Foreclosures Transform a Symbol of Prosperity into Emblem of Recession
Foreclosures have transformed Lake Las Vegas resort from a symbol of prosperity into an emblem of recession. Beyond the suburban spread there lay an artificial lake in the desert flanked by a village with an Italian touch – representing everything that taste and money could buy. But the overflowing milk of prosperity has suddenly curdled.
In 2008 Transcontinental Corporation that was developing the property lost it to foreclosure after failing to repay loans amounting to $540 millions. The new owners filed Chapter 11 bankruptcy in the summer of 2008. One of its main hotels – Ritz Carlton LLC too filed bankruptcy to ward off foreclosure and since then has been sold. One of the prime golf courses has been left abandoned.
There are practically now new constructions of residential houses although the project is far from being completed. Like an epidemic, foreclosures have spread causing value of houses to tumble. The glittering aquamarine lake that was thought of as the jewel in this region suddenly developed an ominous leak causing engineers to hastily repair it to prevent sudden draining of it.
The residents are all trying to sell their units one after another. In May this year about 10% of the houses in the region were in the foreclosure category – either bank repossessed or in short sales. It meant that the values of the houses were so low that the loan amount was far greater according to the findings of Applied Analysis that deals in real estate research. About 80% of the houses that were listed lay vacant and unoccupied.
Ed Santacruz – formerly a mortgage broker and fortune hunter said, “I thought it was a no-lose situation. It ruined me.” His hotel-condo lapsed into foreclosure. He had plans of renting out the unit to tourists but there were not enough candidates so as to meet the mortgage expenses. He added, “That’s where I messed up, I believed enough in the product and in Las Vegas.”
It is not difficult to find the reasons for the problems of Lake Las Vegas. The community was planned to be a resort as well as a residential centre. It leaned heavily on buyers of second home and tourists for its success. But when the economy began to falter it too began to choke and stumble. Brian Gordon of Applied Analysis said, “There was a point and time when the higher end of the market had been less impacted. But as the recession has run longer and deeper than initially expected …”
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Foreclosures Transform a Symbol of Prosperity into Emblem of Recession
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