Good News for Cosmopolitan Condo Owners

To the right, the Las Vegas Cosmopolitan Condos and the
Bellagio Hotel and Casino, to the left the MGM CityCenter project.
Phot0 taken September 5th, 2008.

Many proposed high rise condo projects around the country have had the plug pulled in the past two years due to cost overruns and tightening credit. Since Deutsche Bank announced they were beginning foreclosure proceedings on the Las Vegas Cosmopolitan condo hotel project at the beginning of 2008 on their $760 million dollar loan, over 1800 contract owners have been holding their breath, wondering if the development would be completed. Or if they would get their money back in full if the development was canceled.

There were many "interested parties" making bids to purchase the project, but as of this week Deutsche Bank has taken over full ownership of the Cosmopolitan under an affiliate, Nevada Property I. Deutsche Bank was the high bidder, paying $1 billion at a recent foreclosure sale to acquire ownership of the project.

And Deutsche Bank isn't letting any grass grow under its feet to make sure the project goes forward. It has already inked contracts with Related Companies to take over as the resort's new developer. In addition Perini Corp. signed a new contract to complete construction work on the project. Perini has been working on the project from the beginning, and was being paid under an interim agreement since March when Deutsche Bank began foreclosing after the original developer, Bruce Eichner, failed to complete a deal to secure more financing. Increased construction costs helped drive the Cosmopolitan's construction budget from its original $2 billion price in early 2006 to its current $3.9 billion price, and Eichner was unable to find a new partner with enough capital to infuse into the project.

A letter has already been drafted to contract owners by the resort's new developer, Related Companies, letting them know of the management changes and informing them of progress to date. This letter will go out on Monday to almost 1825 contract holders, assuring them of the project's completion. To date over 50% of the Cosmopolitan's exterior construction has been completed, and it is anticipated that by December of 2008 owners will be celebrating the "topping off" of both towers, including the penthouse units. The new proposed completion date for the entire project is estimated for the second quarter of 2010.

Along with a rebounding resale housing market, this is great news for the local Las Vegas real estate market. For four months straight statistics have shown a significant rise in Las Vegas homes sales, with multiple offers on lower end properties, especially Las Vegas foreclosures. The buyers are back!

Sales Statistics Brighter for Las Vegas Real Estate

Things seem to be looking up in Las Vegas according to the statistics, no matter what the national media is reporting. In July 2008, 3036 units were sold, and inventory ended the month at 22,178. At the current rate of consumption, that is 7.3 months of inventory, and many Las Vegas new homes developments are reporting waiting lists again. For those who are wondering when the bottom is going to be reached, we are getting very close to what has historically been called a “normal market”.

And for those that think they can lowball the already ridiculous foreclosure prices on Las Vegas homes, think again. There were 3036 closings in July, and here are the averages between list price and sales price:

For units that sold for under $500k, the average unit sold for $2,888 less than the asking price.

For all units selling under $1m, the average unit sold for $3,855 less than the asking price.

For ALL units selling in July, (including the multi million dollar penthouses and homes which bring the dollar amounts up) the average unit sold for $5,326 less than the asking price.

1,220 of the 3036 units that closed in July 2008 closed at a HIGHER sales price than their asking price. In other words, 40% of the homes sold, actually closed at more their advertised list price. The low prices on Las Vegas foreclosures are generating multiple offers on each property and creating mini bidding wars reminiscent of the "golden years" of 2004 and 2oo5.

Another good indicator is the percentage of listings taken vs sales over the past few years. In 2008 so far 34% of all listings taken have sold as opposed to 2007 when only 24% of all listings taken sold.

And it looks like with the anticipated population growth over the next 12 years, that things will start moving back up in price. Jeremy Aguero, a principal at Applied Analysis, was quoted in the paper saying he expects "Southern Nevada’s population by 2020 will grow to 3 million, from 2 million”. The Clark County School District is the fifth-largest school system in the country with 308,783 students, and district officials predict enrollment will grow to 473,000 students by 2018. Pointing to projects such as the CityCenter development under construction on the Strip, Aguero said, "We're not going to have all the employees to fill all the jobs we're going to create in the next 10 years."

Think about that for a minute. That means that there will have to be a roughly 50% increase in housing over what is currently built. With the scarcity of land for sale in Las Vegas, prices may just start creeping up before the analysts are predicting. This is one real estate agent who definitely thinks we are seeing the bottom of the market and is buying as much as she can.

Las Vegas Home Warranty Plans Can Be Customized!

Partnering with Las Vegas real estate agents to deliver the service and products that home buyers and sellers want, American Home Shield® developed the FlexPlan®, an innovative product that provides an unprecedented level of coverage and price options. Homeowners can customize the plan to fit their specific coverage needs and budget requirements, choosing from a wide range of packages and options. The AHS Home Warranty FlexPlan also offers coverage for items and services never before available in the industry.

Homeowners can choose coverage starting with the Core Coverage Plan®, the basic coverage that every AHS customer receives. This plan provides repair or replacement of many frequently occurring breakdowns associated with heating and air conditioning systems, duct work, plumbing and whirlpool motors and pumps, plumbing stoppages, electrical systems, water heaters, built-in microwaves, dishwashers, garbage disposals, ranges, ovens and cook tops, exhaust, vents, and attic fans and trash compactors. The Core Coverage Plan also includes new coverages such as 13 SEER, rust, corrosion or sediment and insufficiently maintained equipment.

Beyond the Core Coverage Plan, purchasers of Las Vegas homes may decide to customize their coverage with one or more of the ServicePlus Package® and CoveragePlus Package®. The ServicePlus Package was created for customers who wish to add a level of service coverage and includes repair or replacements associated with mismatched systems, undetectable pre-existing conditions, code violations, permits, removal of defective equipment, refrigerant recapture, reclaim and disposal and improper installations, repairs or modifications.

The CoveragePlus Package was designed as an option for AHS customers who desire enhanced coverage on previously uncovered items like garage door openers, doorbells, ceiling fans, telephone wiring, central vacuums, smoke detectors, food processors, and instant hot and cold water dispensers. This option also extends coverage on breakdowns associated with plumbing (faucets, showerheads and toilets) heating and air conditioning (geothermal and/or water source heat pump units, registers, grills and heat lamps), built-in microwaves (door glass and racks), ranges, ovens, and cook tops (rotisseries, racks, handles, knobs and dials) and trash compactors (removable buckets).

For a warranty specifically tailored to additional needs, customers may choose from the impressive list of additional FlexPlan options, including coverage for breakdowns associated with septic system pumping and septic sewage ejector pumps, swimming pool or spa equipment, kitchen refrigerator with ice maker and water dispenser, second refrigerator with ice maker, washer and dryer, free standing ice maker, water softener and well pump.

This gamut of options through the FlexPlan is available only through real estate transactions.
About two weeks after closing, each participating homeowner receives a contract package with contact information, wallet reference cards, specific coverages and exclusions, system and appliance maintenance tips and much more. Homeowners will also receive periodic customer relationship mailings and e-mails containing valuable home and maintenance information.

Since 1971, AHS has focused on providing the most innovative products and best customer service delivery in the business. The FlexPlan is another example of the company’s commitment of partnering with real estate professionals to serve home buyers and sellers with excellence. Designed in direct response to feedback from customers and the real estate community, the FlexPlan can help agents market properties and increase client satisfaction. And don't forget, you can also purchase warranties for Las Vegas new homes as well as resales. Many sellers offer home warranties through the Las Vegas MLS listing service.

For more information or to purchase an AHS Home Warranty FlexPlan, visit www.ahsflexplan.com, call 1-800-735-4663, or contact your local AHS Account Executive.