Even the wealthy leave Vegas mansions as foreclosure pain spreads

Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.

The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million — an “unrealistic” price, according to Zar Zanganeh, the broker handling the listing.

“It’s sad,” Zanganeh said, his high-heeled boots clacking on the marble floor as he gave a tour of the 14,000-square-foot (1,300-square-metre) mansion featuring a six-person steam shower and a closet the size of a small apartment. “There’s a lot of inventory, a lot of homes like this waiting for an owner.”

A growing number of high-end homes are selling at a loss or facing repossession by lenders in Las Vegas, which already has the highest rate of foreclosure filings among large US cities. The wave of defaults that began with subprime borrowers and the unemployed has spread to upscale home owners who see no point of staying even if they can afford to.

In the 15 months through March, at least 25 houses in the Las Vegas area changed hands for more than $3 million, with at least seven doing so through foreclosure or by selling at a loss, according to the Greater Las Vegas Association of Realtors and Clark County property records. In 2009, 14 homes sold for more than that amount, with one trading at a loss.

‘A Sucker’
In the first quarter, 30 Clark County homes with loans exceeding $1 million were repossessed by banks or bought by third-parties in foreclosure sales, up from 20 homes a year earlier, according to ForeclosureRadar.com, a Discovery Bay, California-based company that tracks defaults. Short sales, in which the bank agrees to accept less than the loan balance, and bank-owned properties accounted for about three-quarters of all home sales, according to the Las Vegas Realtors.

“You feel like a sucker if you’re paying a $5-million mortgage on a house that’s worth $2 million,” Zanganeh, 28, said while showing the grounds of an 11-acre Las Vegas estate built by Prince Jefri Bolkiah, brother of the Sultan of Brunei. “These days, there are no traditional sales. They’re all short sales or bank-owned.”

The estate — with 18 bedrooms, 36 bathrooms, a 20,000-bottle wine cellar, an 11-car garage and air-conditioned stables for 10 horses — sold for $14 million in 2004 to Eric Petersen, who owned Consumer Credit Services Inc, a Las Vegas-based catalog-merchandising company that closed in 2008. Petersen, 44, said he spent $20 million to make the estate habitable.

Giving Up
It’s back on the block for $25 million — $9 million less than his investment — with an offer “for considerably less on the table,” Petersen said in a telephone interview from Las Vegas. He has slashed the listing price four times since October from an initial $37.5 million.

“I gave up on Vegas,” Petersen said. “There’s no opportunity for anything in this town that I can see.”

Another listing with Zanganeh’s firm, Luxe Estates Collection, is a never-occupied, bank-owned mansion overlooking a Jack Nicklaus-designed golf course in the gated Ridges community west of Las Vegas.

The asking price is $3 million for the 8,550-square-foot house, which was repossessed in 2010 and had a $3.2 million mortgage from the Community Bank of Nevada, a lender seized by regulators in August 2009.

About 100 homes in the county are listed for $3 million or more, according to the Las Vegas Realtors, a five-year supply at the current sales pace.

‘Rolled the Dice’
In Nevada, 23 per cent of delinquent borrowers said they “strategically defaulted,” or walked away from their homes by choice rather than necessity, according to a January report by the Nevada Association of Realtors.

“It’s folks that feel the hopelessness of it all,” Rob Wigton, chief executive officer of the state association, said in a telephone interview from Reno. “They’ve rolled the dice and lost.” The population of Clark County, home of Las Vegas, has fallen by 16,000 from its estimated high of 1.97 million in 2008, according to the government-funded Nevada State Demographer. Las Vegas home values have plunged 58 per cent since the 2006 high-water mark, the most of the 20 metropolitan areas tracked by the S&P/Case-Shiller index. Prices fell 7.4 per cent in March from a year earlier to a median $125,950, the Las Vegas Realtors reported April 8.