stay on unemployment benefits and use the Easy Out inquiry as an easy way to prove to the state they're still looking for work. (That the unemployed would rather draw benefits than look for work is a common argument among congressional Republicans, even though there are nearly 15 million people looking for three million available jobs.)
"You can sell two for $39 and keep $20," says Bunnell of his product, "and people won't do it because it's beneath their dignity.""