Route to Recovery
A trip through the epicenters of the American recession

BULLHEAD CITY, Arizona – Not so long ago this town on the Nevada border was in full boom mode.

It was a magnet for people coming to work in the casinos across the Colorado River in Laughlin, plus Californians looking to retire here or have a second home at a fraction of the cost in their own state. Construction workers flocked here to build homes and roads.

All told, successive booms turned Bullhead City from a fishing village just a few decades ago to being a city of more than 40,000 people.

But America’s housing crisis and the most severe downturn since the 1930s stopped the city’s boom dead in its tracks.

“We had booms in the 1980s and the 1990s, but in 2005 and 2006 things went absolutely nuts,” said John “Mac” McCollum. “Then in 2007 all of a sudden the lights went out.”

Many of the construction workers have gone, as have a lot of people who have been laid off at Laughlin’s casinos. Nevada’s casinos have had 20 consecutive months of declining gambling profits.

“Unemployment is on the rise and we’ve had quite a few foreclosures,” said Bullhead City Mayor Jack Hakim. “Families are leaving because there’s no work to be had.”

“It’s going to be tough for a while around here,” he added.

Unemployment in Mohave County where Bullhead City is located is around 10 percent. The median house price here has fallen from nearly $190,000 in January 2006 to less than $93,000 now, a drop of more than 50 percent.

Around 60 percent of McCollum’s sales now are foreclosures.

“Many of the other sales we handle are people trying to avoid foreclosure or at least break even,” he said. “Either way, right now foreclosures are pretty much the only game in town.”

John McCormick of McCormick Development helps run a number of family businesses – a water company, a construction company, a land development company and a real estate broker’s office – and says that many of the people walking away from homes here are either speculators or Californians who bought a second home here.

“If they end up in trouble, it’s so much easier to walk away from a second home than a primary residence,” he said.

The McCormick clan’s land development business has laid out a subdivision north of Bullhead City with 141 empty lots, complete with roads and water mains. But although there have been plenty of people looking, no one is buying right now. The family business owes the bank $8 million on the development, plus has to pay $160,000 annually in property taxes while the subdivision remains empty.

“There’s money out there but a lot of people won’t let it go,” McCormick said. “They just waiting to see if prices will go lower.”

For Bullhead City to come back, both McCormick and McCollum agree that casino business needs to pick up again but – even more importantly – California’s economy needs to recover.

“If California’s market is in the tank, we ‘re in the tank,” McCormick said. “I think we may be past the worst of it now. But nothing big is going to happen any time soon.”