The Micro View – Wednesday, March 18, 2020
St. Patrick’s Day 2020. That was the night the lights went out in Vegas…
While most Las Vegans were wrapping up watching Governor Sisolak’s press conference ordering the closure of all nonessential services for 30 days, those who had not given credit to this monumental event were suddenly waking up to the seriousness of the situation. Although we are still at the precipice of a potential crisis, the events of the past two weeks have shaken families and business owners to their core.
For decades, Las Vegas has been an economy centered almost exclusively around entertainment and tourism. It was no wonder that the result is so-called “one trick pony” resulted in its total decimation during the Great Recession, with an unemployment rate in excess of 14% at its nadir.
Southern Nevada continued to outpace the nation in terms of overall employment growth, but did we diversify fast enough?
Fast forward to 2019. Las Vegas was experiencing strong economic activity, continued investment in its core tourism industry, as well as expansion and diversification into non-entertainment professional occupations. Southern Nevada continued to outpace the nation in terms of overall employment growth, but did we diversify fast enough? There are about 60,000 workers in Las Vegas with union contracts sitting at home tonight contemplating their future. Despite generous promises from giants, like MGM, who have pledged to pay their employees during the shutdown, the uncertainty of the recovery and totality of this crisis is unfathomable for most.
Las Vegas’ unemployment rate at the end of December was 3.5%.
Lest we forget, every other “non-essential” service provider, such as hair stylists, gym trainers, or our favorite bar and pub owners. Every small business and their family is affected. All eyes are on the government for a bailout and how they choose to distribute it. It will be telling to see if they favor the very backbone of Las Vegas, our resort industry, in an effort to get families back on track so that our main revenue engine can flow once again.
The Federal Housing Finance Agency is already offering mortgage relief options to those affected by coronavirus.
The situation with the housing market will continue to unfold. It’s too early to see a trend just yet, however, the numbers reported by the Greater Las Vegas Association of Realtors indicate the status quo – business as usual today. The only difference is a nominal amount of price reductions than normal, however, nothing indicating a widespread panic at the moment.
Thanks to government lending regulations put in place after 2008, homeowners are generally sitting on properties today with equity and affordable payments. The key will be to hold over homeowners that have been financially hit in the interim. Relief could be in sight. The Federal Housing Finance Agency is already offering mortgage relief options to those affected by the coronavirus. Also, President Trump is pushing a plan to send money directly to Americans in response to the pandemic, saying it’s time to “go big” to boost the now-stalled economy. How much the checks will be for is still unknown, but they’re considering $1,000 each and pushing to send out checks within the next two weeks.
Private capital continues to sit on pause, poised and waiting for opportunities to arise in the real estate market.
My team has been making and fielding calls to clients for the last several days. We have clients with job security moving forward confidently on home purchases in the median price range. Each and every client and each and every purchase is unique, however, we do know that owning a home, historically, is a wealth-building tool and a family foundation. With extreme pressure on rents and low-interest rates, homeownership payments (in the median price range) will likely become equivalent to or less than rent payments with the luxury of stability. It’s a sensical move if a family can commit to being in that home for five or more years.
Historically, wealth transfers from the stock market to real estate assets, and Las Vegas could be prime with opportunities by the time this story concludes.
In my view, the most interesting element to unfold will be the fundamental and inherent changes in the way we do business in the future because of the current forced, technology-based, social distancing. I started working with a cloud-based brokerage almost one year ago for that very reason – I no longer saw the value in owning brick-and-mortar and found that I could put more money in my agent’s pockets by leveraging technology. Today, social distancing has forced our community to do just the same. Out of the schools and online. Out of the office and online. Zoom and Google Hangouts are now everyday words. How will this affect our commercial market and the viability of office and retail space in the future? We are fundamentally social creatures, however, a people-centric business may have just been pushed to critical mass – thank you coronavirus. Repurposing buildings and how we use them could be the next big business!
Private capital continues to sit on pause, poised and waiting for opportunities to arise in the real estate market. Historically, wealth transfers from the stock market to real estate assets, and Las Vegas could be prime with opportunities by the time this story concludes.
The Las Vegas community is not a stranger to tough times. We’ve come together and persevered #vegasstrong on more than one occasion. This time is no different, from the guy next door to large corporations. I’ve seen school teachers offering live-stream tutoring and science labs, Cox Cable increased all our internet speeds in an effort to keep us working effectively from home, a Realtor delivering a dozen eggs to one of his clients, Amazon committing to hiring 100,000 new employees…. Families will get to know one another again in the next 30 days. It’s the Spring Break that never ended.
A lot of what’s happening right now is changing the way it is just making its making it go faster the way consumers actually use properties so being able to adopt to the industry which was already headed that way. We knew real estate was changing and with we-work as an incredible example of how businesses use real estate. We-work comes along and the have one thing that is really pushing forward the way consumers do business. A lot of retailing and office spaces are going to hit the shitter you know, they’re not able to make their lease payments and so knowing and understanding consumer demands is instrumental and knowing how to start real estate. Owning and enjoying real estate and that’s one thing, we are looking forward to and are prepared for EXP Las Vegas and Real estate in Clark County.