I'm in Las Vegas today doing a bunch of stories on the housing "recovery" here. Many of you may be wondering what ever happened to Katie, the subject of my "Lunacy in Las Vegas" blogs of a few months ago. She and her husband were trying to buy a home here in Vegas and were constantly being beat out by cash-only investors. I had wanted to interview Katie for my stories out here because she did in fact finally get an offer accepted on a house. But of course the bank screwed up the financing, even sent out a guy with all the paperwork...who didn't speak English, so it's all still on hold. Katie and her husband are driving out here this week, but they won't have a home to move into.
Never fear, though; it was easy enough to find other home buyers out here with similar stories. I met a mother and daughter team who spent seven months making offers on foreclosed homes (which are close to 85 percent of the inventory here today) until finally getting an offer accepted. The daughter was a first time home buyer, eligible for the tax credit, and she has very good credit herself. Just like Katie, she was beat out several times by investors with cash.
I spoke to one investor out here from Canada, who has already bought two homes (with cash) and is thinking of a few more. He says the city is teaming with investors from China, France, you name the country, they're here. Even with the competition, he says the prices make these homes a steal, and he believes Las Vegas will eventually come back. He sees growth here, and he says he's no quick flipper. He's willing to wait it out.
After interviewing buyers and investors, I headed over to the "New American Home." This is the home that was supposed to be the showpiece for the National Association of Home Builders' annual convention. It's a 6800 Sq. Ft. home once appraised at $3.5 million. It is a "Zero Energy" home, which means that it is so energy efficient that when you factor in the solar energy it brings in, it doesn't use energy. At least that was the plan.
The home is about 75 percent done, and there is not a worker to be found on the lot. The builder, Domanico Custom Homes, lost one of its investors.
"We had about 3 million dollars worth of cost into the house and we were asking for 1., and no bank would step up," Adam Knecht, the company's general manager, told me. "If they did step up they’d offer much less. There was really just nothing there. We talked to private investors. The loan brokers that we usually work with, they haven’t don’t a construction loan in Las Vegas within the last year."
So now it's just sitting there. The company has it up for sale for a fire sale price of $1.8 million, and so far all they've gotten are a few low-ballers. They have liens against them, posted on the door of the house, from a few subcontractors. There's just nothing they can do. But what's even worse is what's next door.