Vegas Home Sales Defy Strip's Collapse.

“It’s a head scratcher,” Diane Varney of Coldwell Banker told Dana Gentry for the Nevada Current, who is seeing a return to multiple offers and bidding wars as a result of the market’s shortage of inventory. “I’m a Realtor and I’m still in awe of the activity that is going on in our market.” 

“They don’t seem to be [concerned with Covid or the economy] because they are buying like crazy,” says Varney.  “To a Californian who can buy a $600,000 house here, which is drop in the bucket — they don’t care about a dip in equity.” 

Meanwhile, Dr. Deborah Birx gave Las Vegas a dubious shout out the other day, saying Sin City was among eleven cities she has her eye on as new Covid-19 hot spots.  A chart of new cases and deaths in Nevada and Clark County resemble the stock price chart for Tesla.  

Despite happy talk here and there, Las Vegas, with its dependence on frequent fliers and conventioneers, is in a bad way.  During an earnings call for Las Vegas Sands, owners of The Venetian and Palazzo on the Las Vegas Strip, Sands President Rob Goldstein said, “We’re in a world of hurt here in terms of Vegas.”  

“I see nothing indicates that 2020 would return at all,” Goldstein added. “We cannot, Las Vegas cannot, perform without the return of these segments [airline flights and conventions]. It cannot make money with limited hotel occupancy or negligible occupancy midweek, maybe 50% capacity weekend.” 

Howard Stutz, listened to the call for CDC Gaming Reports and reported the grim numbers from the Strip behemoth, “During the quarter that ended June 30, Las Vegas Sands’ total revenues fell 97.1% to $98 million. The company’s Las Vegas properties – Venetian and Palazzo – saw revenues decline 92.3% to $36 million. The resorts were open just 26 days during the quarter.”

Goldstein did not paint a rosy picture going forward saying the company is “running a regional casino predicated upon drive-in businesses.”  That sort of demand will not keep the lights on very long. The Sands Expo’s 1.8 million square feet sits empty with little  on the books for the remainder of the year.  The Palazzo’s 3,000 rooms are closed during weekdays. 

As for next year, “I don’t have a crystal ball into 2021. I remain pessimistic about group and convention,” Goldstein said. “In all the years as I’ve been here, I’ve never felt more gloomier about what’s happening in Las Vegas short term. (I) hope, long term, we can see a better day.”

Addressing the Las Vegas tourist market on KNPR’s “State of Nevada” recently, Jeff Hwang, an industry analyst and consultant, said "We knew this was going to happen. [One of] our two biggest problems were A) a lack of standards, like safety standards across the board." 

The second and bigger problem is lack of visitor restrictions, "Every place on the planet that has the coronavirus under control has some form of visitor restrictions," he said, "Like Taiwan, Hawaii, Singapore, Hong Kong, Macau - they've all been able to lock down their borders."

Hwang told KNPR listeners, "Until we can stop visitors from coming in ... [and] stop people from visiting, we are going to continue to see an outbreak."

"Right now, we're a little out of control," he said, "It was June 24 when Sisolak announced the face mask mandate - by that point, we had already set records for cases four times in the previous eight days. We had the highest coronavirus transmission rate in the country."

Dealers, waitresses, and bartenders can’t work from home so shutting Vegas down has unique and dire consequences. "The read that I have on the governor is that he is basically just buying time at this point," Hwang said, "If virus containment was the priority, we would have shut down weeks ago."

Hwang’s most important point is that Las Vegas peaked in 2007 and has not rebounded to that level. And now Covid.  "The idea the Strip will snap back and we'll have this great recovery - it is not a given," he said, "We kind of embarrassed ourselves at this moment because ... we're dangerously close to being branded as unsafe. We opened without the proper visitor restrictions in place. We opened without face mask requirements. The NHL was going to come in here and have their playoff bubble here [and] they walked away because we're not safe."

To further the point, the NBA, despite holding its summer league in Las Vegas each year, snubbed Sin City for its re-start and opted for Disneyland. 

So with all of this bad news, one might guess the Vegas housing market would be in a coma. Guess again. “On the resale market, single-family homes traded for a median price of $325,000 last month, an all-time high, and buyers picked up more than 2,460 houses, up nearly 45 percent from May, trade association Las Vegas Realtors reported,” writes Eli Segall for the Las Vegas Review-Journal.

As for new-home sales, Segall explains, “Southern Nevada home builders signed nearly 1,230 sales contracts in June, the most since February, and reported 208 sales cancellations, down almost 43 percent from May, according to figures from Las Vegas housing tracker Andrew Smith, president of Home Builders Research.”

This buoyant market may run headlong into the expiration of the $600 federal add-on to unemployment checks, as well as, the end of eviction and foreclosure moratoriums.  Plus, if the casinos do go dark again, a collapse similar to what happened in March will happen all over again. 

“[Homebuilders are] just keeping their fingers crossed like everybody else,” Andrew Smith of Home Builders Research told Segall.  

We crossed our fingers in 2008—it didn’t work.