Interesting story in today’s Wall St. Journal forwarded to me by a client:
Las Vegas Home Bargains Drying Up
As with many revelations by clients thinking it’s easy to buy something in Las Vegas with all of the dread reported in the media… reality is soon realized after looking at several Las Vegas homes and being out bid over and over.
But what really caught my eye in this article is something I brought up in a post not too long ago about the “outrage” by local government officials when Las Vegas was snubbed on receiving money under the $6 Billion Neighborhood Stabilization Program.
From the Wall Street Journal Article:
Also competing with the investors is Mr. Pawlak, head of community-resources management for Clark County, which includes Las Vegas. Mr. Pawlak leads a team charged with spending about $30 million of state and federal money awarded to the county to purchase foreclosed homes.
The federal money comes from the $6 billion Neighborhood Stabilization Program created by Congress in 2008. That program is supposed to help local organizations buy and repair foreclosed homes so they don’t drag down neighborhoods. Those organizations then sell or rent the homes to people with low or moderate incomes.
Given strong demand from private buyers, why should the county be in the market at all? Mr. Pawlak says his program tries to ensure homes are occupied by stable owners or renters. Investors, he says, won’t necessarily repair homes thoroughly and find long-term occupants with a stake in the neighborhood.
Certainly interesting and I want to point out… they are not just competing with investors but also the many first time homebuyers out there completely frustrated with how hard it is to purchase something in Las Vegas for under $150,000. (And trust me… their real estate agents are frustrated also.)
As for the statement of ensuring homes are occupied by stable renters that will be long term occupants with a stake in the neighborhood: Is there a formula to determine this that private investors do not know?
For the Las Vegas Real Estate market.. the demand is nothing new and has been going on for quite some time as evidenced by this article in the Las Vegas Sun back in September of 2009. (If it’s in the main stream news.. then it’s been going on for quite some time.)
So.. you really have to ask questions.
Is a Government Agency / program going to do more for neighborhood stabilization buying homes and leasing them back out then the private market?
Is a Government Agency going to be more efficient in rehabbing homes with “approved contractors” then the private sector who will use the most efficient contractors? (I know a couple of Private companies that specialize in this and I highly doubt that anybody is going to do a better job then them.)
Is $30 Million dollars competing for homes in a market dwindling with supply creating higher home prices for first time home buyers?
Does this program really help current homeowners whose home values have lost so much in equity?
By the way.. this is not the only Government Agency Private Las Vegas home buyers are competing against:
Ex Fannie Mae Executive on Fannie Mae Becoming Landlords
“Another Long Line of Policy Initiatives Just Kicking the Can Down the Road”
Paul Francis, CRS
Prudential Americana Group – Realtors®
Las Vegas Real Estate
702.592.3058
August 25, 2010 at 6:18 pm
“Investors, he says, won’t necessarily repair homes thoroughly and find long-term occupants with a stake in the neighborhood.”
That’s just ridiculous! We require all our properties to be completely repaired before we place them on the market for rent. I know many other property managers in Las Vegas and they have the same requirements.
This is just the county trying to capitalize on a great opportunity to generate future revenue. Plain and simple.
September 5, 2010 at 4:29 am
Thanks for stopping by Tony. When you really look into the program and the requirements for this money to be rewarded to local governments to use Taxpayer Dollars to purchase housing, it’s really a re-distribution of wealth.
I’m sure you can agree at this point of time in the Las Vegas real estate market… Las Vegas Real Estate agents with a clue are screaming get out of the way and let us take care of business in returning to a truly sustainable recovery.
September 5, 2010 at 4:32 am
By the way.. I certainly agree with your statement that respectable Property Managers are insuring that the Las Vegas homes they are taking under their care are done the right way.
I certainly do not take junk properties and the fixers I’ve bought for my investors are done right before we put them back up for lease.
Today’s Las Vegas Real Estate investor has to be financially solid to begin with in order to purchase.
September 12, 2010 at 12:08 pm
[...] I saw an article in the Wall Street Journal about Las Vegas Real Estate that you can read here:Private Las Vegas Real Estate Buyers competing with the Government – 03/03/2010Is a Government Agency / program going to do more for neighborhood stabilization buying [...]