Nebraska and Nevada, ahead of the election
Citizens State Bank in Carleton, Neb.
Tess Vigeland: We turn now to our special election coverage here at Marketplace. We're calling it "The Real Economy." Because the economy and how it affects you is the most important narrative of this election year.
I'm joined now by two of our intrepid reporters -- Sarah Gardner and David Gura -- to talk about their recent travels to Nebraska and Nevada. Welcome Sarah.
Sarah Gardner: Hi, how are you?
Vigeland: And hi David.
David Gura: Hey Tess.
Vigeland: You've both been reporting in two different states with I think pretty different experiences with the recession, with the housing bust. Sarah, let me start with you: How would you describe the mood in Las Vegas where you were?
Gardner: Tess, I would say it was sober. Nevada is still in a bit of a hangover and of course, they had the biggest boom and they fell the hardest. I think the mood is somewhat chastened, numb a little bit and even still a little stunned at how hard they fell. And they're saying, "We're just gonna have to claw our way back to prosperity."
Vigeland: David, you were in Nebraska, and I actually visited there three years ago just as the bust was happening, the financial crisis in October of '08. And at that time, they weren't hit. They had an unemployment rate of, I think, about 5 percent. Did the recession eventually come to Nebraska?
Gura: Onto the good news. There's this awareness in Nebraska that there's been a recession, that things have been pretty bad across the country. But in Nebraska itself, unemployment is still just around 4 percent.
Gura: When you look at that list of foreclosures, Nebraska is right near the bottom. So there's this sense among everyone that I talked to that they feel pretty lucky, they feel like they've made it through this all right and they've done pretty well so far.
Vigeland: All right, let's get to the details of all this. Sarah, let's go back to Las Vegas. You met with some families there and of course, not surprisingly, the big topic of conversation, the housing bust.
Gardner: Right. I met a couple named James and Monique Leslie. They're in their thirties, two young children. They are renters and typical California couple who came to Nevada during the boom, because of cheap housing and job opportunities. Two years later, they had lost those jobs, they were related to housing and tourism. They were at one time making $70,000; now I think $18,000 was the most they made last year. James, the husband, has been looking since July for a job and here's James talking about that process:
James Leslie: I've had interviews here and there, but there's times where I'm sending my resume off literally to about 40 to 50 places and getting one response.
Gardner: And response as in...
James Leslie: As in, "Thank you for your application, we've decided to move elsewhere."
Gardner: Tess, I think of them as being really stuck in Vegas. They can't find jobs elsewhere, and even if they could, they can't afford to move.
Vigeland: You mentioned that they were renters, and I know you also talked to some home owners and based on the statistics, probably a safe bet that they're underwater on their mortgage?
Gardner: Oh yeah, I mean you could just run your finger down the white pages and find people in Las Vegas. I talked to Tom and Denise Wideen, they're in their forties. They bought a home in Enterprise, Nev., just south of Las Vegas. They lost their small business, which again was related to the housing industry. Now their home is worth a third of their mortgage. Here's Tom talk about what's next:
Tom Wideen: Feeling sorry for yourself isn't going to help you. You just gotta keep moving forward. We just talked about it this morning; you can't change anything unless you start. And so we're starting some different things. I'm looking in some different industries I might be able to work in, as well as going back to school and working towards getting my teaching degree.
Vigeland: Wow. Well, David, let's move back to the cornhuskers state. Was there much gambling there in the housing boom?
Gura: There wasn't. Home prices have stayed pretty stable. Land price, that's a different story. The price of farm land has gone up a lot over the last couple years. There's actually a good deal of fear that we might be seeing a bubble growing there. I talked to a real estate agent in Wayne, Neb. This is called a "big town," 5,000 people, just northwest of Omaha. And Trisha told me that she thinks there's something about Nebraskans that's helped them weather this crisis.
Trisha Peters: We are used to getting by with just a little bit less. You know, we weren't going crazy with building. People were staying in their homes, they were trying to improve what they had. It was just a different type of lifestyle than what we were seeing elsewhere.
Gura: And Trisha told me there are two reasons for that. She said there isn't a whole lot of turnover in housing in Nebraska. You buy a house, you buy a farm, you're gonna stay there for a while; it might even stay in your family for generations. And she told me if you bought a house, say, for $80,000 and over six months you made some repairs and you renovated, and then you try to sell it for, say, $180,000 -- that wouldn't fly. The neighbors would get suspicious; they'd know something was up.
Vigeland: Wow. So no flipping there in Nebraska.
Gura: No, no.
Vigeland: Wow. I'm struck by your mentioning that farm property values were actually still going up. Why is agriculture in such good shape?
Gura: I mean, there's incredible demand. Everybody told me there's incredible demand for commodities like soy and corn. Corn prices, they're $6 or $7 a bushel, which didn't mean anything to me beforehand. But when you talk to a farmer and he's telling you that he can get a couple hundred bushels of corn out of an acre of land and he's got 1,000 acres -- it all adds up very quickly.
I talked to Mike Van Cleef, he's the president and CEO of Citizens State Bank there. And I asked him what farmers are doing when times are good -- are they investing, are they saving? And this is what he had to say:
Mike Van Cleef: There's a sayin' out there that farmers are always paper rich and cash poor. There's a lot of truth to that. I had a gentleman the other day. He came in and he paid off his operating line of credit, which for this example -- and this is a true story -- was about $275,000 line of credit. He paid it off.
Gura: That's not it! He still had $300,000 in his account. He put some of it in a CD and the rest of it, he put it toward putting down more debt and he invested in equipment and land.
Vigeland: Well good for him. He's been listening to Marketplace Money. Sarah Gardner, David Gura, thanks so much for traveling and joining us to tell us about your travels.
Gardner: Well thank you for having us.
Gura: Thank you.
Vigeland: And be sure to tune in for more from Sarah and David next week on Marketplace and the Marketplace Morning Report as we cover The Real Economy.