5/27/2011 11:49 AM ET|
Is Las Vegas the new Detroit?
When hard times hit, single-industry towns are especially vulnerable. And the combination of the recession and housing bust has Sin City reeling.
It's no longer even close: Macau's gambling revenues were four times those of the Strip in 2010.
Iconic casino operators like Las Vegas Sands and Wynn Resorts now get the lion's share of their revenue and operating income from Macau and Asia.
Macau's gains have come in the years since Las Vegas' housing and building boom turned to dust.
Home prices here have fallen 58.1% from their 2006 highs, the most in the Standard & Poor's/Case-Shiller 20-City Composite Home Price index. They've even lost 12.6% from the nationwide recession low in April 2009 -- again the worst performance of any city in the index.
The median home-sale price in the Las Vegas area at the 2006 peak was $313,500; in 2010, that fell to a stunning $138,100, according to the National Association of Realtors.
Currently more than 70% of the homes in the area are "underwater," meaning their value is worth less than the amount owed on the mortgage, according to Stephen Miller, the chairman of the economics department at the College of Business at the University of Nevada, Las Vegas. Nationwide, it's more than 28%.
A recent Forbes survey named Las Vegas the nation's second-worst-performing housing market of the past decade.
The worst? Detroit.
That's not the only thing Sin City has in common with the Motor City, although on the surface no two metropolises are more different (and I can guarantee that Detroit doesn't have a hotel as cool as Vegas' new Cosmopolitan).
Detroit was a manufacturing powerhouse that has been in decline for decades. Las Vegas was the prototypical boom town: Clark County, in which Las Vegas is located, grew by about 40% in the last decade, pushing its population to nearly 2 million.
Detroit is gritty, Vegas is glitzy. What happens in Vegas stays in Vegas, and what happens in Detroit . . . well, who cares?
And yet there are striking parallels.
Las Vegas, said Robert Lang, director of Brookings Mountain West, a think tank affiliated with UNLV, "has become a modern-day version of Pittsburgh or Detroit, which once relied on one sector for its growth to its detriment," the Las Vegas Sun reported.
He "compared Las Vegas to Midwestern and Northeastern cities with manufacturing plants and steel mills where the middle class had high-paying jobs, only to see those plants disappear."
A different kind of one-horse town
The industry that defines Vegas, of course, is gambling.
"We're a one-horse town, and gaming is driving the economy," said Miller.
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I hate how day by day we're being conditioned to hate one city over another in this country. this is my country and I love every and each city. I have been to Detroit. I love the people. It has its problems but at the end of the day just like all other Americans they too are human beings working hard to raise a family and hoping for a better life. The rebuilding of America has to be started with us building each other up instead of constantly tearing ourselves down.
Vegas is also for the younger crowd. There are several world class clubs here and most are filled solid every day of the week, with reservations necessary on Fri and Sat nites.
Unlike Detroit, It is a tourist town, not an industrial city. And like most tourist spots, it depends on disposable income. People will always love to sun, swim, party, gamble, and be pampered. Few places on earth do it like Vegas. As soon as the economy picks up, so again will Vegas. Anyone care to bet on it?
The one thing that is forgotten, is our US economy is built on cities like Detroit and what it has to offer. It is a reflection of the overall health of the US economy, Vegas is dying because the US (Detroit) economy is dying. When people don't have jobs, they don't have money to waste in places like Vegas. People in the US need to buy products produced (manufactured, designed, engineered) in the US, and the US government needs to stop spending more money then it brings in. That is the only way this will turn around. None of this should be a surprise. Every country what a piece of the "success" pie, and we gave it to them. Free trade!
Isn’t it ironic, U.S. corporations built the Chinese manufacturing sector and provided the technology, manufacturing know-how and knowledge base in the guise of Free Trade and ended up with trillion dollars in budget deficit, billions in negative balance of trade, millions unemployed, under funding of Medicare and Social Security, homes being foreclosed, etc. Now negative effects of these agreements have finally reached Las Vegas because Americans, employed and unemployed are underwater financially. The employed are either making non-living wages or stagnant wages.
WELCOME TO THE WORLD OF ECONOMIC GLOBALIZATON, PROPAGATED BY THE UNITED STATES OF AMERICA!
I'm seeing some comments about Detroit's leadership. Guys, it's changed - drastically. The mayor is Dave Bing - and he's been going after waste and incompetence left and right.
Just fired the a dept head for giving herself a $10,000 raise using Head Start money and furnishing her office with over $100,000 worth of furniture. She's gone. It's a new era in Detroit leadership. And thanks to the people who posted their dislike for Detroit-bashing....
For every factory that employed 400 people that closed , that's 400 homes without a working spouse .
In my neighborhood that's several square miles of homes .
For people returning to work , some have to take lesser paying jobs . >> recovery will be slow.
The idea of making exclusive made products in America although a good idea , America has become so entwined with foreign trade that we can't make parts as cheap as some countries that can make the whole product.
American businessman will not invest in new factories in America if other countries can make it three times cheaper. The new factory worker is in such places as China ..The world is a small place , it doesn't mater where it's made now.
That's the thinking of the businessman and that's what's killing us. The problem is easy to see.
Even if there was a new Henry Ford and said I'm going to make a $8000 new car made exclusively in America , The thinking is " Why do i want to spend 1/4 million dollars on one machine to make one part when I can get China to make it 3 times cheaper ."
The solution to the econmy is very complex. there's no simple solution .
America was most prosperous when a good many products were exclusivley made in America.
I am sorry that you have to read yet another article bashing your area. It seems the media and other ignorant people/organizations like to bash certain areas to make themselves feel better.
a reader in New Jersey
PS if any of you people bash my area, you are no better than this author
"Detroit is gritty, Vegas is glitzy. What happens in Vegas stays in Vegas, and what happens in Detroit . . . well, who cares?"
That is the problem with this country!! What a thing to say. Who cares? A lot of people care!! I don't live directly in the city and I care! Geeze people, wake up!! I thought we were ALL in this together!!!!
Ok, this article says is Vegas the next Detroit? Indeed it may be. But what is overlooked here, is that the next Detroit, Vegas...will be New York, Boston, Philly....and on and on. Point is folks, if things don't start coming back real soon, the current economic climate of persistent 9% unemployment (really 16% or more), inflation fueled by high gas prices, and the drop in home values Nationally that is greater than even what was observed in the Great Depression....all cannot go on indefinitely without some SEVERE ramifications. And hence, it wont just be the Detroits and Vegas Cities we will be reading about with rampant home foreclosures, etc....it will be in EVERY City across America. Stay TUNED! And use your VOTE wisely in 2012.
I suppose the slime bags who accepted fradulant loans got what they deserved, but the total slime bags on Wall Street who encouraged them and made it possible got bonuses. And the nitwits in Washington who wrote the legislation to support the slime bags (Barney Frank) got reelected!
Detroit, and Michigan have been under one party Democratic rule for 40 years. In Detroit the AFL/CIO and the Democratic party are indistinguishable. The corruption at all levels of government is astounding.
Las Vegas, and Nevada have been under a Democratic majority for a very long time. In Las Vegas, the SEIU and the Democratic party are the same. The corruption in Las Vegas is well known.
Would MSNBC dare compare these two cities to a place like Texas, that has a thriving community under a conservative state government with Right to Work laws and weak unions?
No, because that would be an analysis based on FACTS not progressive propaganda.
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