Well, as I stated then and have been predicting all along, things aren't going to get any better anytime soon -- this was some bubble and we've got a long way to fall.
From the Las Vegas Review Journal Today: Bad news mounts in housing
The number of Clark County homes that entered preforeclosure status reached a record 6,152 in March, up 52 percent from February and more than double the 2,813 preforeclosures in the same month a year ago, Sacramento, Calif.-based Foreclosures.com reported.
The county has 15,937 preforeclosures through the first quarter of the year, or 3.11 percent of its 512,253 households, the online foreclosure source reported.
Nevada leads the nation with 2.42 percent of its households, or 18,087 homes, in preforeclosure through March, followed by Arizona (1.96 percent), Florida (1.87 percent) and California (1.05 percent).
Staggering foreclosure numbers are the result of a multitude of factors, including a meltdown in the mortgage lending industry, fraudulent appraisal values and overzealous speculators.
Real estate-owned, or bank-owned, homes in the county also rose substantially in March to 1,937, up from 1,640 the previous month and 1,763 in January. The three-month total is three times more than a year ago.
Jeanette Young said she's now faced with possible foreclosure on her home after losing her job at National Alliance Title, which closed in December.
President Bush's plan to give $600 tax rebates to help homeowners is a "joke," she said.
"I don't know anyone that has a mortgage that is $600, unless they've had the same loan for 10-plus years," she said. "Mine is $2,200 plus all the other bills associated with a home. I do not see any relief in sight for those of us who have lost our jobs, cannot find comparable income and now cannot make our house payments."
So, how is this foreclosure issue impacting the broader Nevada economy?
Nevada's January gambling revenue falls 4.8 pct
Nevada casinos won $1.06 billion from gamblers in January, a 4.8 percent decrease from the same month a year earlier, Nevada's Gaming Control Board said on Friday.
Hooters Hotel sees fourth-quarter decline
Hooters Hotel's management said the economic downturn late last year drove fourth-quarter revenue down as the property saw department wide declines.
Fourth-quarter net revenues declined 11.5 percent to $14.8 million from $16.8 million in 2006.
Casino revenues dropped 10.1 percent, food and beverage fell 12.1 percent, and hotel revenue fell 8.4 percent for the three months ended Dec. 31.
"The challenges presented by the current economy have eroded consumer confidence," said Mike Hessling, president of 155 East Tropicana, LLC, Hooters' parent company, during a conference call Tuesday. "It has caused certain customers to reduce their spending on leisure and entertainment."
States taxable sales plummet 5% in January '08
Nevada's funding problems worsened Friday when the state Department of Taxation announced that taxable sales for January plunged nearly 5 percent from the year before, the biggest drop of the state's current economic slowdown.
Every major component of the taxable sales base was down in January, from auto sales to restaurant purchases.
In a separate report issued Friday on Nevada's February unemployment rate, Bill Anderson, chief economist for the Nevada Department of Employment, Training & Rehabilitation, suggested that an upswing in the economy isn't expected immediately.
Governor Gibbons Dealing With Major Budget Cuts
Concerns are mounting that the $900 million state budget crisis could get worse. Thursday Governor Jim Gibbons was in town and he outlined how he intends to decide what to cut.
So far the conventional wisdom has been correct, it's going to get worse before it gets better. The governor said some departments will be spared from further cuts, while everyone had better get used to the same old, same old everywhere else.
K-12, public safety, corrections and juvenile justice. Should it stay or should it go? These are the decisions haunting Governor Gibbons. $900 million is looming and more programs want more money than ever before.
Las Vegas is in the red and facing one of the largest budget deficits in city history. The mayor and the council called an emergency meeting to come up with solutions.
Nevada governor says budget shortfall is nearly $900 million
CARSON CITY, Nev. — Nevada Gov. Jim Gibbons said Monday that the state's budget shortfall could reach $900 million by mid-2009 and he'll work with legislators to find more ways of reducing spending beyond the 4.5 percent cutbacks he ordered in January.
After two closed-door meetings with both Democratic and Republican lawmakers, the GOP governor also told reporters that he hopes to avoid layoffs of state workers. However, there's still a possibility of additional budget cuts of up to 3 percent for some agencies next fiscal year.
The projected $900 million shortfall amounts to 13 percent of the nearly $7 billion state budget approved last year for the current two-year budget cycle, which runs through June 2009 - and if the revenue slump continues, the shortfall estimate will grow even larger.
The city finance director says the Las Vegas housing market and consumer spending are in a recession although overall the city is not in one yet. Still, it means huge cuts that will affect every department and Las Vegas residents waiting longer for services.
"Only an idiot would say that everything is going to be hunky dorey. It is not. We are just going to have to do what we can with the money that we have," said Mayor Oscar Goodman.
So, where does Las Vegas go from here?
For lack of better words than those I've already written, I'm going to repost some of my closing thoughts from a December 07 Las Vegas Housing Bubble Post, as they still apply
Las Vegas’s economy has been completely dependent on the discretionary spending of vacationers (Airlines, Hotels, Restaurants, Shows, Gambling, Drinking, Strip Clubs, etc) and the city lacks any real or substantial diversification. When tourism & discretionary spending finally start to decline (due to National negative savings rates, rising inflation and falling home values), gaming revenues will drop, hotel occupancy rates will fall, and thousands of layoffs will follow.
Those locals who find themselves unemployed will quickly find that they have very limited options, as the entire hotel & gaming industry will be feeling the same economic pains. The lack of industry diversification in the city will be a killer!
Currently, with housing values falling, the wealth effect is under strain and many people are having difficulty understanding what has happened to the housing market, while most are still holding on to the false hope it will recover somewhat quickly.
In the meantime, these folks have a mortgage that must get paid, all while coping with higher gas, food prices, tuition, insurance, energy bills, etc. Many are already strained to the max and the black hole of upcoming teaser rate mortgage resets will finally set them over the edge. (Note: refinancing will not be an option for those who have purchased within the last 3 years because they are already underwater; additionally many who have owned for decades used the cheap rates and housing boom to extract available equity--to live beyond their means; so they too cannot refinance).
This same issue is beginning to impact millions from across the nation!!!
Additionally, the home ATM machine that people used to draw money out of regularly has finally dried up, so they have ended up resorting back to the credit cards (the same ones they paid off with that home equity line of credit last year) just to make daily ends meet.
This is going to end horribly (on a national scale)!
BOTTOM LINE: When tourism starts to wane, due to people running out of discretionary cash, gaming/hotel industry layoffs will follow, cascading the impacts of the already doomed Valley housing market, as more locals will be unable to meet their monthly mortgage obligations.
Reduced spending levels, increasing layoffs, magnified home foreclosures and tightening credit conditions will cause a doubly painful domino effect on the Commercial real estate market and in due time, the impacts will be extremely painful to the entire economy. .. State Tax revenues will fall, budget cuts will follow and the increasing number of government layoffs will only exacerbate/compound the situation.
I think one of my readers summarized the situation best: “ Las Vegas lives off the margin. Good times, fat margins; lean times, no margin. LV has no plan B, there's nothing to take up the slack from a decrease in visitor volume. Even dollar rich foreigners aren't going to hold up employment that is based on a volume service industry and housing construction.”