Real estate expected to flounder in 2007

By RACHEL KONRAD

ANTIOCH, Calif.

Donald Anthony has slashed the price on his four-bedroom, two-bathroom house by almost $80,000 -- and added $40,000 worth of improvements, including a new kitchen and landscaping in the leafy yard.

He's used three different agents. He's listed the 1,800-square-foot home -- an immaculate ranch on a quiet cul-de-sac -- on for-sale-by-owner sites, in newspapers, on cable television and community site Craigslist. He or his agents have spent at least 50 idle afternoons hosting open-house events.

But the 74-year-old retired physicist cannot unload the house, now listed at $489,950 -- well below the price of comparable homes in the fast-growing region between San Francisco and Sacramento.

"The buyers have vanished," Anthony shrugged in front of new Shaker maple cabinets and never-used appliances. "If this doesn't sell post haste, I'm going to bite the bullet and pull it off the market."

If Anthony can't wait another year or more, he might as well rip out the for-sale sign now.

Although few experts predict that home values will fall dramatically in 2007, many economists say that prices won't improve for 12 to 18 months. And without the cushion of rising home equity -- which softened the blow of high oil prices last year and kept consumers buying big-ticket items at a rapid clip -- Americans may lose confidence in their finances, and the broader economy is likely to suffer.

Ambitious building booms in many markets in the past half-decade, combined with mortgage interest rates that have increased about 1 percent in the past year, have resulted in residential real estate stagnation. The gridlock defies conventional wisdom, stubbornly remaining neither a buyer's nor a seller's market.

"We are currently experiencing the worst of the market freeze, which is being exacerbated by the gap between the buyer's desire for bargains and the seller's fantasy of what they once thought their homes would be worth," said Diane Swonk, chief economist for Chicago-based Mesirow Financial, who forecasts a rebound in early 2008. "The good news is that there are some signs of stabilization. The bad news is that a substantial backlog of unsold homes still exists."

Global forces and U.S. monetary policies play important roles in the housing slowdown, which already appears to be depressing the national economy.

The newest forecast by Moody's Economy.com, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent -- the first decline for an entire year in U.S. home prices since the Great Depression of the 1930s.

The Commerce Department reported Nov. 29 that gross domestic product grew at a 2.2 percent annual rate in the third quarter, down from 2.6 percent in the second quarter. The residential construction falloff subtracted 1.2 percent from growth, the department stated.

Peter Morici, business professor at the University of Maryland, said artificially low interest rates over the past half-decade encouraged China and other exporting nations to purchase 10-year bonds, which kept U.S. mortgage rates low and fueled the housing bubble -- despite a gaping trade deficit that should have sapped investor confidence years ago.

"In order to play this ponzi scheme, the value of the homes had to go up faster than the economy grew and faster than people could service their debt. We've reached that limit," Morci said. "The housing market sustained the economy at a time of very large trade deficits. It's been a false prosperity."

In addition to macroeconomic forces, regional U.S. housing markets faced particular challenges.

In expensive coastal cities, economists say, price appreciation hit a wall. San Francisco and Boston -- where many investors enjoyed double-digit property gains in the late 1990s and the first half of this decade -- have simply become unaffordable.

The number of Californians who could comfortably pay the mortgage on an entry-level home fell to 24 percent in the third quarter -- down from 44 percent in 2003, according to the California Association of Realtors. The median price statewide was $563,190.

"I don't see how the economy can continue with these prices," said Stephen Levy, senior economist of the Center for Continuing Study of the California Economy.

Housing prices in New England grew an average of 10 percent per year from 2000 to 2005, compared with 8.3 percent for the nation as a whole.

But a forecast released Nov. 14 by the New England Economic Partnership, a nonprofit forecast organization with members are from private industry, government and academia, projects prices in New England will be flat through 2010, below the U.S. forecast of 2.1 percent growth per year. Housing prices in Massachusetts are expected to decline 9 percent through 2010.

"Areas along the coast of the nation and the large urban areas tend to see stronger price gains in housing upturns, and stronger declines in downturns," said Celia Chen, a housing economist with Moody's Economy.com in West Chester, Pa.

In Sun Belt havens such as San Diego, Las Vegas and Phoenix, overzealous construction resulted in a glut of new homes and condos. Real estate experts say sellers and developers there will struggle throughout 2007.

"We have to work off the inventory," said Daniel Nussbaum, a licensed investment adviser and CEO of Calabasas-based TheUSARealty.com. "I honestly think we're past the worst of it, but if you don't take out your magnifying glass you might not notice."

Florida will likely remain the toughest market for buyers and sellers.

Building frenzies in Miami, Orlando and the Caribbean coast resulted in a plethora of for-sale signs. Developers desperate to unload inventory offer free granite countertops, appliances and furniture -- even cars, vacations and mortgage payments for up to six months.

Meanwhile, insurance companies dramatically raised premiums after Hurricane Katrina. Depending on where they live and their policies, Florida home owners may pay as much as 10 times more for flood and wind insurance than last year; premiums can exceed $30,000 per year on mansions. That's caused monthly costs to skyrocket, pinching current owners and making it all but impossible for renters to buy.

Throughout Florida, 12,773 existing single-family homes were sold in October, down 22 percent from a year ago, according to the Florida Association of Realtors. Florida's median price was unchanged at $242,500, but more than half of the urban areas posted declines. Around Fort Myers, the median price plunged 44 percent to $249,200 from October 2005.

Not everyone is pessimistic -- even in beleaguered Florida.

Long-term demographic shifts from the Midwest and New England bode well for the notoriously boom-and-bust state, said Dave Denslow, professor of economics at the University of Florida. Florida, which gained 430,000 new residents in the past year, is a popular destination for Latin American immigrants and retirees from northern states, Canada and western Europe.

"People start thinking about buying a retirement home in their late 50s, and baby boomers are approaching that age," Denslow said. "The demand for residential housing here is only going to get stronger through 2020."

Meanwhile, back in Antioch, where Don Anthony is struggling, Zach and Katherine Chouteau are looking for a house or condo with a home office and room for twin Pug dogs.

They'd love to buy in Antioch, but the couple -- who moved from suburban New York five years ago to start their own business -- are reluctant to commit.

Like many shoppers, they're discouraged by higher interest rates -- and rampant appreciation in recent years and the perception that many San Francisco Bay Area owners have halcyon-day notions of multiple offers and bidding wars.

"It's definitely a friendlier market than earlier this year, but not a dramatically cheaper one," Zach Chouteau, 41, said. "People have gotten really spoiled by the rapidly escalating prices, and it seems like they're in denial that things have leveled out. They're just fishing for the best price."

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AP Business Writer Mark Jewell in Boston contributed to this report.

Time for a Change

By Donald Luskin
June 16, 2006

WHAT CAN I SAY but, "Whew!" For a while it looked like stocks were going to fall — and fall hard — every day until they hit zero. Scary in any event, and especially for me as I have been writing in this column that this would be a buying opportunity. Well, I know that being right too early is like being wrong. But that's a lot better than being wrong too early.

So no crowing here, but I still stand by every bullish word I've written over this last month of stock-market decline. The particular timing and nature of this week's turnaround in stocks convinces me, more than ever, that my basic premise has been correct: The Federal Reserve is going to act decisively enough to quell inflation risks, and in time to do so with interest rates that are not so high as to kill the economy.

Just think about when the stock market recovery started this week. It was following Wednesday morning's announcement that the core Consumer Price Index had grown by 0.3% in May — the third month in a row to register that same very high inflation number. Bad news, right? Hasn't this whole decline of the last month been an inflation panic? Why should that rally stocks?

Simple. Because Wednesday's May CPI put the inflation problem right out in the open where nobody can dispute it. I've been warning about rising inflation risks in this column for more than two years, and I've been a voice in the wilderness. Now we can all be agreed on what's real — and what needs to be done.

And now that we are agreed, we can be sure that what needs to be done will be done. Until a month ago, plenty of reliable inflation indicators were going into the red zone, because there was no confidence that the problem would be recognized and addressed. Gold had soared to quarter-century highs. The U.S. dollar made new cycle lows. And the TIPS spread — the difference between Treasury bonds and their inflation-indexed counterparts — had moved wider.

Now all those indicators have violently reversed. Fed chair Ben Bernanke and other central bank officials have made it clear that inflation-fighting is job one. We're on our way to the inflation problem being over.

And, thankfully, the recognition comes in time so that the cure won't have to be worse than the disease. Considering how far markets like gold, the dollar, and the TIPS spread have retreated from inflation-panic levels, it looks like the Fed won't have to raise interest rates much beyond 5.5% to do the trick. That's two more quarter-point rate hikes at the next two FOMC meetings. And then — voila! — it's over.

Does anyone seriously think that interest rates at 5.5% are going to kill this economy? I suppose there are those who think the economy is going to roll over even at today's rates. But those are the same people who said the economy was heading into recession when rates were still at 1.5% and again when they were 2.5%, again when they were 3.5% and 4.5%. The perma-bears have been perma-wrong. That's not going to change now.

Here's a factoid for you: Since 1984, 5.5% happens to be the average short-term interest rate. Over the same period, real gross domestic product growth has averaged 3.4%. So what, exactly, is so bad about 5.5% interest rates?

It's not going to be all sweetness and light from here, though. We're at the end of a rate-hiking cycle, so we're entering a whole new world. The investment strategies that paid off the biggest over the last three years aren't likely to do so again. In fact, they're likely to do the worst. People are going to get hurt. Investors need to adapt — or die.

Think about what has done the best over the last two to three years of unusually low interest rates and rising inflation. It's the end of the road for the all the investments that depended on those things.

The one everybody already knows about is housing. I'm not forecasting a housing crash, but there's just no way that that housing market isn't going to at least cool off here. I don't think that's the big problem for the economy, but there will surely be a lot of empty condo towers in Miami and Las Vegas — and some former day traders who have recently become real estate agents who are going to be rather disappointed.

The speculation in commodities is over. Gold. Silver. Copper. They were all bets on inflation fears getting worse. Those fears have topped out and are heading lower, and so are the commodities that have fed on those fears.

The nations that produce commodities — mostly emerging markets — have topped out, too. They've benefited both from the rise in commodities prices, and the fall in the value of the dollar. In an important sense, that's saying the same thing two different ways (they're both symptoms of inflation). But for Americans holding emerging-markets investments, it's a double whammy. The commodities prices underpinning the emerging economies will collapse, and the exchange rate between the currencies of the emerging economy and the U.S. dollar will collapse at the same time.

Japan is the most vulnerable emerging economy of all. How can I call a mature country like Japan "emerging?" Simple. Japan has been struggling for years to "emerge" from a devastating decade-long monetary deflation. Its central bank, the Bank of Japan, has declared victory in the war on deflation, and it's now tightening. Big mistake.

That's because it's happening at the same time as the Fed is tightening even more, which is causing the dollar to appreciate vs. the yen. So the Japanese Ministry of Finance no longer has to intervene to weaken the yen to keep it competitive — and that intervention was key to the recovery from deflation. With no more easing and no more intervention, Japan is likely to slip right back into a deflationary recession. Is it too late to sell the Japanese stock market? Maybe. But I sure wouldn't be a buyer.

The end of the road for inflation plays applies to oil and the stocks of companies in the energy industry. Yes, part of the story there all along was global growth, and I expect that to continue. But when the inflation story is taken out of the equation, at least half the energy thesis is stripped away.

My institutional-investor clients are acting very resistant to accepting these new realities. It's always hard to give up on "what's working." But it's time to get real. "What's working" has stopped working. It's time to find the next play, not cling to the last play.

What's the next play going to be? Honestly, at this point I don't know and I don't care. For now the money is going to be made by what you don't invest in, not what you do invest in. Ask yourself: Are your investments dependent on rising inflation? Rising commodity prices? Falling dollar?

If so, then there's only one thing to do. Get out. The world has changed.

More buyers leaving contracts, huge deposits on table

By SANDRA FLEISHMAN
THE WASHINGTON POST

WASHINGTON — As the housing market cools, builders are reporting that more people are walking away from contracts and from tens of thousands of dollars in deposits.

Nationally, some big builders are beginning to report cancellation rates upward of 25 percent.

"But 10 to 15 percent of people deciding to cancel is not going to be unusual most of the time," said Jonathan Dienhart, director of research for Hanley Wood Market Intelligence, a home-building research firm. "It's just that in the last couple years when we had unusually high demand, where people could just buy a property and flip it, there were fewer cancellations. It's not a cakewalk anymore."

The percentage of buyers backing out of new home purchases is significantly higher in some parts of the Northern San Joaquin Valley than elsewhere in the nation, according to Steve Smiley, another Hanley Wood executive.

"We're seeing cancellation rates as high as 30 percent in some projects," Smiley told builders gathered at a Modesto conference Thursday morning. His talk focused on new home sales in Stanislaus, San Joaquin and Merced counties, which have slowed dramatically since last year.

When a housing market is hot and prices increase, as they did dramatically during the past five years in many areas, cancellations are rare and builders generally aren't concerned because they typically can sell the units at even higher prices. But if the market is slowing, as it has been this year, builders might need to add incentives such as upgrades and price cuts to move their product. That reduces profit but provides opportunities for people who couldn't afford to buy before.

People who are buying for investments rather than residences are the most likely to bail out, experts said. They reason it would be better to lose a deposit than to go ahead with an investment that could lose value, particularly if builders are cutting prices in the same or nearby projects.

Typically, buyers of new homes pay upfront deposits calculated either as flat amounts as low as $1,000 or as a percentage of the price, generally about 5percent of the home price. In recent years, some builders increased deposits to discourage speculators and get more upfront cash from desperate buyers. Some require deposits of 7.5percent to 10 percent.

Despite the pain of giving up that much money, some buyers are canceling to cut their losses because builders are pricing the same houses for so much less, Alexandria, Va., lawyer James "Beau" Brincefield Jr. said.

"I have seen people literally walk away from $125,000 deposits rather than go forward with the closing because the value of a house identical to their own was being sold by the builder for $100,000 less," said Brincefield, who is preparing litigation for buyers who want to sue builders to get their deposits back.

Builders are trying to make it harder for people to split, lawyers and real estate agents said. While contracts "always favor the builder" and are always hard to contest, now that it is harder to resell, "builders are fighting attempts to get the deposit back tooth and nail," Washington lawyer John Gerardo said.

Hanley Wood's survey showed the Sacramento area with the highest cancellation rate, 28 percent, up from 2.6 percent in March 2005.

Rates in Las Vegas, Denver, Phoenix and Orange County also were higher than those inthe Washington area.

Bee staff writer J.N. Sbranti contributed to this report.

Homeowner affordability fuels suburbs

BY TONY ILLIA
BUSINESS PRESS

Rising property prices, escalating construction costs and a shrinking local land inventory has local homebuilders looking at places like Pahrump, Mesquite and Coyote Springs as the next bedroom communities to Las Vegas. Vacant property values now average about $800,000 per acre and higher in the Vegas area, and building costs have increased 14 percent or more during the last year alone.

Homebuilders subsequently are giving rural communities outside the valley more serious consideration. The land is still cheap and plentiful. Local officials are welcoming. Permitting is faster. And there are fewer water restrictions.

Pulte Homes, for example, recently broke ground on a 2,014-acre master-planned community in Mesquite, 80 miles northeast of Las Vegas. The development, called Anthem Mesquite, will consist of 4,600 single-family, detached homes built around an 18-hole golf course designed by Gary Panks. Las Vegas, by contrast, has a golf course construction moratorium in effect because of drought conditions. "We chose to develop in Mesquite primarily because of what the land offered us," said Steve Wethor, president of Pulte Homes' Las Vegas North Division. "We began looking in outlying markets because the price of land in the Las Vegas Valley has become so high that it is not economically feasible for us to develop large active adult communities in Las Vegas at this time."

Pulte is hoping homebuyers will follow them to Mesquite, which currently has about 20,000 residents. But that number is expected to grow by 23 percent during the next few years. Affordability will play a key role in its future growth. Average Mesquite homes cost about $120,000, the city reports, which is 61.3 percent less than those in Las Vegas.

"In 2005, the median household income was $47,741, while median new home prices were $309,990," said John Restrepo, principal of Restrepo Consulting Group, a Las Vegas real estate research firm. "Home sale prices have increased 148 percent during the past decade, outpacing income growth by five times, making it increasingly harder for working families to own a home."

Homebuyers may also be drawn to the idea of getting more "bang" for their buck. Anthem Mesquite will feature single-story detached homes from 1,200- to 3,000-square-feet in size, with average densities of 4.5 units per acre. Las Vegas, by comparison, is increasingly offering three-story single-family detached homes with 14 units per acre and zero lot lines.

A bigger footprint, larger lots and golf course access are highly desirable homeownership points that increase resale value. Mesquite homes can additionally offer yards with turf. Grass is no longer available on most new Las Vegas homes because of water restrictions.

William Lyon Homes has already found success with its 900-acre, 3,200-home Mountain's Falls community in Pahrump. Single-story homes are priced from the low $200s to mid $300s.

"There's a tipping-point when homebuyers will drive that extra distance for a larger lot and bigger home that's 40 to 50 percent cheaper," said Terry Connley, William Lyon's vice president of Nevada Operations. "It really comes down to a lifestyle question that buyers ask themselves. I believe Pahrump will be a major contributor to the Las Vegas housing market over the next five to 10 years."

Pardee Homes similarly is testing the rural waters with its Coyote Springs development, 60 miles northeast of Las Vegas. Construction on the 13,100-acre, 10,000-home first phase began in early April. It, too, will offer homes built around a championship golf course. Residences will be single and double stories from 1,100- to 4,500-square-foot in size. The first homes are expected to come online in summer 2007. There will also be multiple outdoor swimming and lap pools as well as lagoons and water slides. Water features, no longer available in Las Vegas, serve as yet another highly desirable attraction for the new development.

"This is going to be a different place to live for young trailblazing families," said Jim Rizzi, Pardee's director of community development. "We are forecasting that sale prices will be 20 to 30 percent below a comparable community in North Las Vegas."

The 43,000-acre Coyote Springs Valley is being developed by a Harvey Whittemore-led investment group, with Pardee overseeing the residential master-planned portions.

"Outlying areas where entry-level housing is still affordable are becoming the new bedroom communities to Las Vegas," Restrepo said. "As valley home prices continue to escalate, people could soon be forced to commute in order to have a better lifestyle. Unless more affordable housing occurs as a result of improved BLM land auction processes and added developer incentives, places like Mesquite, Pahrump and Coyote Springs will become popular alternatives for workforce home ownership."

Downward Trend Predicted in Las Vegas Real Estate

The Las Vegas real estate market received some bad news from a popular magazine. Fortune magazine ranked Las Vegas last in a list of the top hundred real estate markets. The ranking is based on predicted price growth over the next two years.

Sean Dugan said, "It has been on the market for five months." The Dugan's are anxious for Christmas but they are also hoping to sell their house. Dugan said, "I was hoping for shorter... that it would sell quicker." Their house has been appraised for nearly $200,000 more than they paid for it six years ago. They say that means one thing -- everything you put into your house you get back. It is like money in the bank," Dugan said.

But that is not going to be the case for long according to an article in Fortune magazine. Of the largest 100 housing markets in the country, Las Vegas ranks dead last when it comes to predicted price growth. The study predicts nearly a 13-percent decrease in housing prices.

San Antonio tops the list with a projected price increase of more than 15-percent over the next two years. Albuquerque and Salt Lake City were not far behind. Local consultants disagree. John Restrepo, "I get the feeling they didn't fully analyze the Las Vegas economy and what makes it unique."

Restrepo says even if there is a small drop homeowners still win. "If you have a market that increases 40 to 50-percent over the next two years and then you have to decline of 7-percent, well are you losing money? No." l

Restrepo says there is still a hot market in Las Vegas. That is the market for resale homes. Restrepo said, "If I was in the market I would look for resale."

That is good news for the Dugan's who say all they want for Christmas is, "A lot more people coming to check out the house. A lot more people."

Restrepo expects to see the housing market pick up after the holidays. He says the resale market is a good bet because buyers will have a little more room to negotiate compared to new home sales.

Real estate prices soaring in Las Vegas

KATHLEEN HENNESSEY
Associated Press

LAS VEGAS - Its front windows wish you "Feliz Navidad" in paint that won't wash off. The landscaping consists of four shriveling cacti and a patio piled with empty cat food boxes. Inside, it's 700 square feet of confirmed bachelor's clutter. And it can all be yours for $1.2 million - cash.

There's perhaps no better evidence of the condo fever raging through Las Vegas' real estate market than the asking price on Manuel Corchuelo's home. Once considered deadlocked in the wasteland where the Las Vegas Strip fizzled into a decaying downtown, the World War II-era home is now happily nestled in the shadows of billions of dollars of new and proposed high-rise condominium projects. Corchuelo is sitting on much-coveted land.

From his front lawn, Corchuelo likes to smile up at the cranes and listen to the clang of construction.

"It's a good sound," he said.

The former catering waiter and Colombian immigrant bought the home in 1978 for $30,000. He worked more than 20 years serving high rollers and conventioneers. He never married, saved some money and lost $15,000 of it on the stock market. Ten years ago, he started reading about investors' plans to build condominiums outside his door. He cut the clipping from the newspaper and put it in a three-ring binder.

A few years later, he put his house on the market.

At last count, there were 93 luxury condominium projects, totaling 175 towers, proposed, planned or under construction in the Las Vegas valley in the second quarter of this year, according to a report released in September by Applied Analysis, a Las Vegas-based consulting firm. Though Brian Gordon, an analyst for the group, estimates that little more than one in three of the 93 will ever open its doors, 15 projects representing 10,000 units are expected to be completed by the end of next year.

Developers tout the boom as the Manhattanization of Las Vegas, the move to "verticality" instead of sprawl. They promise an urban lifestyle, skyline views and celebrity neighbors. They court the young, rich and out of town.

About 85 percent of condo buyers are non-Nevada residents or investors, Gordon said.

Most of the projects are huddled on or around the Strip.

"It's sort of like beach-front property. They're not making any more of it. Everybody that's within a stone's throw thinks their property is worth $20 million an acre," he said.

The hype is fueling increases throughout the city. The cost of a vacant acre in the Las Vegas area has hit $601,600 - an 88 percent increase over last year.

Corchuelo's home is one block off Las Vegas Boulevard and across the street from the future home of the Allure, a 41-story luxury complex under construction.

Five years ago, his initial asking price of $350,000 attracted few offers. His agent dropped the listing. Corchuelo continued to collect articles about the market, filling three binders full of stories and notes handwritten in Spanish. He studied the moves of the city's real estate tycoons.

"Even Trump makes mistakes," he said, citing a sale he says cost real estate mogul Donald Trump millions. "You have to know the area. Steve Wynn, he knew what he was doing. He had experience - 20 years building hotels. He knows everything moves in cycles."

Corchuelo found an agent who, like him, is convinced they're riding an upturn that hasn't peaked. The pair has upped the asking price several times and are looking for a buyer who doesn't need financing.

"It's happening. It's all going to keep going," said Paul Miotke, Corchuelo's agent. "The one thing we know is it's not going down in value."

Few would have said that about Corchuelo's block just a few years ago. In the 1950s, the neighborhood was home to card dealers and strippers who used to sunbathe in the buff to avoid tan lines and earned the place its nickname, Naked City. By the 1980s, it had become a pocket of prostitution and crime.

Now, the streets around Corchuelo's home are lined with a mix of small, well-kept homes, residential hotels and public housing. Visitors are as likely to see speculators and real estate agents cruising the place as pimps.

In 2000, the city removed building height and parking restrictions in an attempt to lure development to the area. It took a few years, but builders eventually began to eye Naked City for what planners call "higher intensity housing units."

"We had to expect there would be developers seeking to consolidate smaller properties," said Margo Wheeler, the director of planning and development for the city of Las Vegas.

That's where Georgia James comes in. She's a Prudential agent who cruises the neighborhood in her bronze Cadillac DeVille daily. She calls herself the mayor of Naked City and is one of several people coveting Corchuelo's property. James says she has bought and sold more than 200 properties in Naked City, some of them five times. She's just finished assembling a 5-acre site on behalf of a group of Miami investors. The plot includes 150 feet of Strip-front property and backs up to Corchuelo's parcel. It's listed at $10 million an acre.

James says she doesn't need Corchuelo's plot, but it would be nice. She thinks his asking price is unrealistic.

"He's basing it on the highest price paid for the top property on the Strip. If Wynn paid $250,000 a square foot, Manuel wants $250,000 a square foot," she said. The house next door sold about six months ago for $520,000.

Corchuelo thinks the owner should have held out for more.

James says she hates to see the 64-year-old man waste time.

"He's so old and he's sick. He's going to end up dying, and he has no children or anything else," she said, as she drives down Corchuelo's street. "So, what is he trying to do? They can build around him."

It's been done before, she said, adding that tide of development will likely consume all of Naked City in the next decade. The low-income housing will have to be relocated. The flop houses will be leveled to make way for progress.

"You can't have slums next to your high-rises. I think the city's got to find land and give it to these people," she said. "But this land, this is too close to the Strip, it has too much potential."

Corchuelo isn't the only thorn in James' side. A handful of Naked City holdouts - some residents, some California investors - are keeping her from assembling the neighborhood like a puzzle. She dismisses most.

"It's part of my job. I'm patient," she said.

And so is Corchuelo.

"I've been waiting 30 years for this," he said, adding that he knows exactly what he'll do with the money once he sells.

"Buy another house," he said.

Las Ramblas Opens for Reservations

The ambitious mixed-use project includes plans for 11 buildings and offers a prime location in the Harmon corridor poised to become Las Vegas’ most sought-after address.

Las Vegas (PRWEB via PR Web Direct) September 1, 2005 -- The Related Group, in conjunction with Centra, After Midnight Company and George Clooney, is now taking reservations for their Las Ramblas development on Harmon Avenue between the Strip and the Hard Rock Hotel. The ambitious mixed-use project includes plans for 11 buildings and offers a prime location in the Harmon corridor poised to become Las Vegas’ most sought-after address.

The inspiration for the project is Barcelona’s Las Ramblas, a vibrant thoroughfare through the heart of the city where tourists and residents alike congregate for shopping, dining and endless nightlife. Reservations are now being taken for Phase One, which includes four buildings. Two side-by-side towers of residential units at the entrance to the development off of Harmon Avenue, tentatively named The Gateway, are included in Phase One as are two buildings of Condominium-Hotel units, one that will sit atop the casino and another just to the west of the casino.

Reservations for the residences at The Gateway will start at $30,000 for a one bedroom unit and two- and three-bedroom units requiring $40,000 and $50,000, respectively. Reservations for the Condominium-Hotel units will start at $25,000 for studios, $50,000 for one- and two-bedroom units and $100,000 for penthouse and bungalow units (pricing not yet available).

Las Ramblas is just the latest in a slew of projects announced for the Harmon corridor. The Hard Rock Hotel, which put Harmon on the map 10 years ago, is undertaking a massive construction project that will include residential units. The Las Ramblas site, where the Harbor Village apartments currently sit, lies immediately west of the Hard Rock Hotel closer to the Strip.

Just east of the site, Starwood Hotels has announced plans for a flagship W Hotel at the northeast corner of Harmon Avenue and Koval Lane. Scheduled for completion in 2008, the W will feature 3,000 hotel and residential units and more than 10 restaurants and nightclubs. Just one mile to the west, MGM MIRAGE’s Project City Center will add even more high rises to the burgeoning Harmon corridor.

Aside from up-and-coming neighbors, Las Ramblas offers a prime location only blocks from the world-famous Las Vegas Strip and minutes from McCarran International Airport.

From lofts and penthouses to studios and urban villages, VegasVerticals.com communicates daily with properties in every segment of the market. Whether clients seek a condominium on the Strip, downtown, in the suburbs or even a "condotel," our team's extensive knowledge ensures our clients receive a comprehensive evaluation of their options.

And with VegasVerticals.com, clients can count on personalized service - the kind they would expect at this level of real estate. For more information on Las Ramblas or to reserve a unit or join the interest list, please contact us via PRWeb’s secure email portal. e-mail protected from spam bots

Housing market likely to flatten, experts say

July 13, 2005

By Kevin Rademacher
LAS VEGAS SUN
Warnings of possible stagnation cooling the red-hot Las Vegas housing market continued on Tuesday.

Christopher Thornberg, senior economist with UCLA's Anderson Forecast, said the rapid housing appreciation happening nationwide is not supported by traditional economic fundamentals.

"Housing prices are growing at a rate of something like 10 percent a year (nationally)," he said, speaking at Colliers International's Summer Trends event.

Thornberg said that with low interest rates and record home construction numbers, there is little logical reason for prices to be climbing.

"There is just no justifiable reason for prices to go up, except pure speculation," he said. "This is basically a pyramid scheme. This can only work as long as people are coming in at the bottom end. Unfortunately, you are running out of them."

Thornberg credited "crazy, high-risk loans," like the interest-only and option-adjustable-rate loans that allow people with lower incomes to afford high-priced homes for keeping the market hot. Rising rates or a drop in property values, he cautioned, would bring problems for those buyers.

While he indicated that the first sign of problems would likely be a drop in sales activity, he said that the irrational behavior of the market makes future movement difficult to predict.

"That's the very definition of irrational," Thornberg warned.

The news also is better in Las Vegas than other markets. While some areas could see a rapid drop in prices, he added that the rapid employment growth in Las Vegas should insulate the market from such a drop.

"Prices won't necessarily go down, but they can flatten," he said. "In six years, you're still in the same place whether it goes down rapidly and flattens out or stays flat."

John Restrepo, principal with the Restrepo Consulting Group LLC, also said at Tuesday's event that limited land supplies in Las Vegas should serve to prevent overbuilding and the potential for more lasting market problems.

"That's one thing that could mitigate the bubble (Thornberg) talked about," he said. "There is a certain level of restrictions in the valley that's constantly causing some problems with the cost of land. That could end up being one of our saviors."

Still, Restrepo said that consumers and developers should proceed carefully.

"We do have a tendency here in Las Vegas to say 'We're different,' " he said. "But there are some warning signs to watch."

The economic ramifications could ripple through Las Vegas, Thornberg said.

"You guys got off easy in the last recession because it was led by businesses, and this is a consumer economy," he explained. If a housing market correction sapped the energy out of the economy, it will start with consumers.

"The wild card is what kind of tourism you have here," Thornberg said.

His comments echoed recent statements made by analysts from the Federal Deposit Insurance Corp.

Last month, the FDIC singled out Nevada for its nation-leading 6.7 percent job-growth rate in the first quarter. Las Vegas also was singled out for creating jobs at a rate of 7.6 percent in the quarter.

Since the fourth quarter of 2003, FDIC statistics showed double-digit, year-over-year housing appreciation rates in Nevada, with the biggest gain coming with a 37 percent year-over-year jump in the third quarter of 2004. During that time, however, the greatest gain in per capita personal income came with a jump of 6.1 percent in the fourth quarter of 2004.

"Annual home price appreciation in Nevada moderated slightly in the first quarter 2005, but gains still ranked first nationwide," the FDIC report said. "However, home price growth far outpaced increases in per capita personal income, suggesting continued declines in housing affordability."

Barbara Ryan, associate director of the FDIC's Division of Insurance and Research, said that the run-up in Nevada home prices caused affordability in the state to decline by 24 percent.

Richard Brown, chief economist for the FDIC, said if a correction did occurr in the Las Vegas -- or Nevada -- market, it would be more likely to come slowly.

"There's a question with affordability. Are prices likely to snap back suddenly?" Brown said. "It usually happens with what we call a sticky downward. People are reluctant to part with their homes at depressed prices. Then the disparity is resolved through periods of stagnation, allowing incomes to catch up with prices."

"Now, that may seem like a bust for people who can't sell their homes," Brown added.

Housing appreciation in Las Vegas remains strong, but pace slowing

ASSOCIATED PRESS

LAS VEGAS (AP) - A major real estate trade group has once again ranked Las Vegas among the nation's best for housing appreciation, but local analysts acknowledge the pace of the city's soaring prices is slowing.

Statistics released this week by the National Association of Realtors showed the median home price in the Las Vegas area rose to $291,000 in the first quarter, an increase of 29.4 percent over the same period a year ago.

As a result, Las Vegas ranked sixth on the association's 136-city list of appreciation rates.

"What's driving appreciation is the growth of the city," said Lee Barrett, past president of the Greater Las Vegas Association of Realtors and owner of Century 21 Barrett & Co. "Las Vegas doubles in size every 10 years, and the market's performance is a combination of that population growth and the fact that we became an area where investors saw good opportunities in our community."

Nationally, the median home price was $188,800 at the end of the first quarter.

Four Florida cities and California's Riverside-San Bernardino market all posted bigger appreciation gains than Las Vegas. The city's ranking is lower than in recent quarters. Las Vegas was second in appreciation in the first quarter of 2004, with a median price increase of 31.3 percent.

In the third quarter, Las Vegas led the nation with an appreciation rate of 53.7 percent.

Analysts say existing homes have seen relatively small price increases, about 4 to 6 percent since January, because of market saturation.

The Greater Las Vegas Association of Realtors had 14,830 single-family homes listed in April, up 71.4 percent from the same month a year ago. The association also had 2,676 condo and townhouse units listed last month, up 53.2 percent from April 2004.

Dennis Smith, president of local consulting company Home Builders Research, said he expects appreciation rates to bounce back to around 8 to 10 percent a year once resale inventory drops.

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