Nevada: A Cold Streak for Real Estate

Irma Escoto, a 38-year-old mother of three, lost her job at her husband’s auto sales lot when the two of them separated in April. On a recent afternoon she stood handing over paperwork in the Las Vegas office of the nonprofit Consumer Credit Counseling Service of Nevada and Utah in hopes that her lender would put off foreclosing on her home until she can get work or finalize child support payments. A supporter of President Barack Obama in the past, she’s uncertain whom she’ll vote for next year. “I’m not sure anyone can make a difference,” she says tearfully.

The state that went for Obama over John McCain 55 percent to 43 percent in 2008 is on edge today. An August survey of 600 Nevada voters by Raleigh (N.C.)-based Public Policy Polling found Obama leading Republican Mitt Romney by 47 percent to 46 percent with a four-point margin of error. “There’s a lot of anger,” says Jon Ralston, a political analyst and host of a statewide television show. “The question is: Is it focused in some laser-like way, or is it scattershot?”

Escoto’s plight is shared by thousands in the state with the nation’s highest unemployment rate—13.4 percent—and the worst housing market. One in every 44 Nevada homes has received a foreclosure notice, according to RealtyTrac, a data seller in Irvine, Calif. Real estate prices in Las Vegas are down 59 percent from their 2006 peak, another dubious national record. Some 60 percent of home mortgages in the state are underwater, again leading the nation, according to research firm CoreLogic.

On billboards and radio where new home construction was once advertised, lawyers now promote foreclosure-prevention services and $999 personal bankruptcy filings. “We’re trying to run in three feet of molasses,” says Michael D. Bosma, a Reno accountant. “No one’s doing any significant expansion. No one’s doing any hiring.”

While Las Vegas is still the biggest U.S. gambling center, revenue in the casino industry fell to $10.6 billion last year, or 17 percent below the 2007 peak. Hospitality employment is down 7 percent since then, to 317,600 in August. The construction industry is even worse off. Jobs there have dropped 60 percent, to 54,600 in August from a high of 146,600 in 2006. Southern Nevada builders expect to sell fewer than 3,500 new homes this year, down from 36,000 five years ago, a drop that leaves many Nevadans dizzy. “I remember when people were sleeping in line just to draw in a lottery to buy a home,” says Dina Titus, a former Democratic congresswoman from Las Vegas who is running again next year. “Now there are blocks of houses that haven’t been finished.”

Frank Wyatt, president of the Southern Nevada Home Builders Assn., presides over a declining membership. The number of companies in his industry has fallen from 77 to 32 over the past five years. His own business, Pinnacle Homes, has seen the number of houses it builds plunge to 12 a year from 200 in 2006. The company’s staff has gone from 20 to seven, who now work four-day weeks. To keep his workers busy, Wyatt, 59, and partner Danny Martter, 49, have been selling homes at cost and fixing up foreclosed properties on behalf of banks, even if that means just $50 per job. Neither man has collected a salary in almost three years. “From the company owners to the lowliest employees, nobody in this business is making any profit right now,” Martter says.

Independent contractor Jose Lovato, whose specialty is framing homes, earned $19 an hour in the boom years. Now builders pay a flat fee per job, which means he sometimes earns as little as $8 an hour even if a project delay isn’t his fault. “Obama talks about jobs. I don’t see it,” says the 42-year-old Mexican immigrant as he stands at a construction site, a cloth hanging from underneath his hard hat to prevent his neck from getting sunburned in the 88F Las Vegas heat. “We’re working harder and making less.”

Richard Altman says the plumbing contractor he works for has shrunk its payroll to 30 from 300 employees even as it picks up work from other companies that have gone out of business. “It’s getting worse,” says the 44-year-old Michigan native, who splurged on a boat and a swimming pool when he refinanced his home six years ago and now says he goes weeks without work.

How all this plays out politically is impossible to predict a year from Election Day. Wyatt, who voted for Obama in 2008, says he’ll probably vote Republican. “I’m very concerned about government getting bigger,” he says. Juan Muñoz, 28, a Pinnacle employee fixing a broken water valve at a bank-owned home, says most in his family are registered Democrats, and he voted for Obama in ’08. He’s leaning Republican now. “I think they’ve got a better business plan,” he says.

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