Las Vegas Ranked 5th Worst Economy in the World

The lights. The strip. The hotels. The casinos. The reflection of the Vegas Strip lights off a windshield. This is the definition of Las Vegas as shown in movies, shows, and commercials. Being from Los Angeles and loving all things real estate related, I have been such a fan of Las Vegas business. From “Flip That House” locations in the city, former reality show “Caesers 24/7”, all of the travel channel specials on Las Vegas, and so many other specials and shows dedicated to the city.

Las Vegas represents hospitality heaven, entertainment galore, and gamblers paradise. All of which are dependent on real estate. Las Vegas is nothing without its snazzy clubs and well themed real estate. The city had a booming industry and high valued real estate, making the city an attraction for newcomers to take advantage of metropolitan opportunities in the midst of the desert. Also, Las Vegas was a constant metamorphosis, demolishing and rebuilding its landscape to maintain tourist attraction.

Well... Las Vegas is ranked the fifth worst economy in the world. Brookings Institute and London School of Economics composed a study looking at metropolitan areas all over the world and ranked Las Vegas number #146. It is surprising to find Las Vegas ranked so low but its not shocking to hear the city isn’t doing so well. As the real estate crisis swept the country, cities with highly appreciated real estate were hit the hardest and are still struggling to bounce back to neutral. Las Vegas is one of those cities. Their economy is so dependent on real estate that the crisis halted further construction and deflated property all over the city.

The effects from the crisis:

• At this time, Las Vegas cannot reinvent itself. All of that demolishing in order to create the next grand or modernized hotel is on pause for now. Therefore, halting construction jobs, hospitality jobs, and more tourist money from coming into the city.
• Deflated property. While the low prices are great for homebuyers and developers with great credit and long term plans . The devalued market is horrible for people looking for a place for a few years or developers wanting to develop and then sell. When it hits the bottom, the market can only get better and then slowly climb up. Las Vegas experienced great inflation in the market, so it might not have hit its bottom yet. This means I can buy property today in Las Vegas but if I need to sell and leave in few years, due to a new job or planning a family, I wouldn’t gain any value from selling the property. I might only break even.

I don’t think Las Vegas is done. Truthfully, the city will probably struggle for more years. In fact, the news has been reporting this is true for most major cities hardest hit by the crisis. Stephen Brown, director of the University of Nevada in Las Vegas' Center for Business and Economic Research*, believes the city's long term potential is dependent on the U.S. economy. This holiday season was a major comeback for retail. Soon, people will start spending more on domestic tourism. If the economy gets better, the cities will too, and Las Vegas will begin to move towards positive. Las Vegas is not too big to fail but its legacy and reputation will help it to stay afloat.


*Paraphrased from "Report Says Las Vegas has World's Fifth-Worst Economy" by Maya Srikrishnan and Bradley Blackburn