Obviously, buying a house in Vegas and being able to afford it down the road might one of the biggest gambles in the area.

For those casting aspersions at people who bought houses they ended up not being able to afford: Imagine you are bouncing from rental to rental. You don't stay more than a year or two at anyone because of evictions, losing a job, house being sold out from under you, etc. You can put a little money down and move into your own house at the same monthly cost as rent. Sure, in 5 years you owe $100,000, but for the next 5 years your living situation is stable. If you were in that situation, would you say: "I'm not going to take advantage of this because it might crash the economy 5 years from now". Ha Ha. No.

If people can buy houses with no down payment, that is a sure sign that the housing crisis could reoccur. As studies have shown, owners who have down payments are less likely to abandon the properties in a downturn. they are less likely to mail the keys to the bank (remember the fun Great Recession term "jungle mail") when they feel that their property is "under water." After reading this article, I want to preempt John Paulson and start shorting the major real estate lenders in Las Vegas.

I don't disagree that we need to be cautious about how robust housing really is right now, but this article does't even come close to explaining the Why. The epicenter of the housing bust was fraud at every level of the industry. That's not mentioned one time in the article.

Middle Class income is gone, but so are the middle class attitudes. It's not what's in your bank account that matters, it's how much you can borrow against your house, what you can charge up on an array of credit cards. I know the Middle Class is squeezed, but we could spend less on stuff, upgrades, renovations, et c. At some point we need to choose less than what "they" say we can afford.

We bought a a Las Vegas house in 2003 for $272,000 eith money down, state your income, the

Why do newspapers say EPICENTER to figuratively mean "center" when they can just say "center" to literally mean "center"? Epicenter is the wrong word. https://emcphd.wordpress.com

A nearly identical article could have been written about my home city of Sacramento, California. Purchase and rent prices have skyrocketed over the past few years. I've been fortunate that my landlord hasn't increased my rent by too much. I am fully anticipating getting one in the next few months and I am lucky enough that I can afford to absorb such increases. Sometimes I peruse the for sale listings in neighborhoods I would consider and it's inevitably, "I like it... but I don't half a million dollars like it."

Out of 184 houses built, he's setting aside 6 for those with modest incomes and this is supposed to make a dent in the affordable housing problem? LOL

Your primary home should not be considered an investment. If you have additional homes that generate a positive income, those are "investments." Much of the pain Americans suffer in their lives economically is due to their hyper consumerism, their easy access to credit (which they mismanage) and their mistaken belief that they're going to "cash out" and become rich someday. And there are certainly any number of criminal-types more than willing to sell them "the American Dream." People would be better off if they lived more frugally, but that's just not in the DNA of Americans.

The Alfa Romeo ad in between the 3rd and 4th paragraphs - "for many the American dream is now out of reach" - is a particularly nice touch.

One home owners asks "How are you supposed to build wealth?" Not in your home is my response. It's nice when you pay down your note and the market rises and you end up with equity but you are always going to need someplace to live so a home is not a good way to build wealth for the average American. Certainly not for me. How I built wealth (modest though it is enough for independence) is through laser focused, unwavering discipline spending and investment. The average American had a huge role in the financial crisis of 2008 when they leveraged themselves to the door knobs. Were there unfortunate situations and predators? You bet. But there was an incredible lack of personal responsibility and naivete.

Would have helped to know what kind of mortgages these buyers are getting. If any portion whatsoever are getting stepped-payment (vs. adjustable) loans, that's a big problem.

We bought at the bottom - Summer 2011 - in an established neighborhood three miles west of the middle of the Las Vegas Strip. Now our house is allegedly worth almost 2-1/2 times than we paid for it. How is this logically possible? The fact is, it isn't. The Las Vegas Valley's housing market has been driven primarily by speculation for a couple of decades now - the house next door to ours has been reasonably maintained but vacant since before we moved in 7 years ago. By the time the speculators let word get out that there are bargains to be had, panic buying settles in even though purchase prices have already gone through the ceiling. Experience indicates that yet another Las Vegas housing bust is right around the corner. To put it simply, the average family home buyer, not just in Las Vegas but nationwide, is not a very savvy investor and, as Mikeyz of Boston commented earlier, "The end game of a decent economy is to convince people, who maybe shouldn't, to over-invest," and nowadays, more often than not, they do.

Maddening for me to sit here and read of history repeating itself. It will. It is almost upon us. Massive tax cuts for upper brackets put stunning amounts of 'free' money into hands of people who've nowhere to invest it but in the housing and stock markets which runs up the price of both asset classes. Saw it with G.W.Bush and we are seeing it again with Trump's insane tax cuts. Practices in the mortgage business are ripe for trouble. It will happen again. The Brookings Institution produced an in-depth report to say we're as shaky now as we were in 2008, maybe worse. Page 1 tells the tale. Read it here: https://www.brookings.edu/wp-content/uploads/2018/03/5_kimetal.pdf

Seriously? Were the hundreds of thousands of people who moved to Las Vegas forced to move there? Everyone is to blame for so many of the problems we face now and until that is accepted then history will repeat itself over and over again. People used to buy a house to make a home but that changed and now people buy houses as an investment. I have no sympathy for anyone who bought more than one house as a quick turn around investment but lost the properties to foreclosure. No one learned the lesson in the 1980's when people lost their shirts in Texas. John B. Connally, a former United States Treasury Secretary and Democratic Governor of Texas filed bankruptcy in 1987 when the real estate market collapsed and he was over leveraged. The populations of cities like NY and SF have exploded and the newcomers pay whatever the landlords ask for rent but if they just said NO then the rents wouldn't have skyrocketed the way they have. Instead, at least in NY, newcomers complain that rent regulated apartments cause their rents to be high even though there is no connection between rent regulated apartments and the unbridled greed of landlords of unregulated apartments and the stupidity of people moving to NY willing to paying 50%, or more, of their income for rent. Co-ops and condos are insanely overpriced in NYC and SF but people pay, why? Don't pay and the prices will drop. The wonder of old NYC and SF is gone and soon there will be no water in Vegas. Move someplace else and be happier.

"After looking at two properties this summer, they found a five-bedroom home with three bathrooms for $300,000. First-time home buyers, they were able to take advantage of a program that provides financial assistance in hard-hit areas. They put down less than $1,000." What kind of insanity is it where someone buys a home with a 0.33% down payment? This is the kind of lending that lead to the 2008 bust, and neither lenders nor borrowers seem to have learned anything. Back in the day, 10% down was a minimum. Yes, people had to save longer to buy a house; but once they bought one they were a lot more likely to be able to afford to keep it.

Why did these dangerous boom and bust cycles start with Reagan? Deregulation? Voodoo supply side?

Housing is "booming" in Las Vegas because Nevada's low taxes encourage in-migration of retirees from neighboring high-tax states.

The end game of a decent economy is to convince people, who maybe shouldn't, to over-invest. Their money evaporates and rains back down on the wealthy. And by the way this 'decent' economy is way overstated.

Perhaps it's a function of age, but I gave up reading the article; white letters on a light background are too difficult to read, so I gave up. What a pity, since it seems to be an important article.

The warning sign is the fear mongering of the blue wave trying to grab power lost in November 2016 without any agenda for working class or the middle class. There is no epicenter for the robust economy of the USA. It is all over the country. So in November 2018, there will not be a blue wave or a red wave just the red, white and blue wave of the USA. Vote for the best candidates who will will be the best representatives that will keep America in the current state of a stable economy.

Affordable Housing, as a crisis, began in 2014, after long-term unemployment benefits were ended for millions of Americans who were stranded after the start of the Great Recession, and the stimulus didn't include any provisions in anticipation of housing needs after the collapse of the housing market. Construction starts were weak all throughout the recovery. In California, the crisis is at unheard of levels, with homelessness at peaks never before seen. The state passed legislation to construct affordable housing two years ago. Not one penny has been spent, with cities and counties finding that neighborhoods are resisting the construction of affordable housing among them. NIMBYism is winning, so far. The homeless, in stark contrast to the lore we all conjure, isn't the drug addict or mentally-ill person on the street, but families, single moms, older workers who've never been rehired. The US now has unprecedented numbers of multi-generational housing arrangements in families. This is due, for the most part, to the inequality and lag in wage growth. The gig economy isn't paying workers a living wage. The housing crisis is everywhere and not just on the coasts. Relatively little has been published in the media, in a concentrated way. --- https://www.rimaregas.com/?s=affordable+housing

The paragraph that talks about "renting while black" draws a direct connection to Section 8 housing subsidy certificates. Black people are not the only ones who use Section 8 vouchers. Journalism shouldn't echo the prejudices and stereotypes that need refuting in our culture. White people are the majority of people receiving all sorts of government assistance in this country -- ESPECIALLY assistance for the wealthiest among us known by euphemisms such as tax breaks, business loopholes, and business and investment "incentives."

Thanks NYT, very engaging layout. As for the article itself, unfortunately, it's just another cycle and who ever has the deepest pockets will make out like bandits. When momentum is high everyone buys into they hype, hopefully, you're not the one who buys at the peak...

What happens when they run out of water due to droughts in the West, it will be a ghost town.

Well, you end on a rather complimentary note regarding Mr. Plaster the Kind Developer, who knew that the bundling bubble creators of Wall Street, now bailed out by the taxpayers of America, the dissolving middle class. Plaster says he will set aside six of 180 large houses for people who need governmental assistance. In our neighborhood, usually developers agree to do something of the kind if there is a lot of anti-development sentiment for a specific site, usually because they need local politicians to grant them exceptions for their desire to overbuild or ruin an open space the community has traditionally depended upon. The local politicians do not challenge the builders who agree to this gesture, and then find reasons not to adhere to it after the development has taken place. The people accept it as a fait-accompli. The builders are all a part of the psychopathic search for wealth they do not need and power they will use to continue the destruction of the middle class.

I've been through so many of these boom and bust cycles. I had purchased a condo in the South End of Boston, way back in the mid 80's, when it was just starting to be gentrified. Then the 1990 Savings and Loan crisis and Real Estate bust hit and when I thought I might want to sell it, I was told that I could hang the keys outside with a "take me" sign, and nobody would touch it. Fast forward 10 years later and I sold it in one day for 5 times what I paid for it. That was in 2005. Then, the 2008 crash and again, "nobody" would ever buy real estate again. Years and years of stories about how "millenials" don't want to buy houses, the American Dream is done, yadda, yadda. Now, it's happening again. And it's always the same: When things are booming like now, people refuse to believe or understand that the bust is coming. When things are bad, they refuse to believe that things will recover. It's the smart ones, and usually the rich ones, who can make out like bandits by buying cheap property at the bottom of the market. How likely was it, do you think, that any "normal" person would have been able to enter that foreclosure auction and buy that house for $6,000? Not at all likely.

I used to work in subprime, credit risk modeling and portfolio management (bank based in Las Vegas, where I lived). I quit in 2005, and knew that this stuff was gonna go bad big-time once "securitization" metastasized to mortgage lending. The joke at our bank was "the best things in life are FEE." Google "bgladd tranche warfare" for my thoughts back then. We have learned nothing.

I was curious about those "townhomes and condos with a New York theme" in the Nevada desert, so I googled the developer's web site. I expected the Brooklyn to be like a brownstone with a stoop, condos in the Manhattan to perhaps have floor-to-ceiling glass, and the Rochester to resemble a bungalow. Instead, they look like they could fit in anywhere in the Southwest. All three models look more Sun Belt than Empire State. Not that I can afford to relocate to Nevada, but the idea of living in a "moderately priced" New York-style brownstone was appealing.

The Bankers and the wealthy have been engineering this recast of our economic system for some time now. For the past 40-50 years rather than have a middle class that participated in GDP and productivity growth and profits, wages were kept down and instead the typical American was given large amounts of credit so that lives wer to a great degree financed. Cars today have an average cost of $30K so they are leased not owned. Manufacturers are talking about using a pooed rental car approach to cars with the individual owning nothing but paying for the use of a vehicle on demand. Here in Seattle there is no such thing as entry level housing. The Middle Class has become a group of renters in debt up to their eyes.

Much of this article speaks of speculation. Chasing of profits, of moving home prices. Loans for 3 properties (likely with little money down), and then foreclosures when the market turned. Investors swooping in. All this hugely influences the market, and then quickly turn it around when profits turn negative. Less about people actually buying a home they can afford, living there without watching its value for an easy win, and being stable. It sounds like a few people were able to get good deals in between the chaos.

We have been made slaves to debt. What today is not financed, so the reality is that the banks own everything and you just send them a monthly payment for the right to use it for 30 days.

America's socioeconomic downfall in recent history started with Reagan. It's intricately connected with our growing infatuation with wealth management than wealth creation. Those "wealth managers" (almost exclusively finance and management/MBA guys) are more interested to manage increasing amount of wealth for themselves than helping the society or even the company in most cases. These people, by training, (and probably their inherent nature) are very short sighted, if not selfish. We know that MBA or such investors hardly build a successful company in American history and it's valid till today. They can only ‘manage’. It’s becoming clearer that companies created by technocrats and/or scientists generally are more sustainable, productive and successful in creating wealth in the long run. It’s now a well-accepted fact that talented students do not favor science and technology as a career, almost everywhere, even in developing countries. That enabled mediocre students to flock to STEM- from abroad and also from within the country. Creative art and humanities are doing even worse. As a society, we seem to be more obsessed with wealth management than wealth creation. Our economy and businesses are now overwhelmingly dominated by just one aspect- finance. We must change that and bring back the era of wealth creation by people who can think on a long term basis and take ownership of their creations (scientific or otherwise).

The government forced banks to provide mortgages to people who would have otherwise not been deemed creditworthy. The government (ex- Frank/Dodd) played a huge role in all of this. I blame the government far more than I blame the banks.