THE AIR IS DRY AND OFTEN SCORCHING. THE view is utterly monochromatic--various terra cotta shades of rock, dirt and dust, framed by mountains. If there is water, it's nowhere in sight. And because the residential terrain is so flat, acres and acres of land look like just a few blocks. And guess what: Every month, 8,000 people move in and 2,000 people move out.
Just about everything you can think of is under construction: highways, hospitals, doctors' offices, warehouses, more houses, more hotels, more condominiums, more office buildings, more gas stations, more stores. There are street addresses so new they haven't been listed in GPS Magellan Navigator yet. This is Las Vegas. Real estate here is sizzling. Sales and prices are so hot that some people are worried that, if ever there was a housing bubble, Las Vegas is it.
Across the nation, average home prices shot up 12.5 percent from the first quarter of 2004 through the first quarter of this year. The figures, from the Office of Federal Housing Enterprise Oversight's (OFHEO's) House Price Index, reveal Nevada housing posted the largest gains, with a four-quarter increase of 31.2 percent.
OFHEO Chief Economist Patrick Lawler believes the overall figures "show the rise in house prices continues at an extremely strong pace and raises the potential for declines in some areas later on."
Maybe so. But players entrenched in the heat of the Las Vegas real estate market don't see those declines headed their way. Steve Bottfeld, vice president of Marketing Solutions, Las Vegas, a consumer research and marketing firm, notes that Las Vegas has led the nation in job growth more than any other city in the last 10 years, and that job growth in Las Vegas was roughly 4.9 percent in 2004.
Take, for example, the ever-expanding World Market Center, headed for a total ware-housing space of 7 million square feet. It's intended to not just rival but overtake High Point, North Carolina, as the largest furniture display center in the world.
At the National Association of Realtors (NAR), Chicago, Chief Economist David Lereah isn't expecting a decline of any type in the Las Vegas market. "Households in California are uprooting and moving to Las Vegas. They're moving from $600,000 homes in California to $280,000 homes in Las Vegas. It's half the price. That's not a balloon waiting to burst," says Lereah.
Doug Duncan, chief economist for the Mortgage Bankers Association (MBA), says that the situation bears watching, but not necessarily anxiety. "Are there some local markets where some risks have emerged? I think so, but the risks are layered and not at all severe," he says.
Fannie Mae's chief economist, David Berson, so far, agrees. While there may be some indicators to watch in Las Vegas, such as the steep rise in home prices and the high proportion of investor-held properties, Berson says, "It's not just that people are buying homes there. It has some of the strongest population growth in the country. People do want to live there. You'd have a strong housing market in Las Vegas anyway."
People in the real estate and mortgage business in Las Vegas are just plain bullish. "I don't see a bubble happening here. I just don't see it. Las Vegas is different than any other area. It has its own sense of reality. It truly does. And it just keeps growing," says Lee Friedman, a loan consultant with Silver State Mortgage, Las Vegas.
Friedman was in the garment industry when he moved to Las Vegas from New York in 1988. "It was the Wild Wild West," he recalls. Vast acres of land, where now dozens upon dozens of little $350,000 Spanish stucco houses are being slapped up, were nothing more than vast expanses of rock and dirt then. If you had a horse, you could ride it across the empty valley. That's a lot to absorb for a city boy from the east.
"The thing that struck me about Las Vegas when I first came here was the stark beauty of it, compared to other places," he recalls. …