If you have been following the headlines over the past year, you’re probably aware that Atlantic City — the “Gambling Capital of the East Coast” — is in trouble. This year alone, 4 casinos shut their doors – including Revel, which only opened in 2012.

To be perfectly honest with you, gambling isn’t my thing. I’ve only been to Atlantic City once, and it was really just so that I could say I had been (it was when I used to live in Philadelphia). But I know that many people derive a lot of entertainment value out of gambling.

However, I worry when cities starting believing that a casino can fix all of their city building and economic development challenges. They are not a silver bullet. And many would argue that they cause far more harm than potential benefit. The negative socioeconomic impacts have been well documented.

In the case of Atlantic City, I suppose you could say that casinos “worked” – for awhile. But that’s because Atlantic City had a monopoly on gambling. In 1978 the city opened the first legal casino in the eastern United States. And that led to a boom in casinos and a spike in municipal revenue. But those revenues peaked in 2006 and have been on the decline ever since. 

My good friend Alex Feldman argued in a recent Next City article that Atlantic City is, quite frankly, the next Detroit. It repeated the same mistakes and now it’s going to need to go through the same painful rebuilding process:

It’s no exaggeration to say that Atlantic City is poised to become the next Detroit. In many ways, the trajectories of the two cities are similar. Both cities relied on one industry to prop up their economies — and both failed to innovate as competition increased. Similarly, both Atlantic City and Detroit failed to invest in a sense of place — casinos and factories were more successful when their customers and employees had little reason to go outside. The result: defensively built cities designed around the automobile that gave visitors little reason to stay.

And I think he’s right. The time has come to rethink Atlantic City. Onwards!

If you had to pick an epicentre for the housing bust of 2008, I’d say that Las Vegas would be a pretty safe bet.

Las Vegas home prices doubled between 2002 and 2006 (the peak), and then fell 62% through to 2012! According to RealtyTrac, Las Vegas saw the highest rate of foreclosure (in 2009) compared to any other major city in the US. 1 out of every 13 properties was in foreclosure. That’s pretty incredible.

Now, hindsight is always 20/20, but from the beginning I had a hard time understanding Las Vegas from a real estate standpoint. You have a city that’s running out of water and who’s major economic drivers are tourism, gambling and conventions. Not only are these industries highly cyclical, but they don’t create a lot of high paying local jobs.

So for home prices to double in the span of 4 years, it must mean that there’s a lot of investor activity in the market. But how much is a lot? As one example, the 678 unit Meridian Private Residences, which was a condo conversion done by American Invsco, apparently only sold 14 units to end users. The remaining 98% of the units were bought by investors.

Those are pretty scary numbers - both for investors and end users. And while times today are certainly nowhere near as frothy, I still don’t get Las Vegas real estate.

If you have been following the headlines over the past year, you’re probably aware that Atlantic City — the “Gambling Capital of the East Coast” — is in trouble. This year alone, 4 casinos shut their doors – including Revel, which only opened in 2012.

To be perfectly honest with you, gambling isn’t my thing. I’ve only been to Atlantic City once, and it was really just so that I could say I had been (it was when I used to live in Philadelphia). But I know that many people derive a lot of entertainment value out of gambling.

However, I worry when cities starting believing that a casino can fix all of their city building and economic development challenges. They are not a silver bullet. And many would argue that they cause far more harm than potential benefit. The negative socioeconomic impacts have been well documented.

In the case of Atlantic City, I suppose you could say that casinos “worked” – for awhile. But that’s because Atlantic City had a monopoly on gambling. In 1978 the city opened the first legal casino in the eastern United States. And that led to a boom in casinos and a spike in municipal revenue. But those revenues peaked in 2006 and have been on the decline ever since. 

My good friend Alex Feldman argued in a recent Next City article that Atlantic City is, quite frankly, the next Detroit. It repeated the same mistakes and now it’s going to need to go through the same painful rebuilding process:

It’s no exaggeration to say that Atlantic City is poised to become the next Detroit. In many ways, the trajectories of the two cities are similar. Both cities relied on one industry to prop up their economies — and both failed to innovate as competition increased. Similarly, both Atlantic City and Detroit failed to invest in a sense of place — casinos and factories were more successful when their customers and employees had little reason to go outside. The result: defensively built cities designed around the automobile that gave visitors little reason to stay.

And I think he’s right. The time has come to rethink Atlantic City. Onwards!

If you had to pick an epicentre for the housing bust of 2008, I’d say that Las Vegas would be a pretty safe bet.

Las Vegas home prices doubled between 2002 and 2006 (the peak), and then fell 62% through to 2012! According to RealtyTrac, Las Vegas saw the highest rate of foreclosure (in 2009) compared to any other major city in the US. 1 out of every 13 properties was in foreclosure. That’s pretty incredible.

Now, hindsight is always 20/20, but from the beginning I had a hard time understanding Las Vegas from a real estate standpoint. You have a city that’s running out of water and who’s major economic drivers are tourism, gambling and conventions. Not only are these industries highly cyclical, but they don’t create a lot of high paying local jobs.

So for home prices to double in the span of 4 years, it must mean that there’s a lot of investor activity in the market. But how much is a lot? As one example, the 678 unit Meridian Private Residences, which was a condo conversion done by American Invsco, apparently only sold 14 units to end users. The remaining 98% of the units were bought by investors.

Those are pretty scary numbers - both for investors and end users. And while times today are certainly nowhere near as frothy, I still don’t get Las Vegas real estate.