Las Vegas Housing: 8% Of Single Family Homes Vacant, Yet New Construction Permits Up 50%

Tyler Durden's picture

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

If there is any market that demonstrates the complete and total misallocation of capital that results from Banana Ben Bernanke’s money printing and artificially low interest rate policy, it the latest phony American housing bubble. With a record numbers of citizens on the food stamp electronic breadline, with unemployment stubbornly high no matter what data you use, billionaire financial oligarchs are running around bidding up “homes for rent” and pricing out the random average person that actually has the capacity or desire to bid. I just read an excellent article that demonstrates the degree of insanity that has now been unleashed upon the streets of Las Vegas.

As the title of the post mentions, a study from the University of Nevada at Las Vegas show some 40,000 homes are vacant, or 8% of the metropolitan area’s single-family housing stock.  So it would seem that this would provide plenty of good deals for investors right?  Certainly there doesn’t seem to be a need for new home construction.  Well think again!  In their QE-forever induced delirium, homebuilders have gone Chinese and in Las Vegas “permits for new home construction are up 50 percent, twice the national average.”

My favorite line in the entire article comes at the end when a prospective buyer explains what happens when an actual citizen attempts to purchase a home to actually live in:

“We know there is a minute chance we get anything,” she says. “The most frustrating part of all this is how home prices keep going up and up, yet you have so many empty homes.”

Oh and it seems Oaktree has followed Och Ziff’s lead and pulled back from the “buy to rent” insanity.  Soon all that will be left are the dumb money and homebuilders, who should start thinking about what kind of bailout they will lobby for when this entire thing unravels.  From Reuters:

These big investors and a handful of others have bought at least 55,000 single-family homes across the U.S. in the past year. In the Vegas area alone, they have accounted for at least 10 percent of the homes sold since January 2012, according to a Reuters analysis of housing transactions.


That added firepower helps explain why home prices in this metropolitan area of 2 million people are up 30 percent over a year ago, far more than the national average of 10 percent. Permits for new home construction are up 50 percent, twice the national average.


Las Vegas would seem a highly unlikely locale for a new housing bubble. There are at least 20,000 homes in some stage of foreclosure, and the jobless rate hovers near 10 percent, some two points above the U.S. average. A healthy housing market depends on people having good-paying jobs so they can accumulate down payments and finance their mortgages.

Healthy markets?  That’s so last century!

Cracks are showing in Vegas and beyond. Here, rents on single-family homes were down an average of 1.9 percent in March from a year ago. In other regions targeted by institutional buyers, such as Phoenix, Southern California, Atlanta and Florida, rents are either falling or flat, according to online real estate service Trulia.


Industry insiders estimate that roughly half of the more than 55,000 homes acquired by institutions over the past year in the U.S. have yet to be rented.

In Oceania, that is a market signal for build more homes.

The combination of rising acquisition costs, prolonged rental lead times and declining rental income is disrupting the spread-sheet analysis behind Wall Street’s bet. That could pose problems for what once seemed like a slam dunk. It could also give pause to stock-market investors as some players list their shares. American Homes 4 Rent, based in Malibu, Calif., has said it expects to file soon for an initial public offering.

Taking bets as to how soon after its IPO America Homes 4 Rent will go BK.

Early last year, Oaktree Capital Management agreed to provide up to $450 million in equity to real estate investment firm Carrington Capital Management for its foreclosed-home acquisition program. Carrington was projecting an internal rate of return of 25 percent over a three-year period for its portfolio of single-family homes in several cities, according to a marketing document.


Oaktree is now reluctant to commit more money to the trade after souring on the buy-to-rent strategy, said people familiar with the firms. Oaktree saw returns on rents compress and no longer is comfortable with Carrington’s initial heady yield projections, they said.


The Vegas market has unsteady legs. Statistics compiled by the University of Nevada at Las Vegas show some 40,000 homes are largely vacant – 8 percent of the metropolitan area’s single-family housing stock. Housing research firm RealtyTrac estimates there are 20,000 single-family homes in the metro area either owned by a bank or in some stage of foreclosure.


“We know there is a minute chance we get anything,” she says. “The most frustrating part of all this is how home prices keep going up and up, yet you have so many empty homes.”

Thanks Ben.

Full article here.

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Jay Gould Esq.'s picture

But, Larry Yun says we are in recovery ?

Dingleberry's picture

Went looking at houses. Market is bifurcated. If it is decent and in a good hood, it will sell for probably 10% more than at beginning of the year.  

If it is in a decling hood, forget about getting asking price if anything at all.


3% interest rates can jack up some home prices. How long can it last this time around?

Boris Alatovkrap's picture

Is damn right! Market is bifurcating - bifurcating beyond all recognition as old marine is to say.

redpill's picture

Builders are pulling permits because typical home buyers can't get a resale before it gets snapped up in cash by an investor fund so they have to buy new. Still, new homes are a small fraction of the entire market so the numbers aren't massive, and investors stay away from new homes bcause they don't want to deal with putting in a yard, window coverings, etc., or pay the premium and HOAs that come with a new neighborhood. The scary thing is when the investor portion of the resale market evaporates, the people that bought new homes won't be spared.

markmotive's picture

Also, Las Vegas home prices up 22% over the past year. Try to make sense of that!?!

jbvtme's picture

why is this any different than the chinese ghost cities?

Sokhmate's picture

I familar with say. Is call BUBAR.

Son of Loki's picture

There is a flood of houses hitting the market now mostly bought 2009-2010 .... listing prices way too high but final sales (when you dig it up) about 30% lower then list price.


My son's realtor advised him make an offer 40% lower then list and think about buying for 30% off list price. This is for Central Texas where he plans to live for 5-10 years then move on since he says it's too hot to live there forever (110 degrees in summer).

jepicza's picture

"Knock it off with them negative waves. Why don't you dig how beautiful it is out here? Why don't you say ..."

Big Corked Boots's picture

The pickup trucks used to have bumper stickers in my neighborhood: "New Construction Feeds My Family."

Build MOAR, bitchez. What's good for Krugman is good for Amerika.


Pure Evil's picture

We should really start thinking about building a new Hyper-Mall somewhere in the middle of Death Valley to rival the largest mall in the world currently located in China.

Ghost cities are the coolest.

RebelDevil's picture

Hey, at least ghost cities are a great hedge against overpopulation.

Boris Alatovkrap's picture

So single-family is 8% vacant, but Las Vegas is home for quick wedding chapel. Problem fixed, no!?

cynicalskeptic's picture

Vegas is gonna be a ghost city soon.  Running out of water, Hoover won;t produce electricity to run the AC when the water level gets too low.  The big spenders are foreign and NOT going to Vegas anymore and teh US proles are sorely lacking in disposable income.   Brillliand concept - an economy based on people LOSING money in a place they have to FLY or DRIVE to in the middle of a deserrt.

Have family there - one is a nurse and wants to go back to NY because the schools are so godawful - exhusband is a Vegas cop - BIG gang problem (shhhhh, don't scare the tourists) the trunk of his patrol car has a streetsweeper and more firepower than many small town departments......

As for the building boom - TONS of places in foreclosure but Nobody wants to buy THOSE.  People who own a place that's underwater are buying another house - exactly the same as what they have but for $100,000 less then walking away from the first one.  But they only want 'new' - no foreclosure for them..... totally screwed up system.  Banks write loans to build in a market with ridiculous vacancy rates and are giving mortgages to people who are walking away from their current house.

Agstacker's picture

Makes me want to play Fallout, new Vegas...

Seasmoke's picture

buy-to-rent barely got out of the starting do these new houses even get started ?????

otto skorzeny's picture

the govt is making the banks keep the BKs off the market so that property values don't plunge and real estate tax revenue doesn't dry up so your local jackbooted donut-eater doesn't lose his job so he can waste your ass when the SHTF-comprende?

dolph9's picture

Americans won't be satisfied until they turn the entire country into an unlivable wasteland of sprawl and concrete.

How can people be so dumb is my question.  Do Americans have a burning desire to live in ugliness?  Is it something we grow up with, and then decide it's normal and we want more of it?

nmewn's picture


"Americans won't be satisfied until they turn the entire country into an unlivable wasteland of sprawl and concrete."

Shovel ready jobs baby ;-)

We now need to turn our attention to installation of new asphalt bike paths, parking lots and ADA ramps & sidewalks through our National Parks! Its for the less fortunate and...of course...the children!!!


cynicalskeptic's picture

National Parks are really sad.  99% of those visiting never go more than 100 yards from a road or paved path.   AND they're idiots.  Yeah. go feed the bear, go climb on the wet rocks at the top of the waterfalls......  got to love the clueless tourists in Death Valley - on high clearance 4WD roads in some subcompact without water, maps or any idea of what they're doing....   they recently found the skeletosn of a German family missing for 5 years - shredded the tires ion their minivan backcountry and tried to walk out.        Got to love the 'back to nature crowd' that thinks taking that hike up a mountain is a REAL good idea in flip flops, without any water food or change of clothes, playing games on their phone instead of watching the trail......  Most of the kids are whiney brats who want to be at Disney World instead.

Headed up Logan Pass in Glacier when it was 65 and clear, when we came back it was in the high 30's and hailing. No big deal, had more clothes adn rain gear with us in backpacks.  Spectacular seeing that front come in so fast.  But most were whining and running back - in t-shirts and shorts, soaking wet.  There's something to that 'Be Prepared' thing.

The good thing about National Parks is that you CAN escape the masses easily - the bad thing is you have to deal with them before getting away from them.

Binko's picture

I liked your post. Here in suburbia just outside the SF Bay Area there are great masses of cars, fat people, more cars, loud people, pick-up trucks, obese people on little little powered tricycles and more cars. And everything is a butt ugly sprawl of fast food, auto repair and smoke shops mostly.

But just five miles away there is a cool local park with tons of trails that wind up through rock formations. The local trail bike clubs maintain the trails and you'll see a few bike riders and some hikers. But if I get off the main trails and hike in the hot part of the day I will often not see a soul. Just miles from a major freeway and I can find relative solitude just because I'm hiking up and down hills which virtually nobody these days wants to do.

cynicalskeptic's picture

Contrast that with Camelback in Scottsdale.....  10th highest rescue site in the US.  You have this mountain in the middle of Suburban AZ sprawl surrounded by resorts.  They actually have a ranger at the beginning of the trail WARNING people about the hike ahead and you STILL have daily rescues.

It's not a particularly bad hike - but not an easy one.  Bad stretches of slickrock with pipe railings to grab - that or scramble on all fours.  Saw two people literally freeze on the rails (blocking others).  Too many people don't bring enough water or wear the right footgear.  Heavily eroded trails with loose rock make for easy falls and sprains.

But you still had the morons in sandals and flip-flops with little kids they'd be carrying after a half mile.  Nevermind the retirees who think they're in great shape because they can make it through 18 holes (though golf cartds don't do mountain trails).


Have spent some great times in NP's - try to avoid peak times and go early or late summer if stuck dealing with school schedules - better yet is off seasdon completely.  But the outright stupidity of people astounds me.  Driving and stopping dead to look at some critter, or trying to cope with an RV when they can't drice a regular car.  Even those you think should know better can be real asses.  Passed a BSA Troop on the way to Angel's Landing in Zion.  The worst behaved, most obnoxious group you'd ever meet.  OUR Scoutmaster would've had a fit and pulled them off the trail.  But this was an LDS unit - leaders are appointed by the church and boys HAVE to participate.  This was the same summer a bunch of kids died - allfrom stupid things... a rafting trip where tehy missed their take-off and hit class 5 rapids - flipped a raft and a kid 'lost' his PFD (how in the hell did a lifejacket 'come off'?.... another drowned in the Yellowstone river - found later in his  'sneakers' not hiking boots and how did he 'fall in ' the river?...  My kids ahev done SewaBase and Philmont - impressed the hell out of the Philmont guides with our last crew.  Had to cut the tripback to 75 miles from 100 but still... not bad for suburban New Yorkers... 

AldousHuxley's picture

There are giant cacti in camelback. Bring a machete and a straw for cacti juice

There were McMansions all around that nature spot. Who the hell needs 10,000sqft in the desert?

Jena's picture

Joshua Tree National Park.  Plenty of hiking and rock climbing for the adventurous in this 1200 sq. mile park but absolutely hazardous for the unprepared.  Daytime temps can reach 115 with humidity in the single digits in middle of summer.

Every year rock climbers have to be plucked via helicopter and transported to the local trauma center due to falls.  Some don't make it. 

Even the car club aren't safe:  A couple of years ago two people from the Netherlands planned to drive through the park.  They pulled off onto a dirt road for some reason, got stuck in a wash trying to turn around and died while trying to walk out in the mid-August heat.  They left water in the car.

But the Joshua Trees and the roadrunners are nice.

H E D G E H O G's picture

hey, Darwins Theory of Evoluton @ work. only the strong survive, weed out the lame and halpless. where better to test his theory but @ a Natural Selection National Park. long live flip flops!

AldousHuxley's picture

It is not survival of the strongest but of the fittest.

City hipster fashion doesn't fit we'll in real green nature.

rosiescenario's picture

....and the crusie industry is also doing its Darwinian best to weed out those with below average immune systems....

Dewey Cheatum Howe's picture

It is part of the plan, next round of new employment is going to be in dismantling all of it. Don't realize when the socialists finishing destroying this country so they can turn it into a dysfunctional oopstopia, we are all going to be living in houses owned by the state the money with the only place you can spend the money is at the company(state) store and the only jobs will be digging a giant hole during the day and the night crews job will be to fill it back in all under the watchful eye of DHS stormtroopers armed to the teeth.


What is going on isn't incompetence (well it is) more like malice pushing the right levers steering the incompetence to destruction.

AldousHuxley's picture

90% of housing is already owned by the state via a vehicle called Fannie and Freddie Mac

TSA is your modern day make work job for useless citizens

Real estates tax is perpetual asset tax to the state, so they own all of the land too

Big myth that US is capitalist.

Freddie's picture

This is all easily solved by running high speed rail lines from LA and The San Fran Bay area to Las Vegas and the casinos.

kchrisc's picture

I don't know about a "party train" to Vegas but a train to "camps" in the desert sounds just about right.       hujel

brettd's picture

How so dumb?

Public education monopoly.

brettd's picture

double post. sorry.


JustObserving's picture

Stock markets, bond markets, housing markets and auto markets - all are distorted by the Fed's printing and the Fed promises to print even more.  Bond yields are the lowest in 237 years and savers are desperate for yields.  All the bubbles that the Fed is blowing will burst soon enough.  And US debt and unfunded liabilities keep increasing at $8 trillion a year.  The only exit from all these bubbles is either default or hyperinflation.  The more the Fed prints, the more difficult the exit.

yogibear's picture

You can be sure Bubble Bernanke and the Fed attempts to  print out of debt.

Bernanke, Evans, Dudley and Yellen are all addicted  money printers.

They want massive inflation, although they would deny it's occurring.




de3de8's picture

You know it's close when almost every auto co providing "0" interest rates for 60 months to sell their wares.

earnulf's picture

60 months, heck, they are offering 96 month loans now.   Sad thing is that half the cars are selling for more than I paid for my house 17 years ago!

At least I got 1200 sq ft, a yard, hot and cold running water and a kitchen with a stove and refrigerator.   All the car does is seat five, go 100 mph and has a cool bluetooth keeping track of you.

Cugel's picture

It sounds crazy on the face of it, but the "hey, free money!" crowd is beating the tar out of the "it can't last" crowd. As one of the latter it seems my only choices are to join the party or continue enjoying my artificially low standard of living. Stack for the long run, but in the long run I, certainly, will be dead.

cynicalskeptic's picture

I have never ceased to be amazed by how long TPTB can keep absurd and improbable 'bubbles' going.  I expected the housing market to implode two years after rates went from over 8% with 20% down  to NINJA mortgages.   It lasted over a decade.   But what the hell, we bought at the 30 year low and bought a few levels above what we should have been able to - never did have to 'trade up' out of a too small starter house.   Still ahead on that one.

But having worked on Wall Street and seen the scheming and backstabbing that passes for 'talent' I'm dumbfounded at how the financial industry is still intact.  The guy running AIG now was the EVP of Ops for a firm I worked for... arrogant ass who got rid of anyone smarter than he was (standard tactic on Wall Street).   Which is why he FAILED completely to get a new broker system up and running.  Higher ups called him on the smoke and mirrors and made him a regional head to 'pilot' the new system.  He bailed and ended up destroying Met Life - thogh the top execs got wealthy.   The Capitalist Nomenklature....  abilty counts fo squat.  It's all about being in 'the club'.

Atomizer's picture

Sounds like our Chinese debt holding landlord is expanding their ghost city business model to pencil whip GDP figures.

seek's picture

Same shit it happening in Phoenix. Sales up 30%+, new construction starts all over, frozen subdivisions thawed...and there's plenty of empty houses. WTF.

willwork4food's picture

Ditto in Hampton Roads. Construction of new homes and a new pharmacy going up all over...and things are pretty tough here economically with the military cuts.

ToNYC's picture

Casinos will take houses as chips to lure kept workers to sell themselves day and night after exracting the wood chips from players in global size. Mr.Potter-Time!

nbsharma's picture

The sad reality. Thank you for sharing. I am a first-time home buyer and can't believe the prices I see for the quality of the homes.

Cornfedbloodstool's picture

I live and own a house in Vegas. 1600 sft starter home I bought in 2001. Over the past three years my wife and I started looking for something bigger and better. What a waste of time. The houses and neighborhoods in Vegas are shit. Even if your spending 500k the nieghborhoods are shit. High crime, vacant derilict houses on every block, the future Detroit. 54% high school drop out rate, highest in the country. Lake Mead is drying up, etc. Stay the fuck out of Las Vegas its a shit hole.

RebelDevil's picture

Vegas.. maybe nice for a week of gambling and partying, but for employment and schooling!? - Down the fucking toliet they are. So I second your opinion Cornfed.

(Why the hell is that your username? lol)

Henry Hub's picture

I thought what happens in Vegas was supposed to stay in Vegas.