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Luck Turns on Las Vegas' Once-Hot Home Market

People trying to sell their homes in Las Vegas -- one of America's hottest job and property markets over the past decade -- have seen their luck turn dramatically worse this year.

Homes in Las Vegas
AP
Homes in Las Vegas

Dana Fillmore was like many of the thousands arriving to the casino capital every month when she moved from Minnesota in 2004 with her husband and two children. In her mid 40s, Fillmore had hoped the find a warmer climate, a house with a swimming pool and place where she could eventually retire.

With no money down, she landed a house with a pool for a $2,100 monthly mortgage.

But her marriage collapsed soon after, and her husband, who works in real estate development, had trouble with support payments as his industry slumped, she said, so she is now trying to sell her house.

A Web site designer, Fillmore bought the place in Henderson next to Las Vegas for $329,000 in July 2005, around the peak of the boom. Since listing the house at $317,000 a few months ago, she has dropped the price to $289,000 and is still hoping for her luck to change as she cannot afford to pay the mortgage on an annual salary of $42,000.

"My parents retired to Las Vegas. It's always been a dream of a lot of people in the northern states to move to a southern state," she said wistfully. "I wish now that I never moved."

Fast Bucks

The promise of a new start and quick riches has made Las Vegas one of America's fastest growing cities for years. Some did become fabulously wealthy from real estate, and in recent years others thought they too could translate rising prices and easy credit into fast bucks.

But no dice for those who bought a few years ago.

"Say they paid half a million. They might be able to sell in the low $400,000s, maybe," said Rita DeSimone, a broker working with Fillmore.

DeSimone said her income is down by half from last year. "Come May, the phone just stopped ringing," she said.

Joy Gillen, 60, a casino supervisor, has had her home on the market for nearly a year and a half. She initially listed the home at $597,000 then $539,900 and since refused to budge, even though she paid only $291,000 for it five years ago.

"I never thought it would ever take so long to sell my house here -- the market was so hot," she said. "I could sell for a cheaper price, but I would shoot myself (financially)."

Nationwide, many real estate markets have turned downward, but the Las Vegas picture is especially pronounced because many speculators in tune with the city's gambling spirit drove up prices and now find themselves forced to sell.

Side-by-Side Sales

Away from the flashing lights of the famed Strip, thousands of signs in front of single- and two-story homes illustrate a glut of available properties, many of which are now vacant. Along one stretch of six homes on Edgeworth Place in south Las Vegas, four show "for sale" signs.

After more than half a year on the market, one house is in the process of being sold after the owner dropped the price from $324,000 to $250,000, broker Doug Helen said: "They literally wanted to get rid of it."

Another owner on the street moved back to his native Singapore because he thought his children could get a better education there, his broker, Betty Chan, said.

The situation has also been tough on builders, who continue to expand into the desert around Las Vegas. Robert Toll, chairman of Toll Brothers, recently told analysts the new home market in Las Vegas rated an "F minus minus."

"What are we doing about it? We are out there with the rest of the builders in Vegas praying. There's not much you can do," he said in August. "You can't advertise your way out of that situation. You just have to wait for the market to come back."

According to the Southern Nevada Home Builders Association, new home sales are down by nearly half between January and August this year compared to the same period in 2006. Existing home sales for the period are down more than 37%.

The group's spokeswoman, Monica Caruso, said Las Vegas had about 24,000 existing homes and 6,000 new houses on the market.

In an interview, Las Vegas Mayor Oscar Goodman said he was "very bullish" about the city's economy but paused when it came to real estate. "We have a bit of a blip as far as our housing market," he said. "Houses over a million are still going fast. It's slow in the $400,000 to $700,000 area."

Many sellers, naturally enough, feel downbeat. Web designer Fillmore is borrowing money from her parents to pay her mortgage. "I'm extremely worried now," she said, adding she may move back to Minnesota. "Vegas has not been lucky for me."

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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