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Real estate, the new game in town
Fri May 6,11:15 AM
ET
Las Vegas turns 100 on May 15, 2005, but it
is hardly getting old. With a history as potent as the
cocktails-by-the-yard" peddled in its myriad bars, the US city is
not so much coming of age as coming into its own. And the hottest
players in town right now are not roulette and blackjack specialists
but real estate agents.
Property prices in the Las Vegas
metropolitan area saw increases of up to 50 percent last year, led
by desirable suburbs such as Summerlin, compared with an average
rise of 11.1 percent across the US. A remarkable 6,000 people
relocate to the city each month, making it the fastest-growing urban
area in the country. And residential developers from as far away as
New York and Chicago are rushing to cash in.
Robert Hamrick, broker president
of Coldwell Banker Premier Realty, thinks the growth stems from
outsiders finally realizing that Vegas property was seriously
undervalued. "For 22 years we had quiet, consistent, growth with
single-digit appreciation," he says. "But I've never seen anything
like this before."
There is a precedent for
people being slow to spot the potential of land here. The first
person of European ancestry to see the valley of wild grasses and
plentiful water amid an inhospitable desert was a scout named Rafael
Rivera. It was 1700, and he named the
place Las Vegas, Spanish for "the meadows".
The area served as a staging post
on the bitter overland trail to Los Angeles, which Spanish traders
referred to as "The Journey of Death", but it achieved city status
only in 1905. Twenty-six years later, when Nevada legalized
gambling, the mafia moved in - to create and then control what would
become the hedonism capital of America.
On Saturday nights, parts of
downtown and The Strip do still look like Sodom and Gomorrah. But
Vegas's current expansion rests on its status not only as a gambling
and showgirl mecca but also a leisure destination, with first-class
shops, entertainment and restaurants. Legitimate industry expunged
the mob long ago and in the 1990s pioneering entrepreneur Steve Wynn
pushed Vegas into the ultra-luxe market with his Mirage and Bellagio
resorts.
The metropolitan area has one of
the strongest economies in the US, gaining 30,000 new jobs in 2003
and an estimated 37,000 in 2004, even as unemployment rose on a
national level. With no state tax and low business taxes, especially
in comparison with neighboring California, it continues to attract
new companies, recently in the health care and computer technology
sectors. Most importantly, however, its core tourist trade is
thriving: visitor numbers jumped from 28m in 1994 to 37m last year,
and the city's megalithic hotel-casinos, including 15 of the 19
largest in the world, now run at 89 per cent annual capacity, due in
part to its status as convention central.
The city's rise is literal as well
as statistical as its expanding population transforms the flat and
uninteresting pancake topography around The Strip into verdant
suburbs and silvery skyscrapers. The reason is lack of land to
sprawl.
"In Nevada, 87 per cent of the
land is federally owned," explains Mike Ford, a director at the
Conservation Fund, which emphasizes environmental and economic goals
in planning. "Las Vegas is, in effect, a small island of private
land surrounded by an ocean of public land with very defined
exterior growth limits."
It is highly unlikely that
designated wilderness and National Park land will be opened to
developers, so the only option is to go vertical. "The high-rise
condo market here has gone nuts," says Richard Worthington,
president of the Molasky Group, one of Vegas's oldest and largest
developers. "Park Towers, which we built in 2001, was the first
residential high-rise. Just four years later, 125 further towers
have been announced."
Sales in Park Tower give a good
indication of property-price appreciation in the city. Condos that
sold for $360-$400 per sq ft in 2001 are now going for $900-$1,000
per sq ft. Downtown, where prices range from $400-$500 per sq ft,
shops, restaurants, theatres and a hospital are being built on a
61-acre parcel of land intended to regenerate the area.
With so much new residential
construction to choose from, buyers must be careful, says high-rise
investment specialist Shayna Goldstein. "New builders often don't
realize how much money and due diligence it takes to get a high rise
out of the ground," she explains.
But right now, seasoned US
developers, such as American Invsco, Turnberry Associates and The
Related Group, are behind the city's most prominent projects. Both
Turnberry's eponymous, 45-storey twin towers and The Related Group's
48-storey Icon nearly sold out before the construction crews broke
ground, and both companies have new buildings in their pipelines.
American Invsco, meanwhile, is
marketing its five-building, 678-unit The Meridian scheme not only
in the US but also around the world with launches in London, Dublin,
Singapore, Johannesburg and Cape Town. This is a significant shift
because, even as Vegas's hotel developers created versions of Paris,
Venice and Luxor around them, residential builders were slow to
court international buyers.
Now, American Invsco thinks that
foreign exchange rates will be a good selling point. "Vegas might be
booming but the US dollar is dropping, making it even more
attractive," says Nicholas S. Gouletas, the company's founder,
chairman and chief executive.
"In London, the very first
investor wanted to buy all 120 units we had scheduled to sell at
that time," adds Stefano Sarsura, president of American Invsco's
international division. "That's something we weren't prepared to
do."
Set on 16 lushly landscaped acres,
The Meridian offers that tranquil meadow effect that Rafael Rivera
saw from his horse, but it is also a stone's throw from the gangster
Bugsy Siegel's old Flamingo (now Hilton) hotel casino. Prices start
at $305,000 for a large studio apartment.
The growth of Vegas has also seen
suburbs, such as Summerlin, Henderson and Green Valley attracting
re-locators, especially from California. Since the first house went
up in the late 1990s, Summerlin has remained the fastest-growing
community in America. Built to a so-called "master-plan", it
consists of different neighborhood villages with shops, parks,
nature trails and golf courses and tends to attract families and
professionals escaping the neon pizzazz of The Strip.
Although there are few bargains
left - a decent four-bedroom Tuscan-style villa will set you back
about $800,000 - prices still compare very favorably with
California. In newer communities, such as Aliante, prices for a
four-bedroom villa start at $450,000.
The only sour note on the Las
Vegas boom is sounded by Ed McMahon of the Urban Land Institute. He
wonders where the bartenders, croupiers and show-girls who work on
The Strip are going to live come 2010. "They just can't afford these
prices and will soon be totally priced out of the market," he
argues. "But they're the people that keep the city in business and
make it what it is."
Worthington says that others worry
about the "Manhattanisation" of Vegas now that the big-league
developers have moved in. But neither factor is likely to deter
purchasers or halt the continuing local building bonanza.
Vegas has always attracted
those with the courage to gamble. The difference is that the latest
arrivals are putting their money on the comparative security of
property, not on a poker table.
Las Vegas
Real Estate Market News
(May 3, 2005) The Las Vegas
real estate market is booming! Appreciation in some housing markets
is reaching well over 30%! Las Vegas real estate shows no sign of
slowing down and continues to be in high demand. More than just neon
lights, the Las Vegas valley is a wonderful place to live. Residents
enjoy no state income tax, beautiful neighborhoods, low
unemployment, great parks and recreation. Las Vegas is known as the
entertainment capital of the world for good reason. Some of the
world's largest resorts are in Las Vegas, featuring world class
entertainment, restaurants and shopping. Currently more than 6,000
people a month move to the Las Vegas valley, which includes the
cities of Las Vegas, Henderson, Boulder City, North Las Vegas and
the master planned communities of Summerlin in Las Vegas and Green
Valley in Henderson.
Realtor Magazine
online
Las Vegas
Real Estate Market
(April 3,
2005) Las Vegas and the surrounding areas of Summerlin, Henderson,
and many new developments maintain a steady rise in pricing and
sales. It is not as hot as mid summer last year when supply was
less prevalent than demand yet the prices climb
steadily.
Realty
Times, Agents
remarks
Nev.: Condo
Conversions Add to Record Sales in
Vegas
(January 11, 2005)
-- Up to1,000 of the 30,000 or so new homes sold in Las
Vegas in 2004 were apartments converted into condominiums, reports
Dennis Smith, president of Home Builders Research.
While
this percentage is relatively small, Smith says the condo conversion
market is on its way to becoming an integral part of the region's
real estate market, which reached an all-time high for new-home
sales last year. The conversions have "augmented the current housing
market by providing homes for consumers who can't afford anything
over $200,000," Smith says.
The median new-home sales price
in Las Vegas was $284,755 in November. Smith is predicting that
new-home sales, including condo conversions, will reach about 27,000
in 2005. He says it is difficult to project just how many
conversions there will be in the next year, but Christopher Bentley
of Bentley Group Real Estate Advisors confirms that Las Vegas is a
"fantastic market" for condo conversions.
Analysts say the
niche is hottest in markets where land constraints are deterring
multifamily developers from building anything else.
Source:
Las Vegas Review-Journal (01/11/05);
Las Vegas: Luster Casts Light on Other
Areas
(December 13, 2004)
-- For the last year, the glitz and
glamour of Las Vegas real estate has been the stuff of talk and
speculation around the water cooler. It still is, even though the
sparkle isn’t as bright this winter.
But the Las Vegas lights
may have obscured the glitter of housing in other parts of
Nevada—especially in Elko, where there’s still lot of gold “in them
tar hills.”
Elko is a remote mountain town of 20,000 people
in the far northeastern part of the state—a region that doesn’t
typically boast of a muscular housing market. Real estate activity,
however, has been remarkably strong right through
December.
The inventory of homes for sale is “nearly
depleted,” with only a tight three-month supply, says Gregory
Martin, a former president of the Elko County Board of REALTORS and
a salesperson with Algerio, GMAC Real Estate. Many buyers are making
full-price offers—frequently with few or no contingencies—and there
are occasional multiple bids.
The demand-inventory imbalance
has pushed median prices up to the $145,000 range for a
three-bedroom, two-bath home of 1,400 square feet. That’s a nearly
21 percent jump from a year ago.
The town has drawn a lot of
Las Vegas and California retirees trading in congestion and big city
problems for Elko’s rural lifestyle, says Martin. “There’s clean air
and plenty of outdoor recreational activity,” says Martin. “And we
don’t have a rush hour; we have a rush five minutes.”
But the
driving force in Elko’s boom has come from within, thanks to gold
prices running up to their highest levels in 16 years. There are
four large gold mines within an hour’s drive of Elko, and mining
operators have hired large numbers of workers to extract the
precious metal.
Martin says the job growth has made move-ups
the hottest part of Elko’s market. Locals are trading in their
three-bedroom, 1,400-square-foot homes for 2,200- to
2,500-square-foot homes costing $225,000 to $250,000 in newer
subdivisions on the north side of town.
Homebuyers also have
been active in the Reno area, where housing appreciation has jumped
28 percent since the beginning of the year, says Marc Sykes, 2004
president of the Reno Sparks Association of REALTORS. The median
price of a home in Reno’s Washoe County is
$328,000.
Appreciation has slowed modestly in the last two
months. Multiple offers, once a regular occurrence in the $500,000
to $600,000 trade-up market, now happen mostly in the $300,000 to
$350,000 range, Sykes says.
Until September, the market was
akin to a driver in a stock car race, says Sykes, “with the throttle
down and going at 180 miles per hour.” Now the market is racing
along “at 160 mph, so the engine isn’t quite overheating so
badly.”
Many buyers in the Reno area weren’t fast enough. The
Estates at Callaghan Ranch, a 285-home subdivision, took more than
300 reservations in two weeks when the new-home community opened
earlier this year. Builders soon stopped taking reservations for the
homes, which carried entry-level price tags of around $650,000, says
Sykes. Then there was the line of buyers several blocks long waiting
to spend $300,000 to $350,000 to buy at Curti Ranch.
“We
didn’t used to see [waiting lists and lines] here, but the demand in
our marketplace is for new or newer houses, and the demand exceeds
supply,” says Sykes.
The strong market has sent many Nevada
shoppers scurrying to the outskirts of larger towns to find less
expensive detached homes or opting for condominiums. That, in turn,
has pushed up prices in second-choice locations as well.
One
new favorite is Fernley, 30 minutes east of Reno. “Fernley is
happening,” Valerie Mapes, Nevada Regional Manager for Prudential
Nevada Realty, says of the town 30 minutes east of Reno that’s
expected to triple its 25,000 population over the next few years.
“It’s becoming a bedroom community for Reno, and it’s still
affordable,” says Mapes. “You can buy a nice family home for
$250,000, with three bedrooms, two baths, and 1,700 square
feet.”
Homes in Carson City, once an affordable town south of
Reno, are up to the $400,000 range. “Anything under $300,000 is
usually in escrow within a week, and a lot of times the first day,”
say Dee Scott, a salesperson with Shadow Mountain Real estate in
nearby Dayton. Buyers who don’t make full-price offers frequently
“are countered back to full price,” he says.
That scenario
has sent would-be buyers to the smaller towns of Dayton, Silver
Springs, and Stagecoach, says Scott. Homes in those communities are
“reasonably priced right now, he says, with several subdivisions
marketing homes for as little as $150,000 to $250,000.
Home
prices were considerably higher around Lake Tahoe—particularly in
the affluent second-home community of Incline Village—even after the
market became “somewhat static” this fall following a heavy summer
buying spree. Buyers paid a median $870,000 in October to own a home
at Incline Village, according to Kurt Carlstedt, 2004 president of
the Incline Village Board of REALTORS and a salesperson with Dickson
Realty. That was a 4.5 percent hike from the $832,500 the median
home cost one year earlier.
With prices approaching $1
million, Incline Village buyers made condos their property of
choice. Condo values surged under the strong demand to a median
$442,500 in October—15 percent higher than the $384,500 price tag 12
months earlier.
Still that price didn’t get new owners a
retreat on Lake Tahoe’s famously expensive waterfront, where
Carlstedt says a teardown home was on the market for $5.9 million.
Most buyers found prices more attractive a block or two from the
lake, but nonetheless close enough that that both owners and
possible renters could have easy access to the water.
In the
south end of Nevada in the desert of Las Vegas, the world’s top
destination for gambling also has been a top destination for real
estate money. Thousands of buyers attracted to a hot investment
hand, many of them from Southern California, sent home values
soaring 52 percent to a median $284,000 between January and October
of this year.
But so many owners simultaneously tried to take
their profits off the table and run this fall that it left Las Vegas
with a glut of 16,000 homes for sale. “When the market got so crazy,
[consumers] started to take a back seat and just look at the
market,” says Kellie Rubin, a past president of the Nevada
Association of REALTORS and a salesperson with RE/MAX Achievers.
Investors were “hoping to sell them in a few months for a quick
profit. Now they’re sitting there with all these
properties.”
The high inventory has halted the appreciation
run and flooded the rental market. It also has hampered the new-home
market, which has responded with slashed prices and buyer
incentives.
Builders are a “lot more market friendly” and are
starting to offer “buyer incentives that they weren’t before,” says
Rubin. Some builders are throwing in $5,000 to $15,000 in upgrade
options and another $5,000 to $10,000 in closing cost for buyers who
use their lenders.
Pulte Homes, one of the region’s biggest
builders, in October cut prices from 5 percent to 28 percent at two
dozen of its new-home communities. And some builders have raised
broker commissions to 5 percent from the usual 3
percent.
Both resale and new-home specialists say the current
market isn’t a long-speculated bubble bursting, but a return to the
balanced market that existed between buyers and sellers before the
frantic market ignited in last year. “The market went from normal to
overheated, and it’s trying to get back to normal,” says Dennis
Smith, head of Home Builders Research, which monitors the new-home
market in Las Vegas.
Still unbridled optimism is the
operative rule in Sin City—and it couldn’t be truer for high-rise,
luxury condos, the new darling of Las Vegas real estate. The town,
which had only two high-rise condos a few years ago, today boasts
several developments on The Strip, with thousand more on the drawing
board. “I think the high-rise concept is really taking off here in
Las Vegas. We didn’t have that before,” Rubin says. “New York had
it. Florida had it. And Chicago had it. And now it’s
here.”
The high-rise movement began with Park Tower’s 84
units just off The Strip, where condos cost from $1 million to
nearly $3 million, and Turnberry Palace, four 40-story towers right
on The Strip. The price to enjoy resort-style living at Turnberry
Palace ranged $530,000 to $5.9 million. The projects sold out almost
immediately, many to well-heeled Southern Californians looking for a
Las Vegas pied-a-terre.
In early December, only three units
were unsold at Turnberry Palace, says John Riordan vice president of
sales and marketing for Turnberry associates. Riordan says the
company will start construction in January on Turnberry Towers, two
45-story towers, with more modest prices of $350,000 to $1.1
million.
The Park Palace and Turnberry developments
demonstrate there’s a “very strong demand for the high-rise
lifestyle,’’ says Riordan. “The success we’ve had absolutely
attracted a lot of other” condo developers.
In November, MGM
Mirage revealed plans to construct a mega-resort on the strip with
1,650 luxury condos. Real estate magnate Donald Trump also plans to
build a high-rise condo project in Las Vegas.
Still, Las
Vegas is a town of big dreams and not every proposed condo may break
ground. “It remains to be seen how real most of these projects will
ultimately be,” says Riordan.
—By Corrie M. Anders for
REALTOR® Magazine Online
Las Vegas:
Builders Buy 1,940 Federal Acres
(June 17,
2004) -- The federal government sold 1,940
acres of land in Nevada's Las Vegas Valley, one of the
fastest-growing residential construction markets in the country. The
buyer was a consortium of homebuilders bidding at an auction, held
on June 2.
The $557 million sale is the largest by the U.S.
Bureau of Land Management since the 1998 passage of the Southern
Nevada Public Land Management Act.
The consortium that won
the bid is comprised of the Las Vegas area's No. 1 home builder, KB
Home, along with master planner Focus Property Group as well as
builders Toll Bros., Woodside Group, Pardee Homes, Beazer Homes USA,
Kimball Hill Homes, and Meritage Corp.
A spokesman for KB
Home says the company plans to begin delivering homes on its 940
acres in Henderson sometime in 2006.
Source: Los Angeles Times (06/16/04)
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