Interesting story on the state of affairs in Nevada from The Buffalo News. They take and in-depth look at the lay of the land in this Battleground with its cross-currents of issues and needs through the eyes of some Buffalo ex-pats in the Silver State:
CoreLogic, a company that tracks real estate data, says 64.7 percent of Las Vegas-area homeowners were “under water” early this year – meaning the value of their homes plunged so far that they owe more on the mortgage than the place is worth. Welcome to Nevada, land of the endless Great Recession, where the 12.1 percent unemployment rate leads the nation and where President Obama and his Republican challenger, Mitt Romney, are fighting fiercely for six electoral votes and the loyalty of voters like John McGinty. The choice, undecided voters and some experts said, pits a Democratic president who has tried and failed to end an economic nightmare against a Republican who might just make things better – or worse. The real estate collapse that happened here and around the nation four years ago is not Obama’s fault, nor Romney’s. It’s the fault of a nation that turned its real estate market into Las Vegas – and left 60 percent of the homeowners in Nevada, and more than a third of those in Arizona, Florida, Georgia and Michigan, under water in the process. All the boom towns went on the same real estate roller coaster ride. As the government encouraged home ownership, banks took to bundling and selling off their mortgages in packages and relaxed lending standards along the way.
The result was evident in Las Vegas by the mid-2000s. Fueled by such speculation, the median home value in Las Vegas shot up from $205,200 in January 2004 to a peak of $315,000 in June of 2006. But then came the financial crisis. Confidence fell, lending standards tightened, investors started bailing on their properties – and the median home price here plummeted to a low of $118,000 this January. It’s bounced back to $138,000 since then, but signs of the collapse can still be seen everywhere. Two would-be casinos on the Strip have stood unfinished for years. Started and abandoned developments dot the suburban landscape.
Housing bust reality
And at Johnny Mac’s, John McGinty finds himself handing out the occasional free lunch and personal loan to loyal customers in need. “I do what I can to help,” McGinty said. He does this while coping with a downturn in business and mortgage payments on a three-bedroom, 1,800-square-foot home he bought for $495,000 in the mid-2000s that, he reckons, is worth about $210,000 today. Countless Las Vegas homeowners, most of them speculators, have found themselves in McGinty’s situation and walked away, intentionally defaulting on their mortgages. Economic experts say the real estate crash wrecked consumer confidence and crushed the job market, leading to an unemployment rate that’s three full percentage points higher than Buffalo’s.
Frequent visitors, Different ideas
Obama and Romney have had plenty of time for Nevada. The president will arrive here today for three days of debate preparation; it’s his ninth visit of the campaign. Romney, meanwhile, has been here six times. Yet what they’re offering voters could not be more different.
The Obama Plan for Nevada
Obama sticks by the Dodd-Frank financial reform bill, which is aimed at curbing the excesses that caused the financial crisis. In addition, he touts elements of his 2009 stimulus bill that aimed to make it easier for troubled homeowners to refinance, or even to get lenders to agree to reduce the amount of principal on troubled loans, and criticizes Congress for not expanding the refinancing program as he suggested. The trouble is, banks seem to be reluctant to take part in the original Obama refinancing and principal-reduction programs, said Kelley, head of the Realtors group. Besides, many troubled homeowners have second mortgages – and the holders of those loans are not cooperating.
The Romney Plan for Nevada
Romney wants to repeal the Dodd-Frank law, saying it’s so burdensome that lenders are now reluctant to make home loans. He also offers varying free-market proposals for addressing the Nevada housing crisis. “Don’t try to stop the foreclosure process,” he told the Las Vegas Review Journal last October. “Let it run its course and hit the bottom.” And on a Sept. 21 trip to Sin City, the GOP nominee went a step further. “The federal government has about 200,000 foreclosed homes they are holding onto,” Romney said. “I’ll make sure we get them sold, so every home is occupied, we fix our neighborhoods,” The trouble with Romney’s comments is twofold, Las Vegas-area economic experts and political pundits said. First off, letting foreclosures move forward, or putting 200,000 more homes on the market all at once, very well could depress housing values further.
On the political side, Romney’s let-them-eat-cake comments on foreclosures reinforced the Democratic caricature of him as an out-of-touch plutocrat. “It’s a very bad sound byte for him,” said Jon Ralston, a Buffalo native and longtime Las Vegas political reporter who now publishes RalstonFlash.com, a political newsletter.
Ground game is key
Ralston finds it “astonishing” that Obama appears to have an edge in a state with a 12.1 percent unemployment rate, but that appears to be the case. The latest Real Clear Politics average of polls in the Silver State finds Obama 3.8 points ahead, and political pundits say there are plenty of explanations for that edge. “The state Republican party is very much a broken party,” said David Damore, a UNLV political scientist. Party control swung to a faction loyal to Rep. Ron Paul, R-Texas, in May. The result: the Romney campaign has had to build a get-out-the-vote effort from scratch to compete with a Democratic effort honed in Obama’s 2008 victory here and the re-election of Senate Majority Leader Harry Reid two years later. “The Democrats have a very effective ground game,” said former U.S. Sen. Richard Bryan, a Democrat who nonetheless said the race remains “too close for any comfort.”
Obama is getting a boost, too, from the state’s Hispanics, who now account for more than a quarter of the state population. Political pros here say heated GOP rhetoric on the immigration issue has helped propel the president to a 43-point lead among Hispanics in a Public Policy Polling survey last month. “A lot of (Hispanics) don’t understand how powerful the vote is,” said Arianni Valencia, 20, a Romney volunteer who specializes in reaching out to the Hispanic community. “They’re not even sure what it is to be a Republican or a Democrat. But they see the other side reaching out to them, and we’re trying to catch up.”
The deciding factor
Sherman Conley, 71, seemed to sum up the thoughts of many of the dozens of Nevada voters interviewed last week by The Buffalo News. “It’s a critical election,” said Conley, a Buffalo native, “and I’ve got to figure out who will do me the least amount of harm.”