In Vegas, Housing is Still Unaffordable - Ouch!

In today's Las Vegas Sun (the 1/16th of a newspaper that's supposed to have us believe that there is freedom of speech in Las Vegas other than the extreme neocon dribble printed in the Las Vegas Review Journal) there is a story regarding the study done on behalf of local governments that was conducted for the Southern Nevada Regional Planning Coalition by Restrepo Consulting Group and the Theodore Roosevelt Institute that states "Despite the housing slowdown that has dropped median house prices more than 20 percent in the past year, affordability remains a long-term problem that could stop industries and workers from moving to Southern Nevada".

It also suggests it’s not enough to have affordable housing on the fringes of the valley or in satellite communities and calls on local and state government and businesses to work together to craft solutions to address housing affordability and accessibility. Possibilities include employers building housing for employees or, at a minimum, providing bus passes.

What a joke - can you imagine the big boys at the casinos cutting their profits by purchasing bus passes for the maids and caretakers?

In a display of pure consulting balderdash, John Restrepo, the study's author said, “We are building a large percentage of homes in the suburbs and in some cases the exurbs, and when you don’t build homes where people work, that creates a disconnect and affects productivity. That means there needs to be an effort to create greater housing densities closer to the resort corridor and a greater investment in mass transit".

OK, so why not drop the prices on the "Vertical Vegas" vacant condos and start selling them to the locals instead of the famously rich and wealthy that come to Vegas just enough times a year to claim their exemption from their state income taxes.

Another pearl of wisdom from Mr. Restrepo - "For housing to be affordable, the monthly mortgage payment shouldn't exceed 30 percent of the owner’s monthly gross income. In the leisure and hospitality industry, the annual average salary is $30,372, which translates to an appropriate mortgage payment of $768 a month. The maximum affordable loan amount is $90,618."

"In the construction industry, the annual average salary is $51,376, which translates to a monthly payment of $1,284 on a home valued at $176,699."

Hey there, Mr. Retsrepo - I've been using the 3 times annual gross income rule for the last 20 years in the mortgage business. When did you first discover this - last week?

A bit more of Mr. Restrepo's statistics before I scream -- "The dominant market segment in 2007 consisted of homes priced from $250,000 to $300,000, which were 24 percent of the housing stock. About 20 percent were priced from $200,000 to $250,000 and 12 percent to 13 percent were priced less than $200,000."

"Even with the price drops, about 45 percent of the market was priced above $300,000, but homes need to be priced from $212,000 to $276,000 to be considered affordable."

"From January to April, 57 percent of the housing units sold on the Multiple Listing Service were priced at $250,000 and below. That shows buyers are taking advantage of those opportunities, but Restrepo said there are still problems."

Now, it does not take a PhD. genius to know that the average working family simply cannot afford to purchase the size and type of home they need here in Las Vegas because the wages are lousy. Worse yet, we live in a city that is dominated by giant employers that refuse to contribute to real economic and wage growth, a vibrant educational system, and a state supposed government that is mired in an attitude to workers that is stuck in the 19th century.

If you think its going to get better soon, forget it. The new FHA mortgage rules are even more restrictive and make the required mortgage insurance simply unaffordable for the majority of the buyers in the market.

How to fix this mess - well we need new, high wage jobs, such as engineering, software development, energy systems, medical technology. How can this happen? Well, first we have to fire the incumbents that are owned by the status quo crowd. Then, we need a real, quality education system including a major revamp of the Clark County atrocity, the CSN joke of a junior college, and UNLV where the newest program is "Party Management or How to Sell $500 Pool-side Cabanas to inebriated 20-somehtings". Let's get Chancellor Jim Rogers, Senator Harry Reid, and Dina Titus together in one room and get to work on re-inventing Las Vegas.

If we don't get on top the education and job creation issues, this city is doomed to be the home of low wage service jobs, unaffordable housing, growing ghettos and crime, and a totally lousy place to raise a family.

The Best Money Guy.