las vegas real estate

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Good morning. There’s an excellent series of short profiles in the LATimes today documenting the personal cost of the declinining real estate market to those who work in real estate.

Among the examples; appraiser Michael Mathis (pictured) sees his income drop from ‘mid-six figures’ to ‘less than $75,000’ and wonders how he’ll pay for renovations on a 9,000 square foot house; the Long Beach mortgage broker who can’t refinance his own house and ‘has been holding off paying property taxes on his own home;’ and the Guatemalan day-laborer who sees work drying up: ‘I used to get four, five calls a day,’ he says. ‘Now I go four, five days without a call.’

‘I don’t see anything positive happening in this market until effective demand picks up -- and prices come down,’ says Mathis, the appraiser. He adds, ‘This is the darkest moment I’ve ever gone through, but compared to other people who really suffer in this world, how can I complain because I’m not making more money right now?’ Mathis said. ‘I just need to keep it in perspective.’

Our take: We believe the real estate industry -- from homebuilding to renovating to financing to speculating and house-flipping -- has powered California’s economy since the turn of the century, and the recession now occuring in real estate will hurt the entire economy. We believe it will be similar to the damage caused by the decline of defense contractors in the early 1990s. Because so much of homebuilding and renovating is a ‘cash business’, we don’t have great faith in the government’s ability to document this problem. Sorry to be so glum first thing on a Saturday morning. Tree of the week is coming soon.

Photo Credit: LATimes