Just about 5 years ago, Time Magazine did a cover story on the booming town of Las Vegas, which was in the midst of non stoppable economic growth. Here is an excerpt from that article:
The city’s casinos, hotels, restaurants, shops and clubs took in a record $32.8 billion in 2003. Vegas is the fastest-growing major U.S. city; 7,000 people move to Clark County each month, bulging the population to 1.6 million and overstretching the police, fire fighters, hospitals and schools. The unemployment rate is more than a third below the national average, and there’s more construction than in any other city in the U.S. It’s the country’s top tourist and convention spot, with Vegas taking in more money from conventions ($6.5 billion) than gambling ($6.1 billion).
Fast forward to 2009, and times have changed quite dramatically to the city. Time Magazine just did another cover story on Las Vegas, with some very notable differences.
This has been the first major recession Vegas has experienced since it became a real city. After two decades as one of the fastest-growing metropolises in the U.S., Las Vegas has seen its population growth flatten. It’s got the highest foreclosure rate of any major metro area, and the unemployment rate jumped from 3.8% to 12.3% in just three years. Even if you have a job, it’s not a good time to have your wage be dependent on lavish tips. The No. 1 convention city has also had a wave of cancellations from the AIG effect — companies don’t want the bad publicity of being seen in Sin City. Just as Las Vegas was the epicenter of the extravagant consumption of the past 20 years, now it’s the deepest crater of the recession over the last year.
Also notable are the incredible vacation deals available in Vegas today:
The hotels, led by Wynn Resorts boss Steve Wynn, slashed room prices to increase occupancy rates to 82% from a low of 72%. On the right day in July, you could book the type of 750-sq.-ft. room that was $500 a year ago at the Wynn for $109 and get a $50 gift certificate.
As for real estate in Las Vegas, the spiraling down of property values continues, and its making room for a new breed of real estate agents. Brooke Boemio is showcased in the article, and she specializes in helping home “owners” abandon their overvalued homes and swapping it with a new purchase of a distressed or foreclosed home.
Boemio specializes in short selling, in a particularly Vegas way. Basically, she finds clients who owe more on their house than the house is worth (and that’s about 60% of homeowners in Las Vegas) and sells them a new house similar to the one they’ve been living in at half the price they paid for their old house. Then she tells them to stop paying the mortgage on their old place until the bank becomes so fed up that it’s willing to let the owner sell the house at a huge loss rather than dragging everyone through foreclosure. Since that takes about nine months, many of the owners even rent out their old house in the interim, pocketing a profit.
My how times have changed for Vegas. The old adage rings true in Vegas – what goes up must come down!