Tiny Vegas House Sitting in the Middle of Housing Craze

Click here to see this 700 square foot home nestled in the shadows of billions of dollars of new condominium projects. The house has “Feliz Navidad” painted on the front windows that won’t wash off. The landscaping consists of four shriveled cacti and the patio is piled high with empty cat food boxes. This home is on the market right now for $1.2 million, and the owner won’t accept anything but cash. They say that it is like beach front property they’re not going to be making any more of it. This craze is going throughout the city of Las Vegas. A vacant one acre lot in Las Vegas is up to $601,600 that is an 88 percent increase from last year. I can’t believe this outrageous real estate market. The most outrageous thing is that speculators think that it is going to keep going up. I think that it is quite scary we as students are about to graduate and find jobs, but how are we going to find a house that we can afford?


destiny said...

Location, location, location. That's basically the underlying motto in real estate. The prices of real estate in Vegas are insane right now, but that is precisely why I won't be moving there anytime soon. The same one acre lot on the outskirts of Vegas would go for half the selling price that it would for a lot close to the strip. It's all about the location baby.

Dr. Tufte said...

This further demonstrates a point I've made in a few other comments. It's a basic principle that all benefits accrue to the holders of fixed resources. In this case, a lot near the Las Vegas strip.

For the curious, there is a farm in Silicon Valley (avocados, I think) for which the owners have turned down offers in the billions.

Blake said...

Although the prices of real estate can be somewhat linked to the state of the neighboring economy, it seems as though that is somewhat of a secondary factor. In one of my classes, the economic development director of Cedar City, Terry Keyes, was a guest lecturer, and he explained that most of the local law enforcement, and school teachers could not afford to purchase a home here, yet prices continue to sky rocket. There are obviously other driving forces, such as incomes from outside people coming in, etc that are driving up the prices of homes at unbelievably high rates.

Dr. Tufte said...

Terry is correct, and he is repeating a common argument made in many places.

Even so, 1) I know that it isn't as relevant as it is portrayed to be, and 2) I'm not sure it is even worthwhile worrying about.

On point 1, what Terry should be saying is that a police officer or teacher moving into this area might not be able to afford to live here. But, the vast majority of police officers and teachers are not in that position. Would the police officers and teachers who already own homes here be willing to subsidize the new ones moving in? If not, then I think this example is phrased the way it is to tug at heart-strings rather than because it has any particular merit.

The second point takes an obvious position - that it may be desirable to live close to work - and extends it into a non sequitar. Should we do something to help those people live close to their jobs? If yes, what about the flip side of requiring someone to live close to their job when they don't want to. Many places do that, and it is unpopular. Some might think that the two don't go together (which is fine), but it implies that somehow being a police officer or teacher entitled you to asymmetric treatment that others are not entitled to. That's a problem too. And how would we address someone like President Bennion who would then feel entitled to a home in Salt Lake City too because he has to deal with the legislature regularly. That's silly, of course, because he doesn't do that job most of the year. The problem is that teachers don't do their job most of the year either. Should we make them move every summer because they have chosed a profession that gives them that time off?