It’s Like Deja Vu All Over Again in the Las Vegas real estate market
By Jennifer Ablan
Las Vegas had become the poster child of what many had pegged as the biggest casino during the real-estate boom, all which was engineered by cheap credit and a yearning for owning a piece of the American dream.
The economic toll of the financial crisis swept through towns and communities in terms of home foreclosures, devastated neighborhoods and half-built shopping centers and office complexes.
But on my December visit to Mountains Edge and South Summerlin — large master-planned communities, not far from the Las Vegas strip, for example – I saw several bulldozers doing work in preparing the sites to build houses, after years of sitting idle.
There are signs of hope and renewal with new construction projects ramping up in Sin City and investors snapping up foreclosed single-family homes, rehabbing them and renting them out. The market for foreclosed homes is getting a lot of attention these days, as there are signs the multi-year plunge in housing values is in a bottoming process and Americans become more of a renter nation than an ownership one—at least for the time being.
As my esteemed colleague Matt Goldstein and I reported Tuesday, the lure of fat profits to be made from scooping up foreclosed homes at a discount and turning them into rental properties is attracting not just local entrepreneurs but big institutional investors. And the federal government is getting into the act with a plan by the Federal Housing Finance Agency to stage a bulk sale of some 2,500 Fannie Mae-owned single family homes in Atlanta, Chicago, Los Angeles, Phoenix, parts of Florida and Vegas.
But some worry whether the FHFA program will favor big investors with D.C. connections over small, local entrepreneurs.
One of those who voice such concerns is Laus Abdo, a Las Vegas real estate investor and property manager, who has been buying foreclosed homes for several years. Abdo wants to partner with an institutional investor so he has enough money to make a viable bid for the pool of single-family homes Fannie is putting up for sale in Vegas. His plan is to buy some of the bulk sales and help the renters get enough equity to eventually buy the homes.
Abdo says one of the benefits of a real estate advisory firm like his TriArchic Advisors is that he knows the local community better than some big New York or Los Angeles based money manager. He feels the cards may be stacked against him in the bidding for the Fannie bulk sale because he doesn’t have a lobbyist in Washington, D.C working on his behalf.
“I don’t have any inside track,” says Abdo. “Other than old-fashioned, due diligence and hard work, I have no other competitive advantage. And I believe that some institutions will.”
FHFA and Fannie haven’t yet announced a deadline for submitting bids. They intend to first pre-qualify bulk sale bidders, meaning they will use a series of criteria to narrow the potential list of buyers. Right now, that is the first hurdle Abdo and other potential buyers are trying to clear.
It’s too soon to say how this will all work out. But the stakes are high because the last thing the federal government wants to be accused of is making the housing recovery seem to favor the rich and powerful at the expense of everyone else.