City Council should stick to pot holes
Inside Liberty Watch Today - Nov. 3, 2005

There are condominiums in the Las Vegas valley which used to be crappy apartments and now are selling briskly in the "mid 100's" as those ubiquitous signs say.

There are houses in the Las Vegas valley which wouldn't bring $40,000 in Peoria, Illinois which are selling briskly in the "low 200's" as those ubiquitous signs say.

And a "starter" house here now costs close to $300,000.

Personal income is up but so are interest rates which makes it difficult for teachers, among other groups, to buy a house and participate in the American dream.

It is with those facts as a backdrop, that the Las Vegas City Council wants to declare a moratorium on converting apartments into condos because it is concerned that we don't have enough crappy apartments and we’ll have too many crappy condominiums if this sort of thing continues.

Should the city council don its cape and smite those greedy developers, dealing them a blow on behalf on the little guy?

In a word, no.

The problem here is that the real estate market in this county already has an artificial inflation factor built into it.

That would be the Federal Government.

The same Federal Government which owns about 93% of the state's land and releases land in Southern Nevada at prices which dictate the cost of the houses which will be built.

If you want to smite whoever is greedy, dealing them a blow on behalf of us little guys, here's an idea. Get Senators Reid and Ensign to pay attention and force the government to price its land reasonably instead of creating a developer's gold rush. In fact, here's another idea. Have the Feds set a flat per acre price and sell the land by lottery, prohibiting any flipping.

Land prices will tumble according to the laws of supply and demand and the prices of housing will come down overnight.

When government gets involved in private enterprise—like setting land prices, artificial markets develop.

When another government tries to deal with the symptoms created by the artificial market the way the city council wants to do, what you will get are REALLY crappy apartments because the owners will have no incentive to keep them up.

Right now, the real estate market is reacting to the laws of supply and demand.

If demand were to slow down, the price of housing will go down.

If supplies were to go up, the price of housing will go down.

And, if someone were to develop an innovative lower priced product to meet the demands of a market which is not being served—say, housing in the less than $100,000 range—than that person will make a lot of money independently of the existing market.

But a city council dictating that crappy apartments will remain crappy apartments instead of becoming crappy condominiums will only result in crappy apartments which will make nobody happy.

If the city council is really interested in helping with a solution, it should encourage innovative developers to build reasonable projects on land the city owns in the worst neighborhoods. The land should be cheap enough to allow a truly innovative developer to build a reasonably nice house, condo or apartment complex.

But remember, "encourage" is not a code word for what that same city council did on Fremont street. Because pissing away tax dollars won’t solve the problem and it will bring a whole new set of problems.

Bottom line is that the city council should spend its brainpower attacking causes and not symptoms. And even there, it should use a very gentle hand.

Fred Weinberg, Liberty Watch Columnist