The Starwood Capital Group recently purchased several high-rise properties in Las Vegas through U.S. Federal Deposit Insurance Corp.’s asset auction of Corus Bank, a unit of Chicago-based Corus Bankshares. This deal is expected to have a huge effect on  Southern Nevada’s luxury condominium market because of the scope and scale of Corus Bank’s local financial participation.  In the past, Corus Bank provided more than $400 million worth of loans for Las Vegas Valley condominium developments, many of which didn’t reach full potential. According to the analysts, this maybe an opportunity that may result in some abrupt price adjustments thought Las Vegas Valley.

The recent failure of Corus Bank in the Las Vegas market was accelerated due to the bad investments it made.  The publicly traded lender listed on the Pink Sheets under ticker symbol CORS was seized by the FDIC on Sept. 11 after being crippled by the condominium downturn. The Corus shares recently went down by 98 percent from a 52-week high of $5.23 a share.  Unfortunately, it was delisted from Nasdaq National Market last September 15.

According to the real estate experts, with such low purchase costs the new owners can make good profits with sales at foreclosure like price.  The median Las Vegas luxury condominium price was $386,500 this summer, which is 25 percent less than a year ago.  The chaos in Las Vegas Valley’s high rise market carries on due to the major price resets to meet depressed conditions in this product.

Local projects financed by Corus include Meridian ($111.3 million), Platinum ($87.6 million), Loft 5 ($56.5 million), Juhl ($106.2 million), Newport Lofts ($67.1 million), Panorama Towers ($236.3 million), Village Green ($60 million), the Residence Las Vegas ($56.8 million), Soho Lofts ($49.3 million), Copper Canyon ($43 million), Boulders at Lone Mountain ($40.2 million), Verano ($39.5 million) and Spanish Palms ($28.2 million) Streamline downtown and One Las Vegas on the South strip.

Superstar country singer, Garth Brooks, was lured out of semi-retirement by the casino mogul, Steve Wynn.  By giving him a large paycheck together with perks, Garth Brooks have agreed to sign a contract to take a five year weekend residency and shows at the Wynn Encore in Las Vegas starting on December 11.  This summer, Brooks have already started by playing two secret shows at the hotel.

Steve Wynn, whose expensive art collection proves again that what he wants is what he gets.  It took a lot of convincing to get Garth Brooks to sign the contract, as when Brooks retired, he vowed that he would drive his three daughters to school everyday.  Taking more than a big paycheck to get him to play at the Encore Theater , Wynn included the ultimate executive perk for Brooks, the private jet.  A new 11-seat Challenger jet, courtesy of Steve Wynn, will help him honor his promise, making short work of the commute from Oklahoma to Las Vegas.  According to Brooks, his top of the line private jet has a very cool interior and paint job.

In these shows, each ticket at the Encore will cost $125 and total sales for the shows could bring Wynn millions of dollars. But more important than ticket sales is the fact that he will be drawing people to Las Vegas and to Encore, the luxury hotel he opened when the economy was at its worst. Wynn having been in the casino business for a very long time knows that getting the people in the door can be the hardest part.  Having Brooks as an enticement for people to visit the hotel might just be worth the plane and the paycheck.

Property investors are now slowly returning to US real estate market although there the project are smaller compared to the big projects they got years ago.  According to the experts, investors who has extra cash and are willing to take risks are taking advantage of the opportunity while the prices right now are still low, before they slowly go back to their normal prices.  Based on the reports, the investors return as they see that prices have fallen far below the trend and considers this a very good investment opportunity.  Based on the data, residential property prices across the nation rose for a third straight month in July, encouraging investors to buy property. The S&P/Case-Shiller index of house prices in 20 metropolitan areas rose nearly 4% in the period.

One of the areas affected by the price drop is  Las Vegas, where the properties are particularly cheap, abundant and have decreased by 58%.  According to The Montecito Companies, a Las Vegas based real estate investment and development firm, they will start buying around 100 bank owned properties in the city some of which they will rent but others they intend to purchase before prices start rising.  They also explained that the key to turning a profit is getting a steep discount by buying properties in bulk for cash and spending $3,000 to $10,000 in refurbishment, for a swift resale.  Despite this, the buyers are risking their purchases if the prices fall again, experts have warned rising unemployment could still hit the real estate market further and an excess of foreclosed properties suddenly jumped on the market could see values plummet.

This October, the mayor of Las Vegas, Oscar Goodman was invited as the keynote speaker of the Las Vegas Real Estate Insider Club.  The house was packed during the said event and unfortunately, some of the guests that have not pre-registered was turned away due to the space constraints of the top floor of the Newport Lofts in downtown Las Vegas. The mayor, known for his stints as being the high-profile defense attorney for the Las Vegas mob, amused the crowd with interesting stories about his ex-clients and his fondness for the movie business.

The main focus of his speech was directed towards the current state of the Las Vegas housing market.  According to him, the huge majority sales closing in the Las Vegas valley continue to be real estate owned (REO) or bank owned property.  The mayor also pointed out that the number of SFRs currently available is not nearly so important to consider as the number of foreclosures being added to the market as REO listings on a monthly basis. Based on his observation,  the number of sales remain consistently high since June and the number of foreclosures are steadily declining, thus, the market is actually facing a shortage situation.

The effect of this is that there are more people who are looking to buy low-priced REO homes than there are homes to sell them. This clarifies why the investors and realtors are faced with multiple offers and bids as they try to purchase homes in the past couple of months. As the REO steadily declines, the mayor has found that a change in direction is now required to provide his investor clients with the continued ability to purchase quality investment properties without having the price bid up to levels incompatible with strong cash flow.

In todays market the question actually seems to come up more often than before..”Is it better to Rent or Buy”?

Even with the great loss in home owners equity the answer hasn’t changed. Let me explain. Most people who are renting only consider the difference between the amount of their monthly payment vs the amount of a house payment..if the rental amount is less..then that is how they feel they are doing as well or better than a home buyer!

Of course each person has a different tax profile and should consider talking to their accountant..in most cases you can normally reduce your withholding taxes because the interest on your mortgage is tax deductible. Locking in a fixed monthly payment for 15/30 years is the key. Rent payments tend to keep pace with the economy and inflation. If you calculate your rent payments over 20 years with a 2.82 percent inflation rate, your rental payment would have increased from $1,000 per month to $1564 per month..where a comparable fixed mortgage payment would have stayed steady and you wouldn’t have payed out an extra $6768. per year paying rent!

Of course, there are other costs of homeownership to consider, such as home owners associations property taxes and utility bills.

So..for some individuals, this may be the best reason to purchase real estate. If you hold your porperty for long term, it will normally keep pace with inflation creating you additional wealth. If you rent, you pay off your landlord’s mortgage and make him or her wealthy. This may be one of the best reasons that homeownership remains an American ideal ..and the norm.. It may also explain..why Lowes and Home Depot and the rest of the DIY stores “are there for you”..not to mention all the “honey do” lists that are created by homeownership..if you deduct those purchases from your estimated increase of wealth..you might find yourself just breaking even with renting.. but you will have all that satisfaction of working on your house each weekend instead of playing GOLF!
(some information quoted from Bernice Ross, Inman News)