New tour surveys aftermath of Vegas' property bust

By James B. Kelleher

LAS VEGAS (Reuters Life!) - The hottest ticket these days in what is billed as the Entertainment Capital of the World isn't for the Cirque de Soleil extravaganza at the MGM Grand or the Elton John show at Caesar's Palace.

It's for a window seat on the "Vegas Foreclosure Express," a four-hour tour of repossessed homes whose former owners bet the U.S. property bubble would never pop -- and lost it all when the market imploded.

"We're pretty well booked solid," said Barbara Zucker, the real estate agent who with her husband Marshall began offering the tours of bank-owned properties last month.

"It's been really phenomenal. We have people coming in from surrounding states -- Arizona, Utah, Colorado California -- just to take the tour."

The lure of a quick, easy payout has drawn people to Las Vegas since 1931, when the state of Nevada first legalized gambling. For most of the time traditional games of chance -- poker, roulette and blackjack -- attracted people.

A few years ago property became the more popular pastime as house prices began to rise at double-digit annual percentage rates. But when the subprime lending crisis erupted Las Vegas became ground zero in America's real-estate meltdown.

In 2007, Nevada had the highest foreclosure rate in the country, according to the U.S. Department of Housing and Urban Development. In Las Vegas at the end of last year, one in every 277 households was in foreclosure -- four times the national rate.

In January more homes were repossessed than sold.

Michele Johnson, the head of Consumer Credit Counseling Service of Nevada, said the reason is simple.

"The median price of a home has depreciated so dramatically that the majority of homeowners owe more than their homes are worth," Johnson explained.

According to local tracking firm SalesTraq, median prices in 90 percent of the city's ZIP, or postal, codes fell last year.

Keith Schwer, an economist at the University of Nevada, Las Vegas, estimates that the city's excess supply of housing is now "somewhere around 24,000 to 25,000 vacant housing units" - an overhang that will take years to burn off.

A recent tour on the Vegas Foreclosure Express focused on foreclosed homes in the upscale Summerlin neighborhood, in the hills a few miles west of the city.

As the bus pulled up to a home Barbara Zucker gave a little history. The five-bedroom, four-bath home on Bohemian Forest Avenue, which was built in 2004, originally sold for $526,000. Two years later, it was resold for $842,000. In early 2007, before the subprime industry imploded, a comparable home in the area sold for $1.1 million. Today, the bank is willing to take $578,000 -- maybe less -- to get it off its books.

Over on Serena Veneda Lane, the Zuckers took their tour into a three-bedroom, two-bath recently repossessed home. The last owner's business cards -- he was a mortgage broker -- were scattered on the floor of the bedroom closet, along with socks, shoes and a receipt.