Heck, just because it's 107 degrees at a little past 5 doesn't mean the place is all bad. Dataquick says that the median home price in May was $239,940, a 17.3 percent drop from a year earlier. That's a four-year low, largely the consequence of all those foreclosures (hat tip to Lansner on Real Estate). Of course, low prices have also helped boost sales to their highest point since last August (much like the situation in Phoenix and the Inland Empire). The subprime meltdown is part of the explanation, but there's also the Vegas economy, which is no longer recession-proof (just too much big-money development). From the WSJ:
The industry is facing what insiders and analysts call its biggest challenge in years. Rising gasoline prices, the housing crisis and other economic troubles are prompting consumers not just to gamble less, but to spend less at the luxury boutiques and restaurants where casinos draw most of their profits. Struggling airlines are cutting service to Las Vegas. And pressures are building on casinos that cater to local residents, who have been hard hit by economic troubles. "This is the toughest environment we've faced," says Gary Loveman, chief executive of global gambling giant Harrah's Entertainment Inc., referring to the economic challenges roiling the entire industry. Casinos are being pinched by less access to cash as they grapple with predownturn expansion plans and billions of dollars of debt. Turnaround and bankruptcy experts say they are getting more calls from casinos than they have in years.
The Journal piece brings up a struggling sector I hadn't even considered: low-glitz, high-profit casinos that cater to the locals. In April, revenues at these locations fell 9.5 percent from a year earlier, according to J.P. Morgan casino analyst Joseph Greff (what a job, eh?). By comparison, revenues at casinos on the Strip dropped 1.3 percent.
Among those hard hit by the local decline is Boyd Gaming, started in 1975 by Sam Boyd and his son, Bill. The publicly traded company is bidding to become a big player on the Strip, via a $5 billion casino development on 87 acres. The project, called Echelon, is slated to include five luxury hotels, a retail promenade and an exposition center. Boyd is committed to funding $3.3 billion of the project, through a $4 billion credit line and its own cash.