Monday, July 20, 2009
If ever there were an American city to serve as a metaphor for how the country has changed over the last twenty years or so (aside from New York, that is), it has to be Las Vegas, Nevada where nearly everyone's a gambler and, sometimes, even the house loses.
A report in today's WSJ recounts more stories of dashed dreams and disillusionment:
Drew Johnson and his wife, Tina had the life many Americans only dream of: A big house in a swanky suburb, a backyard hot tub, and a $100,000 deposit on a new condo with views of the Las Vegas Strip and 24-hour concierge service.Following the 1990 California housing bust, for about a year or so we rented out our house to a 30-something single Mom who eventually ended up losing her bank job.
They did it all on the salaries of a construction-equipment salesman and a cocktail waitress who brought in $1,000 a week in tips alone. But the recession has slashed their incomes by nearly half, and financing for the condo might not come through.
"It's Vegas," says Mr. Johnson, who fears he could lose most of his deposit. "We gambled."
During the boom years, Las Vegas wasn't just a place where gamblers could hit the jackpot, but where hard-working hotel maids and cocktail waitresses could, too. The city offered something almost no other place in America did: upward mobility for the working class.
Now, that is evaporating.
She then headed to Vegas in search of a better future for her career and her kids.
I hope she hasn't ended up like the Johnsons. Maybe she's long gone by now...
The recession has jolted Las Vegas in a fundamental way. Like other job-creating cities in the Sunbelt, Las Vegas saw its population, income levels and housing prices surge over the past decade. And like those cities -- including Phoenix, Orlando and San Diego -- it's been battered in the bust.There is much more to this story and it's in the free area of the Journal.
But by many measures, Las Vegas's rise and fall has been more dramatic than most. Last year, Clark County's population declined for the first time in more than two decades. More than 10,000 people left Las Vegas between July 2007 and July 2008, according to Keith Schwer, director for the Center for Business and Economic Research at the University of Nevada Las Vegas. The unemployment rate in the metropolitan area tripled from 4% in May 2007 to just over 12.3% in June 2009, higher than the national rate of 9.5%. And after the median price of existing homes rose by 122% in sales between 2000 and 2006 -- more than double the national rise of 49% -- sale prices fell by 30% between last year and this year.
The big bet that fueled Las Vegas's growth for so long is the same one that's now going bad: tourism. Vegas expanded into the lucrative market for business meetings and conventions, building massive exhibition halls and new hotels and casinos. Construction jobs multiplied and the housing market bubbled over. Now that tourism and business travel have collapsed, Vegas has little else to cushion the blow.
Even some long-time Vegas stalwarts now believe the era of astounding growth is over.
As a number of commenters have been heard to say in recent years, Las Vegas, in its current form, would not have been possible without Alan Greenspan at the helm of the Federal Reserve for almost twenty years.
It's hard to imagine how the city can avoid a radical makeover in the years ahead unless his successor proves even more adept at creating even bigger asset bubbles.