Home Equity Lost: A Cab Driver's Las Vegas Story
After a long day of live shots in Las Vegas, reporting various incredible stories of builders, buyers and investors, I got into a cab to the airport... only to hear yet another story from housing's front lines.
My affable cab driver was from Greece, by way of France, and had come to Las Vegas about five years ago with his wife and sons. He bought a condo near the peak of the market in 2005 for $160,000.
Unfortunately life in Las Vegas was not what my cabbie had envisioned. His sons were unhappy, and he felt it was time to move back to France. Unfortunately, this decision came at the end of last year, when housing in Las Vegas had crashed all around him. He called his real estate agent and said he wanted to put the condo up for sale. The agent told him the condo was worth about $50-60,000 at best. That would no way cover the mortgage.
The cabbie said he had no trouble making his mortgage payments; he and his wife were able to make ends meet fine.
Knowing he would never have enough money from his condo to move back to France, he decided to stay, but he also decided to take his real estate agent's advice: Stop paying the mortgage.
He did, and the bank took the home back last Spring. Now he's renting a much bigger place at a much lower monthly payment. He says rentals are everywhere and dirt cheap.
I asked the cabbie if he had considered his credit rating in this choice, and how that would affect his future. He said of course he had been very concerned, and had put that question to the real estate agent. The agent told him, yes, he would take a credit hit, but he would also be able to get a mortgage whenever he wanted. Why? Because, said the agent, "everyone in Vegas has been foreclosed on. There's no way the banks will stay in business here if they don't look past the foreclosures and start lending again to those same borrowers again."
The cabbie then told me that he was looking at buying property now, now that the market is so depressed. He's confident he'll make a profit.
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