In December of last year, real estate agents closed sales on some 900 condominium units that had once served the Las Vegas Valley population as apartments. This past June, they closed 400—a solid indication that the condo conversion tidal wave that has swept through Southern Nevada since the beginning of 2004 is decelerating.
And that its height is declining: Not only have sales on converted condos in the second quarter of 2006 fallen 44 percent from the first quarter, there are now fewer than 7,000 apartment units on course to be absorbed into the conversion wave over the next couple of years, as compared to the 14,000 (11 percent of the rental stock) that have been engulfed thus far. Moreover, real estate monitors say that some converted condominium complexes are reverting back to their apartment status (though they are few and far between).
Which is good news for those seeking apartments, because with more units available (2,315 are projected to go up this year), the rent should lower, says Larry Murphy, president of SalesTraq, a real estate monitor. And it allows for current apartment tenants to sleep with a bit more serenity, for the danger that their respective apartment will be turned to a condominium—the unenviable and at times catastrophic reality for thousands of displaced residents in the past two years—has dissipated, at least for the moment.
The drop in condo conversions has also set at ease the Las Vegas city council, which at one point last year debated the possibility of setting a moratorium to halt the tidal wave before it usurped too many of the city's apartments. It's proof, says Murphy, that the market's nature is to balance itself out. As UNLV Center for Business and Economics director Keith Schwer says: "In the bigger picture, water finds its own level."
But the vacancy rate among the sea of apartments in the Valley rests below 4 percent, and Las Vegas is still one of the nation's top ten economies for condo conversions, and while the real estate market has been finding its own level, the real lives of actual people have been caught in the waves.
"At most mobile home parks, the people own the homes and lease the land," says Don Gilbert, explaining on July 28 the reason he was able to sell the Mt. View Mobile Home Estates without following the guidelines set for manufactured home communities under state law. "Here, they rent the home, and so it's just like an apartment complex."
(The Mt. View park doesn't fall under the protection of NRS 118B, designated for mobile home parks, says Bob Varallo, of the Nevada Association of Manufactured Homes. They fall under 118A, he says, because the residents rent their homes on a month-to-month basis, and so the situation for the tenants there is analogous to tenants at an apartment complex.)
But anyone can see that that desiccated hellhole on East Craig Road in North Las Vegas is no apartment complex. People walk like apparitions through the desolate streets, each lined with rows and rows of monotonous manufactured homes distinguishable only by degree of dilapidation. Windows are covered with wooden boards and garbage bags, enclosing the crawling things that have left just about everyone in the park with nightmarish accounts of recluse-spider bites and roach infestations. Junk and furniture spill out of front doors, and old Buick Centuries, jaded Chrysler LeBarons, and archaic Chevy Luminas sit immobile on blocks in the front yards of the minority who possess vehicles.
This was the scene on the afternoon of Friday, July 29, just after the residents of Mt. View woke up to find a notice to quit taped to their front doors. Many of them gathered at the front of the park—some with wheelchairs, some with babies draped in towels resting on their shoulders—and waited under the miserable midday heat for an explanation.
Don Gilbert, who says he bought the property in January 2005 and has put more than $1 million into it since, sold the property to Beazer Homes, leaving the tenants who occupy 228 of Mt. View's 328 mobile homes in the same boat as those who lost their apartments to condo conversions: shipwrecked on dry land, having only 30 days to relocate into a receded renter's market, and ineligible for financial assistance from Mt. View's owner.
"We're indigent people, here," says Marianne Blair, 41, who had been employed by the park until she was terminated that morning. "And 65 to 70 percent of the people here are disabled."
Carolyn Tyler, 60, says: "There's people crippled here. They can't move. Most of us aren't young. We can't move ourselves, let alone our neighbors."
Dianna Wood, 49, with a voice of indignant despair: "Some people have three or four kids—they'll have to pay twice as much for an apartment. Some are gonna lose custody of their kids, and some kids are gonna be taken by CPS [Child Protective Services], because the courts look at the stability in people's housing. Myself—I barely even have a pot to piss in."
And James Chan, 54: "The rest of us are living on a month-to-month basis. How are we gonna find the money to save up for a new place? There's deposits, moving costs, probably higher rents. The city's gonna have a whole new batch of homeless people to deal with; that's what's gonna happen, just watch."
And one lady who is fighting the evictions with all her time and might, says: "Christ, I moved here to stop being thrown out of apartments converted to condos."
The move to convert rental stock into purchasable homes ignited in 2004, when the elements of a magnificent tide converged: interest rates sunk near bottom, permitting newcomers (three-fourths of whom, according to statistics from UNLV's Center for Business and Economics, are homebuyers) to borrow lots of money; the $100,000 single-family home of the previous millennium became extinct (Las Vegas led the nation in home appreciation in 2004, when the median price for new homes peaked over $300,000); land, in limited supply in the Las Vegas Valley (where the government owns 86 percent of the territory, says Schwer), became more expensive, as did construction costs, and so it became harder than ever before to erect new condo complexes.
In short, there was a demand for condos in the market, and the market itself found a way to supply it. Apartment complexes like Bella Vita on Decatur Boulevard and Harmon Avenue served notices to their tenants, stating that the units would be turned into condominiums, that they had first option at purchasing them, but that if they chose not to, then they'd have to vacate the property. Then the owners made minor enhancements to the units—new granite countertops, new maple cabinets, perhaps new appliances and carpet; a little refurbishing, that is—and because most apartment complexes are already mapped by the county's master-plan for condominium use, that was all that was needed to convert.
Condo conversions swept through the entire Valley. The southwest region saw 38 percent of the conversions; the northwest, 27 percent; the south, 23; the east, 5; Henderson, 4; North Las Vegas, 3—and in the end the vacancy rate among apartments dropped from 7.6 percent to under 4.
For not only did the conversions reduce apartment units in general, but they also forced displaced tenants to converge into the Valley's remaining vacancies. Or to seek refuge in houses (and condos) put up for rent by individual owners. Murphy said this made for a unique market—one in which renters can lease a three-bedroom, three-bathroom house with a garage for just $200 more a month than a two-bedroom, two-bathroom apartment, whose rent has swelled as vacancy rates have lowered.
In any case, the wave is now de-escalating. Interest rates are rising. The median price for new condos (which is exactly what converted condos are considered) has jumped from $140,000 to a more exclusive $205,000 in the past 18 months. Apartments, with their elevated $837 median rents, have become a tempting investment for property owners. And some real estate agents claim people are by and large becoming dissatisfied with buying a 1,000-square foot morphed apartment.
Schwer says that predictions are tough to make, for Las Vegas has several shifting variables, but a good point of reference is Phoenix, a Southwest desert town that had begun its own boom just before Las Vegas', and which has seen an increase in interest rates and thus an increase in the renter's market as well. But with 6,000 to 7,000 new residents each month sailing into the Las Vegas Valley, which has limited and expensive land space, no one can say for sure if the rate in condo conversions will rise again or not.
On August 8, the owner of the Mt. View Mobile Home Estates met with the tenants, to answer their questions about the 30-day notice to vacate the property they received on July 28. Tyler, who lives in a doublewide mobile home with her daughter and four grandchildren, says:
"I asked Mr. Gilbert, 'Can't you be lenient?' And he told me, to my face, 'No. I've already lost a lot of money.'"
Gilbert informed the residents that they had two weeks to move, and then they would be locked out of their homes by the police; unless, that is, they are over 60 or can provide official proof of disability, in which cases, pursuant to state law, they'd be granted an extra 30 days to move, provided they pay another month's rent.
Dell Langston, a prudent and voluble cowboy from South Carolina who had moved to here with his wife and four kids this year, and who just moved into a Mt. View mobile home two months ago, says:
By law the poor and afflicted people of Mt. View, who signed their leases under the understanding that they were on NRS 118A property, are entitled to the same assistance as evicted apartment tenants, which in essence is nothing. Just as no law requires owners to demonstrate compassion for displaced tenants.