Taking a bath inside the real estate bubble

By Scott Dickensheets

Monday, Nov. 15, 2010 | 2 a.m.

In 2004, two years before I bought my house, a website urged real estate investors thusly: “It is important that investors make their investments as soon as possible. This is because Las Vegas is growing and expanding at a scorching pace.”

In 2005, one year before I bought my house, Ken Jones of something called the Institute of Real Estate Technologies was — in a document on greatlasvegashomes.com — dismissing fears of a bursting real estate bubble: “However, there is no rationale or fact-based reasoning being put forth to support this fear; just that ‘prices are too high.’ ”

In 2006, I bought my house, for a price that was too high, unaware — or too deeply bunkered in denial to see — that the bubble was bursting beneath my feet, beneath my house.

In 2007, a year after I bought my house, The New York Times reported on concerns by Countrywide, the mortgage company, that “the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.”

In December 2008, more than two years after I bought my house, the median Las Vegas home price was $189,000, down from $369,000 in 2005, according to greatlasvegashomes.com.

In November 2009, more than three years after I bought my house, that figure was $150,000.

Note to Countrywide: The housing market hasn’t begun recovering here.

Note to Ken Jones of the Institute of Real Estate Technologies: I’d like to show you my mortgage numbers versus my home value and hear again about how you “don’t believe there is a national ‘real estate bubble.’ ” Sir, I submit that, however filled with confidence you were in 2005, you were also filled with something else.

This month, more than four years after I bought my house, in the new issue of Rolling Stone, journalist Matt Taibbi writes about the “profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me as taxpayers) in the guise of AAA-rated investments.”

Most of us have our own real-estate narrative, and that’s mine — except, of course, for the ending, which has yet to be written: short sale? bankruptcy? miraculously resuscitated value? arson for the insurance money?

That’s the heavy skein of sad facts, bruised hopes, rising anxieties and throbbing spleen I bring to every consideration of real estate in Las Vegas.

Like this headline from the other paper: “Las Vegas home sales down 26.5 percent in October.” Not looking good for the rest of the year, either, the holidays being a traditionally slow sales time. Forty-two percent of the homes that were sold in October were foreclosures, which means almost half of all sales resulted from someone’s misfortune.

Or this:

According to the Las Vegas Sun last week, 46 percent of all homes sold in October were paid for with cash. That is, opportunists buying low so they can sell high(er). Said a spokesman for the Greater Las Vegas Association of Realtors, “This speaks volumes about our housing market and how well-funded buyers believe that prices here will eventually appreciate.”

Such is the screwy logic of the city’s housing market in 2010: The circling of vultures is considered a good sign.