Cosmopolitan condominium and hotel project proceeding toward completion

Earlier this year the Strip project ran into serious problems when the principal developer defaulted on a construction loan. Acting on the obvious decline of the housing market in Las Vegas the lead lender, Deutsche Bank, asked the developer to put more capital into it but he couldn’t get anything because the credit market by then was already having its own difficulties. Since months-long efforts to sell the high-rise, twin-tower undertaking were also unsuccessful, Deutsche Bank did the next best thing and took over the project for $1 billion, actually a nice discount from the original cost of $3.9 billion.

The bank, though, isn’t in the business of owning condo developments and casinos, so it is likely to sell it when it’s completed in late 2009. Currently construction is humming along on the site backed by an agreement reached months ago with the primary builder, Perini Construction, which has managed to adhere to the initial end date.

Deutsche Bank could make a handsome profit out of this if the real estate market, and specifically the condominium sector, does rebound in Las Vegas by the end of next year or even in 2010. It could take longer than that, though. Even if the recovery at first were only gradual it could come out of the situation halfway okay since it did acquire the property for a deep discount.

Another bonus is possible in the shape of the CityCenter project by MGM Mirage going up right now next door. It also is scheduled to be finished late in 2009 and its luxury presence will certainly become a plus for Cosmopolitan. Who wouldn’t want to be only a few steps away from The City within a City? Still, CityCenter will to some degree be competition because it’ll also have a sizable condo component within its multiple towers. Finding the right price ranges for its units should, however, give Cosmo great odds of selling its entire inventory in a timely manner.

Cosmopolitan is one of the rare condominium projects in Southern Nevada that are moving forward despite the difficult challenges in the credit and mortgage markets. The going was tough over the past winter and this spring but somehow it weathered the adverse conditions and is now on a solid footing.

Mortgage creativity went a tad too far

As the international audience today watches major U.S. financial institutions come apart at the seams because they were too carelessly and deeply involved in recently-issued mortgage securities, many experts are already starting to look for reasons to the obvious meltdown. There are many of them but it's hard to put the right weight on each. One of them ceratinly has to be the innovative programs the mortgage industry produced over the last decade or so.

Bringing new, creative products to the home loan marketplace is often invigorating and is normally accepted with open arms by all participants. Borrowers, whether purchasing or doing a refinance, could now find a program that fit them just right and at an interest rate that is affordable. Even many of those who couldn't qualify for a loan before were now able to secure financing and become homeowners. Lenders and mortgage brokers had more programs to offer that helped keep their production pipelines steady. Mortgage buyers on the secondary market, like the infamous Fannie Mae and Freddie Mac, were busy packaging mortgages into securities and selling them on, getting a solid fee at every turn. And the investors who bought these securities marveled at the yields they were receiving. Everybody was happy for the time being.

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Southern Nevada resales demonstrate staying power

The existing single-family house sales in Las Vegas in August were 2,545 which is a slight drop from July at 2,592, reported GLVAR, the Greater Las Vegas Association of Realtors. This number actually breaks a string of increases dating back six or seven consecutive months. When a comparison is made to August of 2007 at a paltry 1,316, it represents, however, a serious leap higher, 93.4% in all that can be called a significant improvement. Resales, although still heavily flavored by foreclosures, do remain healthy and need to stay that way to push this weakened market to a smooth turnaround. To read the entire article, please click on the link.

Las Vegas housing projects in outlying areas slowing up

A few years ago when the real estate boom was happily chugging along home prices in town were breaking records month after month. The predictable result was that many home buyers were beginning to be priced out. Smaller, established communities like Mesquite and Pahrump where land cost a lot less could offer affordable housing and they began growing steadily.

Besides them, developers were also drawing plans for new master-planned communities in the outlying areas, like Coyote Springs straight north from Las Vegas and White Hills in northern Arizona. Again, the key attraction with them was that housing out there would be reasonable. The city was still growing at a healthy clip, so it was entirely viable that any new development out in the distant valleys would draw an enthusiastic response.

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