| Sunday, October 02, 2005 |
| Speculators, residents gamble on Vegas housing boom |
By Jerry Hirsch
Los Angeles Times
LAS VEGAS - The boom in high-rise condo projects in this city's canyon of casinos known as the Strip has spawned its own new status symbol - the celebrity resident.
About 8,000 condominium units are under construction or about to start, according to SalesTraq, a Las Vegas real estate information company. It's a building explosion fueled in part by speculators in the torrid real estate market here and the desire of buyers from California and Asia to own a piece of Sin City's action.
But like everything Vegas does, this building bonanza comes with an extra helping of glitz: Developers are using Hollywood stars to make their projects stand out from the more than 100 residential skyscrapers proposed for Las Vegas.
Leonardo DiCaprio and Tobey Maguire have purchased units at the Panorama Towers complex. Jessica Simpson has reserved a unit at Palms Place, the 50-story high-rise planned at the Palms Hotel and Casino. Baseball Hall of Famer Reggie Jackson has snagged a spot at the Icon Las Vegas.
"I am sure these celebrities are getting very good deals," said Peter Dennehy, senior vice president of Sullivan Group Real Estate Advisors in San Diego. "It is a marketing thing. People want to live near the stars."
But some analysts wonder if the market will be left with a Las Vegas-size hangover in the form of a real estate bubble fueled by the large number of speculators - estimated to be as high as 40 percent - who never intend to live in the units they are buying.
The high-rise condo market has proved to be particularly sensitive to market gyrations, said Delores Conway, a University of Southern California real estate economist.
Las Vegas isn't the only town that is going vertical. High-rise living, a long-standing tradition in New York, has spread to the likes of Boston, Denver, Miami, San Francisco and Kansas City, Mo. At least half a dozen new Southern California condo towers are planned for the Los Angeles area.
The Myrtle Beach area also is wrestling with a desire by developers to raise height limits on condo towers. ( Myrtle Beach condos for sale )
Nationally, the number of condominium and town home development construction starts jumped 38 percent to 120,000 last year, according to the U.S. Census Bureau. And that came on top of a 23 percent gain in the previous year.
"Cities across the United States are booming with these projects and many of the developments are quite spectacular," said Max Neiman, senior fellow at the Public Policy Institute of California.
With so many high-end properties on the drawing board, it's easy for a development to get lost in the crowd. That's where the celebrities come in, assuming the real estate equivalent of a walk-on role: Most aren't investors in projects, but their presence gives condo buyers the hope of an occasional star sighting near the mailboxes.
Don't expect anything so crass as celebrity advertising endorsements; Vegas developers prefer the subtle approach, placing tidbits in gossip columns and prominently displaying celeb glamour shots in sales offices.
"It makes a building cool and hip," said Dennehy, the real estate consultant. "You always want to sell lifestyle when you are selling condo projects like these."
Even in Las Vegas, once one of the more affordable real estate markets, no one considers these condos to be inexpensive housing.
A 972-square-foot one-bedroom unit at Icon Las Vegas, the future Reggie Jackson hangout that Related Cos. is building, starts north of $600,000.
Janine Hogg, a San Francisco Bay Area transplant who owns a smoothie shop in the Las Vegas suburb of Summerlin, has placed down payments on four condos in three projects and is considering purchasing a fifth.
"Real estate investments are my retirement strategy," Hogg said. "Hopefully I am not gauging the market wrong."
Las Vegas real estate analyst John Restrepo estimates that speculators such as Hogg make up as much as 40 percent of the market. This has prompted some of the projects to limit purchases to one per person and to require buyers to close escrow before allowing a unit to be resold.
The number of investors in the Las Vegas condo market should be a matter of concern to both developers and other buyers, said Conway of USC.
"Las Vegas prices are not going to go up forever," she said, "and when the market shifts, a percentage of speculators like that is enough to change the price of all the units in the building."
Speculators tend to liquidate their positions quickly if their investments are losing money or aren't producing the expected returns, Conway said, sending prices tumbling.
But some real estate experts say the unique nature of the Las Vegas market helps insulate it from the type of steep downturn seen in other markets.
The city is running out of developable land, and people continue to pour into the region, said Steve Bottfeld, an analyst with the local research company Marketing Solutions.
The Las Vegas metropolitan area had a population of 1 million in 1997, and that's expected to double by 2007, he said.
Moreover, with 38 million visitors annually, the city remains one of the nation's top vacation destinations and will maintain its attraction for second-home buyers, Bottfeld said.
Finally, no one expects all the projects on the books to get built.
"There's not enough skilled labor in this town to build even half of what has been proposed," said Richard Lee, a vice president in the Las Vegas office of First American Title Co.
End....
See a fabulous new condo resort in the Turks and Caicos real estate market. |
posted by Myrtle Beach Web Design @ 6:43 PM  
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How the cookie crumbles
Editor's Note: Here is a taste of our All You Can Eat blog. If you're hungry for more, visit http://extras.insidebayarea.com/blogs/allyoucaneat. A home just isn't the same when there are no homemade cookies in ...
Hey, I love your blog it's real great!
I have a american singles site/blog. It pretty much covers american singles and dating related stuff.
You should come and check it out if you get time :-)
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