Luxury high-rise condos and condo-hotels were all the rage in Las Vegas only a few short years ago. Developers couldn't put them up fast enough on the Strip and elsewhere in town to satisfy all the demand. And of course there was all sorts of mortgage money available to grab a unit or two for one's portfolio. Life was good then.
Today that rosy picture has seen a tragic makeover. Demand for the product has waned, mortgage funding has practically dried up and hundreds of units sit out there vacant.
Palms Place, a 599-unit luxury tower, obviously lost its patience in waiting for the real estate market to turn around and decided to do something to get its unsold condos closed. It worked out a deal with the same group of banks that funded the project itself to participate in seller-backed financing. Buyers who have put down at least 20% will be eligible for this program and based on the size of the down payment will get a mortgage interest rate between 4.25-7.00%. If the plan works out well, it conceivably will be expanded to help other buyers to close on their condo-hotel units.
This type of an arrangement could be something that other troubled high-rise projects in Las Vegas could take a closer look at. Let's be honest, the market is largely at a standstill. It would give the lenders that have financed these towers a chance to get a decent chunk of their money back. It might not happen in a short time frame, but at least something is being done to get them there one of these days. It's very probable that the luxury condo segment in Southern Nevada, as over-built as it is, will take quite a bit longer to recover than for instance the single-family product.
Being creative in finding mortgage money just might be a better solution than foreclosing on these gleaming high-rise glass structures