Las Vegas condo owners sue developer

Just like the rest of the real estate market in the Entertainment Capital of the World the condominium sector has fallen on hard times. Units for sale are sitting unsold for months on end and prices are dropping. That makes a lot of owners nervous, especially those who are in it as investors.

A group of them at the Signature, the MGM Mirage - Turnberry Associates condo-hotel project with three towers, has decided to sue the developer for fraud, for selling them high-rise units that are unprofitable. Yes, that is the reason for the legal action. Unprofitable condos. Disputes typically arise when deposits are paid and then the project fails to get off the ground or when the building opens with material defects and missed features. As is evident, this particular grievance is rather unusual.

According to the complaint, the developer enticed them to purchase condominiums that would bring net profits when they are rented out, in addition to the potential for appreciation. In this setup the owners would have a management company rent their units to visitors when they are unoccupied. But for many owners rental incomes haven't even been enough to cover the underlying mortgage payments and high maintenance fees, much less bring a profit, and they feel exploited.

On the surface it appears to be very difficult to prove that the developer is at fault. The profit assurance assumably wasn't included in any written contracts, so what promises the sales agents orally made is hard to establish. It really is the investor's responsibility to do his homework before signing anything and if the market turns, like it has now done, it's just part of investing, and also a learning experience. Seeking help for a questionable business decision making from the courts is stretching it.

Photo by Steve Marcus

Las Vegas housing crawls along

The November residential real estate indicators for Southern Nevada were recently published by Home Builders Research and SalesTraq, two local industry research shops. In general the numbers are down, an altogether familiar pattern for the past several months.

In the new home category sales were off by 47.5% from last year and the median price declined 20.2%, to $271,228. The drop in the price is meaningful, as it now reached over 20% year over year, a moderately high figure. Resale house sales decreased 42% and the price was cut back 10.5%, to $257,000. During the boom years in Las Vegas the new home prices were racing well ahead of the existing stock and now the reverse is taking place, the new home having given up roughly double the amount of value in comparison to the resale sector. To read the entire article, kindly click on the link in this paragraph.

The Plaza project moves ahead

Another Las Vegas mega resort development obtained its preliminary approval this week from the Clark County Planning Commission. The $5 billion Plaza is planned for the New Frontier's old location at the north end of the Strip. If the final approval is granted in January, construction is set to begin later in the year and completion is estimated for 2012.

The developer is Elad IDB Las Vegas, a joint venture of Elad Group and Property & Building Corp. which is a subsidiary of IDB Holdings Corp. The Plaza is designed to emulate the famous Plaza Hotel in New York that features French Renaissance architecture.

The current plan has seven towers in total built on the 34.5-acre site that will house 4,100 hotel rooms and 2,600 condos spread throughout the buildings. In addition, it'll have substantial space allocated for a casino, a host of restaurants, a large convention center, a health club and of course retail.

The condominium component could pose some headaches for the project since the market is presently saturated. The time frame, however, takes the completion date out to 2012 when the conditions may well be more stable. The developer also has experience in condo development and a known brand that will help in marketing the units.

The stretch of the Strip from the Venetian north to the Sahara is nowadays a beehive of activity. Other projects under way there are the Palazzo, Encore next to Wynn Las Vegas, the Fontainebleau and Boyd Gaming's Echelon Place. Each new property will add bankable value to the north end micro market.

Vegas housing market about to pick up

A lot of attention has lately been directed toward the mortgage industry where lenders continue to struggle with rising foreclosures and try to keep their balance sheets somewhat respectable. Washington also announced an interest rate freeze plan that on the outset received proper headlines, but on closer scrutiny it appears to be more politics than a sincere attempt to help those in need.

In the meantime, Greater Las Vegas Association of Realtors, or GLVAR, compiled its monthly statistics for November and one sector indicates that the market is working actively on trying to right itself. It's the single-family house inventory that deserves special mention, as it dropped slightly to 23,494 from October. The significance actually is that this is the third consecutive month it moves lower. To read the entire article, please click on the link in this paragraph.

photo by decorationtricks

Las Vegas real estate market sluggish

There have lately been small signs of improvement in the local housing market and anything positive on that front is warmly embraced. Perhaps the low mortgage rates are helping out, perhaps the sellers are pricing their homes more realistically, could be the buyers have realized that now is the time to make a move. Or it's a little bit of all of them.

The Southern Nevada Index of Leading Economic Indicators rose slightly in November to 133.06. The index is compiled by the UNLV's Center for Business and Economic Research and really is a six-month economic forecast from the month the data was collected. Overall, it has been relatively flat since March of 2005.

New and existing home sales remain about 48% behind last year's numbers according to October's data, which has been the pattern for several months and was expected. The median new home price declined by 7.9%, to $300,812, from October in 2006. Builders have aggressively cut prices in many subdivisions to move unsold inventory, but it hasn't eroded the median price that much. Not yet anyway.

A bright spot in the real estate arena is the new home permits, which more than doubled from October a year ago, from 860 to 1,840, per Home Builders Research . The figure is somewhat misleading because a new building code went into effect on November 1 and builders decided to pile up on permits under the old code. Those rascals. We'll see in the next few months if a pattern is forming.

Once the residential real estate sector reverses course, it'll undoubtedly begin pushing the economic index up.

Las Vegas developable land hunt

Downtown and its surrounding areas have long had a questionable reputation and a leisurely drive through there will quickly spell it out why. The only bright spot has really been the Fremont Street Experience with its well-lit casinos. Only the brave would choose to go that way after dark, much less buy a house there to live in.

But things have lately changed for the better. Investors, many of them from out-of-town, have been able to identify suitable parcels of land scattered about and purchase them for a price that met their return on investment criteria. Then they proceeded to build on the sites something unheard of before, luxury condominiums. One of the pioneers was Sam Cherry who developed the SoHo Lofts. Another daring investor was the Fifield Co. that built the Allure luxury condos in a seedy neighborhood behind the Stratosphere.

Please click on the link in the above paragraph to read the entire article.

Real estate sold by auction houses

As the real estate market in Las Vegas struggles with a high inventory of unsold homes, sellers are trying to find ways to successfully move their properties. They list them with Realtors and the MLS, some decide to proceed on their own as FSBOs and advertise in the newspaper and the Internet, they distribute flyers in the surrounding neighborhoods, they do a lot of different things and often none of it works.

But many of them must sell, for a variety of reasons. This is where the auction house comes into the picture. Today, it's increasingly the last resort for a desperate seller. Now the marketplace can decide the price of the house and the seller can say, whatever the sales price, that it was fair value.

Hudson & Marshall is a national firm and comes to Vegas every 90 days or so to auction foreclosed homes. They work closely with local agents and advertise the events for 45 days for maximum impact. Properties are auctioned "as is" and have clean titles, meaning no liens or encumbrances and no back taxes.

Those with winning bids are required to put down $2,500 or 5% of the sales price, whichever is higher. Also, they conduct "reserve" auctions where the seller can either take the offer or turn it down. Interested home buyers and investors can go to http://www.hudsonandmarshall.com/ for more information.

But why does it take so long to sell a property, by auction or other means? If it is priced correctly, it will go. Isn't that the motto of the marketplace that there always is a buyer when the price is right? The Las Vegas market has been soft for a while now and it's critical for the seller to accept that. Otherwise it's going to be a long and agonizing wait.