Southern Nevada Water Authority’s Water Problem

May 27th, 2010

Is Las Vegas going to run out of water? Southern Nevada Water Authority’s Water Problem.

May 26, 2010
I attended the Southern Nevada (CCIM) Certified Commercial Investment Managers Chapter monthly meeting at the Rio in Las Vegas. I went for one reason, the title and speaker,

How You May Be Impacted by Nevada’s Water Supply” presented by Pat Mulroy. Mrs. Mulroy is the general manager of Southern Nevada Water Authority.

As a long time real estate professional who specializes in agricultural land with water rights in Nevada, I talk with Nevada’s farmers and ranchers’ everyday; I was shocked by the introduction.

The lady introducing Mrs. Mulroy said about her, among other things, how wonderful she is, how hard she works, how powerful she is, and then she said, “and something I’ll bet none of you know about her, She HATES COWS”.

Mrs. Mulroy took the stage and went on to say “anything that dumb and big has to be dangerous” referring to cattle. The friendly crowd of men and women dressed in suits and ties laughed.

I on the other hand, immediately took umbrage, and thought to myself, I wonder if this lady realizes where the food in the grocery store comes from.

I took notes the whole time she talked.

Her presentation seemed to me to be based on the fear factor.

She talked about snow pack in Colorado this past winter being at 67% of normal. She talked about continuing drought conditions.

She explained that Lake Mead is running an annual deficit of approximately 2.7 million acre feet this year. There are 8.2 million acre feet coming in and 10.9 million acre feet going out.

Mrs. Mulroy explained the Lake Mead water level measurements  with future projections.

But first let me give you a little history, from 1939 to 2003 Lake Mead averaged 1173 foot elevation, the high water or maximum point for Lake Mead is 1229.

Today it stands at about 1094. Since the canyon narrows as it descends, the water level drops faster and faster as it is over drafted, so expect the drop to accelerate.

Mrs. Mulroy explained that at the 1088 foot elevation level they could lose the upper intake for the water supply to Boulder City and 40% of Las Vegas’s supply. 

She said, “At 1050 Hoover Dam stops generating power and that the dam supplies all of the electricity to Overton Power and Lincoln County Power.”

 At 1000 Vegas loses the lower intake that would literally cut off 90% of the water supply to Las Vegas and all of the water supply to Boulder City.

Work has begun on a so called third straw.  This so called third straw has been referred to as a bath tub drain.

Michael Johnson, Virgin Valley Water District hydrologist, told me years ago the aquifer that runs under our Mesquite Valley travels under Lake Mead, could they tap into it?

Pat Mulroy said, SNWA will be utilizing all the water rights it owns or controls in the Virgin River, which runs through Mesquite/Bunkerville and the Muddy River in Moapa/Overton”.

She stated that, Southern Nevada Water Association uses approximately 9.5 million acre feet per year, (that sounds like ten times too much to me) and once Lake Mead goes below 1025 there are only 4 to 5 million acre feet of water left in the reservoir.

 

She said the Lincoln and White Pine Counties pipeline will start construction in 2012 if the lake goes below 1075, period!

 

Her facts can be verified at:  http://www.snwa.com/html/wr_resource_plan.html 

She said ”If I have to set up a cot in Harry Reid’s office, I will stay until I get a permanent chair”. I did not know Harry passed out water rights! That job belongs to the State Engineer.

She said “the hyperbole (hyper exaggerations) coming from rural Nevadan’s about their water table concerns was childish.” She went on to say “the rural Nevada farmers and ranchers are being Pig Headed.”

She referenced a recent USGS Basin and Range study  that she claims shows plenty of extra water. I have not yet located any completed study.

What makes you think they will stop in White Pine County?

When I asked, she said the reason for the huge draw down or overdraft, according to a recent NASA study in California’s Central Valley was the result of farmers irrigating and lack of government regulation. New space observations reveal that since October 2003, the aquifers for California’s primary agricultural region — the Central Valley — and its major mountain water source — the Sierra Nevada — have lost nearly enough water combined to fill Lake Mead, America’s largest reservoir.

Finally for the record, she said “there are plenty of un-appropriated water rights in Nevada and the Snake Basin is next in her sights.”

She appears to me to be dead set on tapping into and draining rural East Central and Northern Nevada, Western Utah and Southern Idaho’s aquifers to supply Las Vegas.

 They did it to Pahrump, Nevada

When I questioned her, she lashed out at me, “Do you have a better idea?”

She said to watch for a favorable Moodys Rating Agency report coming out that should help support project financing in Las Vegas. I wonder if Moodys knows any thing about water. Remember the rating agencies said the Mortgage Backed Securities were safe and secure too.

She may be powerful, but based on her comments, attitude and general demeanor; clearly she is not as sharp as you would expect!

That does not mean you should underestimate her ability or determination to get this done.

You can learn more about me by searching “Irrigated Nevada farm and ranch land with water rights for sale” on any search engine. 

  • Chris W. Miller
  • Independence Realty
  • 435-862-5951
  • Land in Nevada

    Nevada Ranch Properties

    Lincoln County Land Market

    Nevada Water Rights

    Mesquite Nevada Real Estate Market

    Nevada Ranch and Farm Land with Water Rights Issues

    May 23rd, 2010

    Are you unsure if all the hype about water and food shortages in the future is real or just?

    The science is mounting and it is not any one single cause or source. You may not buy into global warming or maybe you do and just do not believe it is man caused. Either way drought is real.

    As mentioned the science is mounting in favor of serious problems in coming decades for mankind’s ability to provide adequate fresh drinking water and food to the increasing billions of us on the planet.

    In previous blogs I have referenced National Geographic’s April 2010 Special Issue, “Water Our Thirsty World”. They clearly believe we have a problem already in many parts of the world including parts of the United States.

    A new study called, the gravity recovery and climate experiment, or GRACE shows the following.

    “Combined, California’s Sacramento and San Joaquin drainage basins have shed more than 30 cubic kilometers of water since late 2003, said Jay Famiglietti, UCI Earth system science professor and director of the UC Center for Hydrologic Modeling. A cubic kilometer is about 264.2 billion gallons, enough to fill 400,000 Olympic-size pools. The bulk of the loss occurred in the state’s agricultural Central Valley. The Central Valley depends on irrigation from both groundwater wells and diverted surface water.

    “GRACE data reveal groundwater in these basins is being pumped for irrigation at rates that are not sustainable if current trends continue,” Famiglietti said. “This is leading to declining water tables, water shortages, decreasing crop sizes and continued land subsidence. The findings have major implications for the U.S. economy, as California’s Central Valley is home to one-sixth of all U.S. irrigated land and the state leads the nation in agricultural production and exports.”

    The loss is nearly enough to fill Lake Mead, America’s largest reservoir and Las Vegas Nevada’s primary water source. The Central Valley’s major source of water comes from the Sierra Nevada Mountain Range.

    Source: University of California - Irvine (2009, December 15). California’s troubled waters: Satellite-based findings reveal significant groundwater loss in Central Valley. ScienceDaily. Retrieved May 23, 2010, from http://www.sciencedaily.com /releases/2009/12/091214152022.htm

    Next week I will be attending a luncheon in Las Vegas;
    How You May be Impacted by Nevada’s Water SupplyPresentation by: Pat Mulroy
    General Manager, Southern Nevada Water Authority

    I will report what she has to say about our water in Nevada.

    Chris W. Miller
    Independence Realty
    435-862-5951
    Land in Nevada
    Nevada Ranch Properties
    Lincoln County Land Market
    Nevada Water Rights
    Mesquite Nevada Real Estate Market

    Retire Secure, Happy, Healthy and Self Sufficient

    May 18th, 2010

    The UN may be wrong about the world’s oceans running out of fish
    http://news.yahoo.com/s/afp/20100518/ts_afp/speciesfishunus/

    The news about food shortages today and tomorrow may be wrong
    http://en.wikipedia.org/wiki/Food_security/

    The news about fresh water shortages may be wrong
    http://environmentalism.suite101.com/article.cfm/environmental_cost_of_global_freshwater_shortage

    The IMF may wrong about fiscal deficits and global financial crisis
    http://www.imf.org/external/pubs/ft/survey/so/2009/RES111009A.htm

    Al Gore and his wacky environmental friends may be wrong about global warming
    http://www.msnbc.msn.com/id/17718399

    This writer seems be advocating a China approach, “But if resources are limited, the last thing we need is a growing population. We would be better off with a smaller population, so that earth’s limited resources can be shared among a smaller number of people, providing more for each person. If families start having only one child each, this would be helpful from a resources point of view, but it would make it even more difficult to pay off out all of the outstanding debt, in addition to paying for Social Security and Medicare benefits for all the seniors.” From The Intelligence Daily
    http://www.inteldaily.com/2010/04/social-security-and-medicare-funding-issues-even-worse-when-one-considers-resource-constraints

    These people believe it is government’s responsibility, “Governments are responsible for providing access to adequate food to eliminate hunger, malnutrition and starvation.
    http://www.hrea.org/index.php?base_id=145

    Obama and his crowd would probably go for this idea! Actually they may be taking us down this road of becoming a totally dependant society deliberately.

    These people say oil sands may as hazardous as the Gulf oil leak, “Oil sands development is ‘kind of like the gulf spill but playing out in slow motion’, said report co-author Doug Cogan, director of climate risk management at RiskMetrics. He called it a ‘land-based’ version of the gulf disaster.” http://www.globalissues.org/news/2010/05/17/5627

    Much of this information feels like it is presented with a bias agenda, and some seem to lack basic common sense, whether it is backed by a guy with a degree in a science field or not.

    We do know between 15,000 to 25,000 children die each day around the world because of malnutrition and water borne disease. We do know malnutrition is a serious problem in the United States for seniors and children living in poverty.

    We do know we are overdrafting aquifers around the world and fresh water tables are dropping in many parts of the United States and around the world.

    We do know the demand for food and fresh water will increase as the world’s population increases.

    Many around the world can not help themselves out of this daily nightmare. Unfortunately this scenario is going to get worse as we place greater demand on finite resources.

    Many are convinced these trends will lead to a resurgence in rural America. So there you have it, my agenda. I sell rural land in Nevada with water rights. A place where you can create a sustainable self sufficient lifestyle that could protect you from becoming a statistic.

    Lifestyle is what draws most people to rural living; it gives them a sense of getting back to their fundamental roots. Raising a garden, chickens that lay fresh eggs, fruit trees and farm raised meats.

    I am convinced economics, urban blight and a desire for an active productive lifestyle will bring many more to consider affordable rural lifestyles. Retired does not mean dead, although it might if you don’t stay active.

    When you combine a nice little piece of land and a small efficient home with proper solar orientation, a mild climate, some good dirt and water, you have the basic recipe.

    Marketing to retirees has largely been focused on golf, activity/recreation center with social clubs in large planned unit developments, which is fine for some, but there are other options.

    Your grand children will enjoy visiting your “farm”.

    I have some good friends, they live in what he and his wife lovingly refer to as their “bunk house”, it is small but quite luxurious. It is completely solar, with propane and a wood burning stove. A solar pump provides water. They raise most all their own food, and have a nice little income from extra produce sold at the farmers market. They have television and internet, and a small green house. They tell me this new lifestyle is the greatest thing they have ever done, short of raising some great kids. They are some of the happiest people I know!

    They also tell me they sleep very well at night knowing that no matter goes on in the world, they “feel” secure.

    Our ancestors lived off the land; you can go back to a slower, simpler, more rewarding way of life. The biggest difference today from back then is modern technology. Instead of plowing your garden behind a horse, you can ride a small tractor. You can raise chickens to lay eggs or broilers that are designed to be eaten. You can have peacocks and geese as watch dogs and security systems.

    We are looking at and working on developing larger tracts for mini farms. Some bankers seem to think this idea is crazy and have told me no one will ever buy it. I would appreciate your thoughts, ideas, and input. Does this make sense to you?

    Land in Nevada

    Chris W. Miller
    Independence Realty
    435-862-5951
    Nevada Ranch Properties
    Lincoln County Land Market
    Nevada Water Rights

    United States Debt and Our Future

    May 16th, 2010

    The average price of listed foreclosures is rising.

    The distress is moving up the income chain. What started with sub prime borrowers, the loose money and bad loans actually reached consumers at all income levels.

    The pain of losing a home has mostly been felt by the lower income and unemployed, so far.

    Excessive debt to income ratios exists at all income levels. Stable higher income has given many the luxury of postponing the inevitable. The bigger they are the harder they fall, or so they say.

    The headline is deceiving, “The average price of listed foreclosures is rising.” Sounds like good progress, rising average prices. It does not mean, what it sounds like.

    What it really means is the more expensive homes and commercial property is moving through process of deleveraging. This process will continue until the imbalance in those debt ratios and values is brought back into balance. Over leveraged simple means more owed than the asset is worth, too much debt, not enough value.

    Over leveraged can also apply to individuals, too many bills not enough income. The wealth effect in real estate caused many to over extend. When prices were rising, they spent like they were rich. While personal consumer debt rose, savings actually fell.

    The burden of covering the financial loses from deleveraging will fall on the tax payers of the future. The government programs appear to me to making the issue worse, at best prolonging the pain. Fannie Mae and Freddie Mac will turn out to be liabilities for generations. Your great grand children will still be paying back the debt.

    For those who will use the headline to spin the market, prices will likely continue to fall. We have not seen the bottom yet. The real estate economy is a symptom of the current social attitudes about image, debt, and materialism, just in case you are buying the spin.

    Our narcissistic society is the American Dream gone wild. Our homes, cars, TVs, diamonds, on and on have to be bigger and better than the next guy. To the point we will mortgage our future, our kid’s futures and our grand kid’s futures to satisfy the insanity. Capitalism is not the problem, debt is the problem.

    While European socialist financial systems fail, Fannie and Freddie’s unfunded bailout liabilities are adding billions now to the United States debt. We are printing away our Nation’s future opportunities, to cover the excesses of the recent past.

    The only real way out is to reduce the debt, at all levels. It starts with personal financial responsibility and that includes your vote. The government does not belong in the business of lending money (Fannie, Freddie, HAMP), real estate, banking, the auto industry, health care, or any other business that can be run in free open markets. Open free markets that allow for failure and loss as well as opportunity and success are the only answer.

    Generational theft to keep people in homes they could not afford to start with, to satisfy an “entitled point of view” must be stopped. We as a nation are going to have to learn to live within our means. The government can not save the value of your home; the government can not stabilize home prices, only open free market supply and demand.

    I recently attended a meet the candidate’s forum. The question was raised, what about a social security means test, not just whether social security is taxable but how much you receive based on other total income and maybe net worth. The room was full of retirees and the candidate asked how many would oppose such an idea, virtually every hand went up.

    The wealthiest generation in our Nation’s history may prove to be the greediest generation of our Nation’s history. They are clinging to a phony image and lifestyle at the expense of their children’s future. That is what I am talking about when I say personal financial responsibility. If you are accepting money you could do without, you are part of the problem.

    In general they look down their noses at those in the so called entitlement programs, welfare and the like. Social security looks like a rat moving through a snake, except this time the rat will eat his way out. For the people in their 20’s and 30’s will that “security” be there for them, they are paying in.

    So I say why not now, why not today’s recipients as well as tomorrow’s. Start today, reduce the debt, cut the entitlements, and build smaller homes, save more money. Whether the IMF is correct or not, that United States debt will exceed 100% of U.S. GDP by 2015, we can either start today or suffer worse consequences in the future. It is guaranteed.

    We better all start today and we better all take it very personally; procrastination to deal with this painful process could kill our Great Nation.

    Chris W. Miller

    Land in Nevada

    Independence Realty

    Mesquite NV 89027

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    Looking for more market exposure for my clients

    April 19th, 2010

    In an effort to improve exposure and reach a broader market Chris W. Miller is proud to announce his new association with

    Independence Realty

    Reno and Las Vegas Real Estate and Western Nevada Properties
    Leo Dupre, Broker-Owner, Independence Realty 775-691-8888
    1005 Terminal Way, Suite 155 Reno, NV 89502
    460 W. Main St #101, Fernley, NV 89408
    8275 S. Eastern Ave. #200 Las Vegas, NV 89123
    Serving Las Vegas, Reno-Sparks, Virginia City and Fernley

    My new association with these offices will give all the Nevada farm and ranch land listed with me greater exposure to the entire state of Nevada market. Properties listings will soon be available on the Las Vegas and Northern Nevada MLS systems.

    To discuss buying or selling Irrigated Nevada farm and ranch land with water rights call Chris today.

    Chris W. Miller

    Independence Realty

    Las Vegas, NV 89123

    435-862-5951

    702-733-9337

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    You Can Never See the Whole Picture by Looking at One Piece of the Puzzle

    February 18th, 2010

    Let’s start with the easy pieces, the edge pieces, the positive aspects of the current housing market.

    Home sales are up in Mesquite, Nevada from 15 closings in January 2009 to 39 in January 2010, huge increase in closings. Price per square foot dropped from an average of $120 in January 2009 to $100 per square foot in January 2010. This was stimulated by Federal tax dollars in the form of tax buyer credits that would be your money!

    Single family new home building permits are up in Mesquite from 1 in January 2009 to 22 in January 2010. That adds to the competitiveness of the market, the supply side.

    Trying to keep it positive here, mortgage interest rates are still near historic lows.

    The Home Builders Index of confidence rose 2 points to 17. A score of 50 or more on the index indicates that more builders view conditions as favorable rather than unfavorable.

    Access Research & Consulting Inc. estimates that the number of mortgage brokerage firms is down from a peak of 53,000 in 2004 to less than 15,000; this may be a good thing.

    Now we can start into the middle of the picture, the harder pieces of the puzzle.

    Realty Trac reported January 2010 foreclosures were above 300,000 for the eleventh straight month, and up 15% from January last year. US Home ownership is back down to levels not seen since 2000.

    Private mortgage insurance companies are dropping like moths flying into the flames of a blazing fire. Short sales and foreclosures are literally wiping them out.

    Mortgage underwriting standards are getting tighter everyday, shrinking the pool of eligible qualified potential home buyers. Even FHA has made it tougher to qualify for a mortgage. This piece is part of the demand side.

    By most industry estimates, there are eight million delinquent mortgages in the US today and only a very small percent of the mortgage modifications are actually working. The re-default rate continues to climb. Only 66,000 are considered permanent of 900,000 of those who are enrolled in trial modification programs.

    3.4 million Homes in the Treasury Department’s Making Home Ownership Affordable (HAMP) are currently 60 days or more delinquent.

    There are a half trillion dollars of mortgages still out there that will reset or adjust over the next twenty four months. Many of these homeowners are not prepared for the higher cost of housing headed their way.

    The picture is coming together, but there are still some pieces missing.

    The shadow inventory is out there in various forms, and the number of homes sitting vacant is at a historic high. Many are owned by institutions, others are owned by individuals, all are waiting for the market to improve. Then there are the sellers who would like to sell but can not or will not sell at current prices. At some point they will have to liquidate this inventory.

    We should all hope Fannie Mae, Freddie Mac, and the others will slowly ease this inventory into the market. Some industry experts believe it could take as long as three years for the market to absorb this shadow inventory of homes.

    If they dump a wave or waves of distressed property into the market, it will drive down prices further and create a huge opportunity for those in a position to capitalize on the low prices.

    The Federal Reserve’s 1.25 trillion dollar fund set up to buy mortgage backed securities is nearly spent. Without the support of this emergency fund, the secondary mortgage money market is bound to drive rates higher for consumers.

    The effect of higher interest rates is to make housing less affordable and reduce the buyer pool, again reducing the demand side.

    What the real estate market needs is jobs and time. Jobs will help people stay in the homes they currently own. Jobs will slow foreclosures, help mortgage modifications work, and create new demand.

    Time will heal credit, time will clear inventory, and in time the market will find balance again.

    Now step back and look close, with all the pieces of the puzzle in place. Where do you think the market will go over the next six months, twelve months, and twenty four months?

    Remember Mesquite, Nevada is a prime retirement community with a very bright future offering a low tax structure, excellent weather with nearly constant sunshine, premiere golf courses, excellent outdoor opportunities, gaming and all located within an hour’s drive of Las Vegas.

    Chris W. Miller

    ERA Brokers Consolidated

    Mesquite NV 89027

    702- 346-7200

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    FHA Eyes Rules Change

    January 25th, 2010

    Home Buyers sitting on the Fence Should Know This

    Currently FHA has been playing a large role in home mortgage lending. The relatively easy to qualify for and low down payment requirements have made FHA loans attractive to many of today’s home buyers, FHA Does not actually Loan money to home buyers, but insures lenders against default on loans that meet FHA criteria.

    Some rules changes are on the way to FHA guidelines. They will include higher upfront insurance premium, current buyers pay 1.75% of the loan amount that will go to 2.25%, that will be the second increase in two years.

    The current value of the FHA’s reserves to cover losses has fallen to $3.6 billion, less than.05% of the roughly $680 billion in loans outstanding, down from 3% a year earlier.

    In addition the agency may ask for buyers to pay annual premiums. FHA runs a risk of coming up short and may be forced to go to congress to ask for a bail out of its own for the first time in history.

    Today only a 3.5% down payment is required on FHA loans. There has been much criticism, that FHA is only prolonging the current crisis, and even creating a new bubble of buyers unable to afford the home they are buying.

    There is speculation FHA will increase the required down payment to ten percent, this idea is supported by many housing analysts. As well reducing the amount sellers can contribute to the costs of sale for the buyer from 6% to 3%.

    That seller’s contribution has undoubtedly lead to inflated pricing to give the seller the funds to pay the buyers costs. This artificial inflating of prices to allow people to buy homes by paying their down payments and closing costs sounds the reverse of what the market needs right now.

    For now Mesquite Nevada real estate home buyers still have USDA financing available, a low down payment program. It could be gone with the 2010 census if we have grown above the 20,000 population mark.

    Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
    Chris W. Miller

    Chris W. Miller

    ERA Brokers Consolidated

    Mesquite NV 89027

    702- 346-7200

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    Jobs Bill,Bailouts,Stimulus,and your Grand Childrens Future

    January 17th, 2010

    A lender recently told me, 80% of the buyers he is pre-qualifying can not get a loan.

    I have a nagging fear that our real estate markets as we have known them throughout the last 70 years will not be restored until the Federation gets back to its foundation. The nation was built on principles of individual liberty, individual responsibility, and free enterprise. As a democracy we elect officials to represent us, uphold the Constitution, and follow the laws, today they appear to be doing few of these things.

    The majority of the money currently being loaned as mortgages is government backed, through FHA, HUD, USDA, VA and in the secondary markets of Fannie Mae, Freddie Mac, Ginnie Mae. Yes a conventional bank or mortgage broker may take your loan application but virtually all the loans are being sold into these government agencies. The private secondary mortgage market has become nearly non existent at current rates. Fannie and Freddie were not designed to be slush funds for bad decisions or funded long term by tax dollars. In order for the Mortgage companies to continue to lend at current rates the US government may have to EXPLICITLY guarantee these agency (MBS) Mortgage backed securities cash flow investments.

    The government regulations have gone from “making homes affordable” think: Bush administration, ACORN, and the repeal of Glass-Steagall, although it goes back much further in history. To today’s consumer protection laws, making it much more difficult to get a loan. When the government exits the mortgage business, rates will go up.

    The federal reserve has spent 1.122 trillion of the 1.25 trillion given it to buy (MBS), the program is scheduled to end March 2010, along with the “Home Buyers Tax Credits”. The federal reserve can keep rates low for the banks to make huge profits on short rates but it really has limited control of the ten year and longer end of the bond markets which effect mortgage rates more directly.

    2.8 million Foreclosures hit the market in 2009. Fitch ratings have warned that in the next twenty four months another one half trillion dollars in prime, Alt-A, interest only, option arms, and sub prime mortgages will adjust or recast and many of these are middle and upper middle class families. Creating unsustainable payment shock for millions more Americans and millions more foreclosures. Distress in real estate tends to lead to more distress, and finding a bottom may involve unemployment numbers.

    RealtyTrac says “No End in Sight”.

    This is ALL about unsustainable debt, consumer debt, state level debt, federal level debt, and out of control spending.

    Back to the start, the Federation is governed by laws; states are required to balance budgets, consumers are required to make mortgage payments or suffer the consequences. Our elected officials can not save home values, they can not keep people living in more home than they can afford, they can not put people in more home than they can afford and expect them to make it, and they can not modify people into a home they could never afford in the first place. They are throwing our good money after trillions in bad money. They, the elected officials, must be held accountable for bringing our children’s nation to the brink of bankruptcy.

    When the dust finally settles and the unrealized losses are all on the books, the wealth effect in dollars lost will be staggering beyond any numbers currently being discussed, the effects will last generations. These losses will show up in places like pension funds of all kinds, 401k plans, other retirement accounts, sovereign wealth funds, and many of the world’s governments. States with budget deficits and falling tax revenues will be asked to cover more and more of the federal debt burden.

    None of this is good for the current home price market today or tomorrow. The median price home sold in Mesquite during the forth quarter 2009 dropped to $192,063 or $118 per square foot. The median priced condo sold for $75,000 or $70 per square foot, and the median priced town home sold for $108,000 or $78 per square foot.

    Ego, greed and monetary policy have taken us down the wrong path. Government intervention and efforts to manipulate the market created the environment for the crisis to occur; now it threatens to prolong and deepen the damage. We as a country must quit spending money we do not have, buying homes we can not afford, and curb government spending programs. And until we as a nation get back to a free and open market, principles of individual liberty, individual responsibility, and free enterprise, I believe recovery is unlikely.

    Real recovery can only begin with honesty at every level, at home, in business, and most importantly at the government level. In my humble opinion we have little chance of any real sustainable financial recovery until we accept these facts and principles and then, act on them.

    Expect real estate values to continue to drop more in 2010 due to the massive amount of distressed inventory of properties sitting out there and coming to the market.

    Chris W. Miller has 33 years in the real estate industry, was trained and worked as a financial advisor for Morgan Stanley Dean Witter and currently specializes in Irrigated Nevada land with water rights with ERA Brokers Consolidated in Mesquite Nevada. He can be reached at 702-346-7200 or chris@mesquitemarket.com
    Chris W. Miller

    Chris W. Miller

    ERA Brokers Consolidated

    Mesquite NV 89027

    702- 346-7200

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    Shadow Inventory, What is it and What does it Mean For 2010?

    December 31st, 2009

    In May of 2007 we had no shadow inventory, virtually everything listed was sold including the few foreclosures and banks were not holding them back off the market at that time.

    Many questions surround this so called shadow inventory supply of housing; some even dismiss the idea as a scare tactic and illusion. Market facts are as varied as there are markets; many markets that did not experience the extreme boom are relatively healthy while others continue to get sicker. This information is definitely market specific.

    Mesquite Nevada real estate statistics since May of 2007 show a steady, dramatic, and continual climb in failed listings. These properties were active for sale and did not sell and are not actively for sale today. Yet the reasons for needing to sell and the needs of seller’s in most cases have not changed. In many cases the urgency to sell has only increased. How many people do you know who have put off putting their home on the market until the market improves and how long can they wait?

    Notice of defaults, those falling at least ninety days behind on their mortgage payments has spiked to its highest level in the second half of 2009. Many of these will become short sales or foreclosed bank owned properties. They have to be sold and are not currently listed as active.

    Foreclosures and bank owned vacant properties in Mesquite NV continue to climb and the banks are not listing them. They appear to be holding them waiting for either a dramatic market change or more likely a change in government regulations regarding asset values and bank solvency. Realized verses unrealized losses on the books of the banks. They may actually believe they can release these at a pace they can control prices, manipulate the market, I know they have not acted rationally but this would be off the scale of stupid.

    Today there are around 400 active listings in the town with a population of 18,000 or so of primarily retirees, at 2 per household that’s around 9000 homes and condos. The shadow inventory is much harder to count. You have normal live changes that lead to people moving, health, death, jobs, family size changes, etc.

    When you add in the mortgage loan resets, those arm loan adjustments where the payments increase, the walk a ways from the under water syndrome, moral or not, it is becoming far more common, and the very high unemployment. Mesquite NV real estate is unique in that most of the people living here purchased either at the beginning of the boom or during and so nearly all paid more than they can net from selling today. Under water whether by mortgage or just cash loss.

    Based on vacancy rates, notices of defaults, Mesquite’s foreclosure filings, 400 active listings, builders inventories not listed, there may be as many 800 or 900 properties coming available. 2009 was a descent year for number of sales, MLS shows 365 closed as of December 31, 2009 for the year. It was not so good for prices the average sold price was $110 per square foot. That number dropped to $89 per foot in December 2009.

    At the absorption rate of 365 per year, it could take until 2012 just to clear the inventory sitting out there today. This of course does not consider new builder competition, which with Sun City in town and plenty of new choices coming soon in Canyon Crest, is going to remain fierce. Supply and demand will dictate pricing.

    I believe there is another possibly more important factor driving demand. During the boom years the emphases was “A Rich Rewarding Lifestyle”, “The Next Palm Springs” was often heard around the city halls. Many larger and expensive homes were built. The bulk of the market selling to today is the lower end smaller more efficient homes. Expensive gated HOAs and the higher end housing sector is really being hit hard on pricing. The 2009 Median price for all housing sold and closed in Mesquite, NV was $165,000. If you are builder there is a target number for you.

    The retirees of tomorrow are focused on preservation of capital, conservation, comfort, and affordability. Few are going to extend themselves beyond their budgets, and most will try to stay in a comfort zone which will allow for more than living month to month just making house payments. The days of Baby Boomer’s spending like they are the wealthy class may be gone forever. Bankruptcies have shot through the roof and will continue to go up well into 2010.

    Mesquite Nevada’s real estate challenge ahead will involve working our way out the hole we currently in, and that could take two to three years. Most importantly though Mesquite’s challenge will be to bring a product to the market in the future that will meet the needs of this retiring generation. Affordable housing must top the list of priorities (think $110 per square foot), solar orientation, efficiency, comfort and livability.

    Some may say that Mesquite was built by the wealthy for the wealthy and must remain that way; I say if that be the case it is going to become a mighty lonely place around here.

    Chris W. Miller

    ERA Brokers Consolidated

    Mesquite NV 89027

    702- 346-7200

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties

    Mesquite Nevada Commercial Real Estate Market Update December 2009

    December 30th, 2009

    There are currently only 12 active commercial buildings listed in the Mesquite MLS, and only 18 commercial land parcels listed active for sale in the Mesquite MLS. Commercial real estate is listed and generalized into these two categories in the Mesquite MLS. I have focused on the improvements, not the vacant land and attempted to break it down for you by highest and best use. There are some properties that do fall into more than one category.

    After a careful physical review it appears that there are closer to 30 buildings available for sale or lease, and 45 commercial land parcels for sale or with an option to lease with build to suit in some cases.

    Business closings have been dramatic over the past twenty four months, in the neighborhood of 30 have closed and are gone, including a large casino, numerous restaurants, retail shops, builders, associated contractors, suppliers, title companies, and various other small businesses.

    In general, in retail space the vacancy rates range from 100% to as little as 20% per complex, virtually none are 100% occupied. The overall vacancy rate in Mesquite for retail space appears to be running between 40 to 50% of available space. There are between 50 and 70 vacant retail spaces, depending on space size. A vacant 8000 square foot building could count as one space or four units. I would guess there is between 100,000 and 120,000 square feet of idle retail space in the market.

    Light industrial space may be worse than retail space in terms of vacancy rates, at least nine buildings are 100% vacant with close to 125,000 square feet of idle space. Then there are another ten to twelve buildings with some vacancy. My best guess is these have another 30,000 to 50,000 feet of idle unoccupied space. There may be as much as 175,000 square feet of vacant light industrial space.

    Falcon Mesa Business Park Complex, this complex is a combination of office and retail multi purpose use. Seven of 13 of the total buildings appear to be vacant. When a building was half occupied, I have counted that as half and included these buildings in the above mentioned vacant retail square footage.

    The Town and Country Plaza on Pioneer Blvd. has seven tenants, all retail except AG Edwards which is the only office space leased. These early tenants are paying close to $1.50 per foot, but I believe that future new tenants may get a better rate. My best guess is that it is 20% retail and 5% office space occupied. The owner is motivated and very negotiable but will not commit to any numbers without a face to face meeting with the prospect.

    The Oasis Professional Office Park at Pinnacle and Oasis Blvd has eleven buildings total and 6 appear to be vacant and for sale or lease. The Brickyard on Mesquite Blvd appears to have ten vacant spaces out of a total of approximately 30.

    The 100% vacant buildings in Mesquite include, 175 and 195 Willis Carrier Canyon (40,000 Sq. Ft each), Capital Materials Building 6200 Sq. Ft on 2.58 acres with yard and pole barns, two buildings located in front of Capital Materials Buildings, Calais clubhouse building, office building located in front of Calais clubhouse, Cinco Office building at 4200 Sq. Ft., Harley’s Auto Repair shop on Mesquite Blvd, Rio Virgin Grill Restaurant, Credit Union building on Pioneer in front of Wal-Mart, Walgreen’s Building on corner of Falcon Ridge and Pioneer, Buffalos Restaurant, Wolf Creek Office Building, Convention Center Building, NAPA auto building on Mesquite Blvd, 6000 warehouse on Aztec, 4800 tilt up building at corner of Hardy Way and Bowler, a Building East of Sears. There are a few others but this gives you a sense of the magnitude.

    There is vacancy in every commercial complex and as I talked to leasing agents and building owners there was one clear theme, they are begging for people who will pay $1 to $1.50 per foot. They all offer possible tenant improvements with two to five year leases. They hint at possible lower rates, but when pressed, the lowest offer I got was a possible .50 per foot from an agent who would have to ask and see. Many of these buildings have no tenant improvements and have been vacant for over two years.

    If building owners are giving away expensive tenant improvements, free months rent, paying taxes, insurance, and CAM fees, then the net is far less than current asking rents.

    We have not really seen price reductions in asking prices or lease rates. The owners continue to hire agents who are inexperienced with little or no commercial background who will tell the owners only what they want to hear. I would liken it to taking a dangerous river rafting trip with a guide who knows less about rafting, the river and current conditions than you do, risky at best. They list property with no facts to support prices and at reduced commission rates, most CCIM or experienced commercial agents basically refuse to waste their time with amateur agents and over priced properties.

    Appraisers call me frequently looking for comps and since there are no comps in over two years I suggest they use a capitalization approach. Of course that leads to a fair market rents discussion. In my opinion, over the next few years until Mesquite grows into the supply .40 to .60 cents a foot will be the going rate. At an 8% cap rate and .50 cents a foot the average asking price is on average about twice the actual market value. Of course the owners and listing agents are sure this approach makes no sense at all.

    There is much speculation in the market about the potential effects of the Desert Falls Sports Complex; it is being used by many as justification for future values. It remains to be seen if it will ever materialize. Until it does I would say “What you see is what you get”

    Chris W. Miller

    ERA Brokers Consolidated

    Mesquite NV 89027

    702- 346-7200

    435-862-5951

    Mesquite Market

    chris@mesquitemarket.com

    Lincoln County Land Market

    Nevada Ranch Properties