• All Bets Are Off

    Published July 13, 2020

    David Grana

    Managing Director


    Pam Junge, CCIM

    Chief Adventure Officer

    The Junge Group Powered by eXp

  • The Macro View

    By David Grana

    I thought the name James Carville was relegated to the history books, but the COVID-19 pandemic and the economic rollercoaster ride that it has taken all of us on has proven me wrong. I’ve heard reference to his 1992 quote “It’s the economy, stupid,” at least a dozen times over the last four months. The phrase was one of three major talking points pushed by the Bill Clinton campaign strategist in 1992 as a means of unseating President George H.W. Bush. At the time, the economy was floundering as Bush’s term was coming to a close, and the Clinton campaign wanted voters to be aware of it.

    Former-Bill Clinton campaign strategist James Carville

    Today, the term has been used to point people to where asset prices, including real estate, are potentially headed. Perhaps it could be backed up by another famous term from the 1990s, this time attributed to a speech delivered by then-Fed Chairman Alan Greenspan: irrational exuberance. With so much data being thrown our way every week, it’s been difficult for anyone to make heads or tails of where we’re headed. The increase in coronavirus infections and subsequent action by state and local officials has all but squandered the supposed third quarter bounceback that we were so anxiously anticipating. And while some assets, such as stocks and residential real estate, soar to record values, while others sit on pause, including commercial real estate transactions, we can’t seem to wrap our heads around whether this will be the case in six months or even next week. So, how do I know where asset prices are headed? It’s the economy, stupid.

  • "A flight from big cities leaves empty apartments and homes, leaving less shoppers and empty office spaces."

  • The global nature of COVID-19 means that, while we need to look at the local and regional economic dynamics, we must also look at the bigger picture. This pandemic is making some monumental shifts in society and business, and in some cases, has served as “the great accelerator.” By this, I mean that, if you had planned to buy a house in two years, you may be buying it today, if you had meant to get an Amazon Prime subscription in the next few months, you’re getting it today, if you had meant to move the family closer to the grandparents...you get the picture. But while this “disruptor” is having some obvious effects, there are many that are still unknown, and to coin a phrase from another political figure, former-Secretary of Defense Donald Rumsfeld, there are also “unknown unknowns.”

    The Great Outdoors

    As Disney World reopens and Las Vegas casinos are mobbed by masked guests, albeit at a fraction of the previous year’s visitation numbers, people are venturing to the great outdoors. Flights to crowded destinations have been abandoned in favor of road trips, RVs, and rentals in rural parts of the country. The ever-growing work-from-home culture has exacerbated this trend, which has sent homes prices in these areas soaring to new heights, while Manhattan condos, co-ops and apartments drop like a lead balloon. And with uncertainty over when international travel bans will be lifted, boats, campers, and national parks are the winning ticket for the foreseeable future. While this may seem harmless at the outset, remember from our very first article many months ago that this is having a major domino effect. A flight from big cities leaves empty apartments and homes, leaving less shoppers and empty office spaces. That, in turn, leaves municipalities with less tax revenue, which leads to crumbling and poorly maintained infrastructure. This narrative leads me to believe that the future of big cities is precarious, or much worse.

  • "Yes, there is pent up demand, but, the spending spree will come to a halt as income generation becomes more and more nebulous."

  • Pent Up Demand

    We ALL have pent up demand. Besides the struggle over whether or not to go to a place where you may or may not contract COVID, the bigger question is whether or not your bank account can support that demand. With many businesses coming to the end of their contractual employee-retention obligation of PPP loan forgiveness, they can now turn towards rightsizing their business by breaking their current leases and laying off excess staff. The most recent and notable is United Airlines, which announced that it will be letting go of 36,000 employees. However, the list of companies, large, medium and small, as well as government agencies and universities that will be going through a similar process is seemingly endless. Yes, there is pent up demand, but, the spending spree will come to a halt as income generation becomes more and more nebulous.

    United Airlines announced that they will be laying off 36,000 employees.

    Foolish Hope or Blind Optimism?

    What are we not getting? Possibly the full picture. In a recent conversation with friend, colleague and local economist John Restrepo, he also quoted Carville and stated that we may not have a clear picture of where we stand until the end of the year. I have to agree with him. All the chips have not yet fallen, and there may be more to come. I have an annual tradition of playing $5 craps at my local casino on New Year’s Eve. Not being an avid gambler, I walk in with $100 and aim to double my money and enjoy a stack of pancakes at the in-house cafe before calling it a night. There comes a point when I double the money and then some, but for some reason, I can never gain the momentum to triple it. So when my chips start disappearing off the green felt table, that’s when I walk away and all bets are off.


    Stay safe, stay alert, and I hope you can join us online for some very insightful information over the next couple of days!

    Often mistaken for film star Antonio Banderas, John Restrepo has had his finger on the pulse of the Las Vegas economy since 1988.

  • The Micro View

    By Pam Junge, CCIM

    Growing up outside Pittsburgh was a treat. Aliquippa, PA! It happens to be the same town the great Mike Ditka, former Chicago Bears head coach, hails from. Creeks, lightning bugs, 6 o’clock fire alarms, and clubs for every nation: Serbians, Croatians, Ukrainians, Carpatho-Russians, Italians and countless others. I loved nothing more than getting treated to a Friday night fish fry at the VFW, or fresh corn from my grandmother’s field, or the best yet - homemade pierogies from the sweet babushkas that took over the gas station on the corner and turned it into their restaurant (I assume this was back before environmental studies were much of a thing). We embraced each other and our cultural differences, and I received a rich education in life.

    Aliquippa, Pennsylvania

    I can feel the nostalgia rising, remembering the days when smoke from the J&L Steel Mill still billowed across the Monongahela. It would be safe to say that J&L (pronounced jane-ell by the locals) likely employed, on average, one person for every household in our small town. My uncles proudly worked there - leaving early in the morning with hardhat and lunch box in tow, only to return famished and sooty after a long day’s work. It was honest work and a good day’s pay. The once-thriving hotbed for jobs employed more than 14,000 workers in its heyday. The town was booming and people hadn’t a care in the world. And although the red flags were there for employees in the 1980s, many admittedly remained in denial, developing no backup plan until the grim reality hit. Department by department, the 7-mile-long plant along the Ohio River closed. Workers found themselves going through a range of emotions, from sadness to anger to despair. But the end result for those who stayed the course until the bitter end following J&L’s merger with LTV Steel was that they woke up one day with no job. And just like that, the once thriving town of Aliquippa became riddled with poverty, crime and desperation. All bets were off.


    The signs were all there…

  • "Not even the likes of the elitist economic catastrophe historians can graph this mess with a straight face."

  • As I attempt to dissect the “signs” in our market today, it leaves me with much of nothing but a headache and more questions. The sheer magnitude and volatility of this labor implosion make it even harder to predict. Not even the likes of the elitist economic catastrophe historians can graph this mess with a straight face. We’re asking ourselves questions we haven’t had to ask in the past - is this person unemployed due to actual job loss or is it a temporary unemployment due to coronavirus? Will employers begin to right size their employment and wages once they can successfully do so without being penalized on their PPP loan forgiveness? How are overall wages getting readjusted as major corporations let go of their top tier work force and replace them with a new era of low-paid executives?

    How many workers are choosing to stay home and collect additional pandemic unemployment, and what will be their fate when the money runs out? How many heads of household will not likely be able to return to traditional work environments due to the new CCSD format and homeschooling? How many small business owners can withstand another economic shut down? How many gig workers and independent contractors have found themselves “unemployed” that aren’t even tallied in the stats? I could keep going, but I’ll spare you the rest.

    One thing is certain as it relates to the housing market - the framework laid by the Dodd Frank Act after the financial crash of 2008 has successfully set more Las Vegas homeowners up to better withstand an economic downturn. Most sit flush with equity and an affordable monthly payment, giving them options, should they find themselves unable to continue to meet their debt obligations. The variables here will mostly rely on how fast the economy recovers. It’s akin to watching a game of Jenga between mortgage payment deferments and job recovery. Something has to give. While analysts are now basking in record setting values and listing periods (time on market to sell), I’m sitting on the sidelines holding my breath as each new wooden rectangle gets removed from the pile. We are likely to continue to see high demand in the local housing market well through the summer and winter months simply due to a shortage of inventory and pent up demand. And it’s anyone’s guess how long the honeymoon will last.

  • "Our heyday, life as we knew it, is over for a while. But if we look back in history to the trials and tribulations that some of our ancestors faced, we may realize our abundant blessings, pull up our bootstraps and forge ahead."

  • Governor Sisolak released a plan late Tuesday to fill the $812 million shortfall caused by plummeting tax revenues amid the ongoing COVID-19 pandemic and business closures. Nevada’s Constitution requires the state to have a balanced budget, unlike Congress, which can spend from a deficit. How do we take an already broken public school system and decimate the budget even further? How do we cut almost $20 million from the Department of Health and Human Services during a global pandemic? We just do. And we live with it and crawl back out of the hole. The threat to the oh so neat and orderly infrastructure we now enjoy in the Greater Las Vegas Valley is very real. On a social and human level, how do we care for our own? How do we provide the very “services” that so many children rely on when they are not able to attend school? The basic needs of kids are sometimes, unfortunately, met in the classroom, not the home.

    Special legislative session in Carson City, Nevada

    We will not know the totality of the butterfly effect of our current state of affairs for many years to come, but I do know that the giving heart is alive and well. I’ve watched a local mobile food pantry triple their deliveries to kids and seniors during this time and do it with grace.


    Our heyday, life as we knew it, is over for a while. But if we look back in history to the trials and tribulations that some of our ancestors faced, we may realize our abundant blessings, pull up our bootstraps and forge ahead. No one knows exactly what the future holds and how it will reveal itself. I’m a firm believer, despite social media, that the American spirit is alive and well and that we will prevail.


    I’ve thoroughly enjoyed this writing assignment the last several months, and although the story of the “coronavirus pandemic of 2020” is far from over, I’ll be putting the cap on my pen, so to speak, and focusing my efforts back into my business and helping those affected by this crisis with their real estate needs full time. If anyone out there is still reading this, thank you! It’s been my honor and privilege to document these times through my eyes. I hope to see you all at the LVPDI conference this week where we can continue these conversations with the brightest minds in the city and beyond.


    Take care. Be well. We are #vegasstronger

    See you Online July 14-15!

  • Engaging and insightful discussions reflecting
    the current state of the Southern Nevada property market
    and the road to recovery.

    2020 Las Vegas Property Development & Infrastructure Conference