We arranged a conservative capital structure with institutional equity partners from New York and put in place bank financing. We retained a world-class sales and marketing team steeped in experience both in Las Vegas and with our product elsewhere. Lorraine Hunt, Nevada’s then-lieutenant governor and economic development champion, became a friend and, later, our landlady.

Since my arrival, however, the residential real estate market has changed, and with it, local attitudes. Within our local industry, attitudes range from confusion to denial to dismay. With real estate in apparent oversupply, what seems to be in short supply are solutions—or the clear thinking that will lead to solutions.

I’ve come to the conclusion that the reason for the confusion, denial and dismay is that few local participants have previously been through anything like our current situation. The Las Vegas residential market has been so strong for so long that few know how to interpret and respond well to the new market signals they are receiving. Some are overreacting; some are not reacting at all. Very simply, few know how to behave and plan for the future when the old rules do not work as before.

My purpose in this series of articles is to offer some foresight born of experience when other real estate markets have encountered downturns. Based on this experience, I’d like to begin with some optimism, to paraphrase the late Sen. Lloyd Bentsen when he stung Vice-President Dan Quayle with the declaration, “I knew Jack Kennedy, and you’re no Jack Kennedy.”

I have been through several major real estate recessions in several parts of the country, and despite what may be written in the national print media, what we are now experiencing in Las Vegas is nothing like what we experienced in Texas in the mid-to-late 1980s when values dropped 50 percent and foreclosures led to the creation of the Resolution Trust Corp.; or in Southern California during the early 1990s when sales virtually stopped from 1991 to 1995; or what is now going on in Florida, where the prospective purchasers of entire new buildings are literally walking away en masse from 20 percent hard deposits.

Before offering solutions, I think it useful to lay out some background and perspective of the current situation. Like a patient seeking a cure from a doctor, we should carefully diagnose our malady before writing a prescription and/or treatment plan.

So, over the next few weeks I will address the causes of our condition, discuss why our situation is very different from others before or elsewhere, and what the best courses of action from here are likely to be.

But, like the patient seeking help from a doctor, the most important factor is to acknowledge that we have a problem—and we do. Denial of the problem will only make matters worse and the recovery process more painful and lengthy.

Read Part II

Jim Noteware, principal of Houston-based Noteware Development, specializes in infill projects in rapidly growing urban areas. In addition to Brickwater Condominiums in Las Vegas, the company is developing Sevilla in the Moon Valley area of Phoenix and The Jamestown adjacent to Candlestick Park in San Francisco.