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Is Las Vegas Going Under?

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Published on Jul 27, 2010

Source: (Excerpt Below) http://www.huffingtonpost.com/2010/07...

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..."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...

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