Homebuilder Don Boettcher has been in Las Vegas for more than 20 years, and he knows all about the ups and downs of this boom-and-bust town.
He’s spent most of his time here with Pulte Homes, a top-selling builder at the peak of the bubble in one of the most overheated markets in America. In 2005, Pulte and Del Webb, which have the same ownership, sold more than 3,500 new homes in Southern Nevada, second-highest in the market. In 2006, the company rose to No. 1 with more than 4,500 sales.
Then the market crashed. In 2009, Pulte still was No. 2 in the market — but with only 560 sales that year, according to research by VEGAS INC predecessor In Business Las Vegas.
Boettcher joined Dunhill Homes in 2010, helping develop Rhodes Ranch in the southwest valley and Tuscany Village in Henderson. Dunhill took charge of the two partially built communities as part of developer Jim Rhodes’ $400 million corporate bankruptcy case.
Today, the 55-year-old Boettcher is building out those projects as Nevada division president for Century Communities, which bought Dunhill’s local assets in spring 2014.
Colorado-based Century has since bought more land here and has projects all over the valley, including in master-planned communities Skye Canyon, Inspirada, Mountain’s Edge and Lake Las Vegas.
Boettcher recently spoke with VEGAS INC about Century’s developments and the valley’s housing market, including the go-go years last decade and the wide price-gap between new homes and resales.
In Southern Nevada, the median sales price for new homes is around $316,800, according to Home Builders Research. That’s more than 40 percent above the median price of resales, $220,000, according to the Greater Las Vegas Association of Realtors.
Edited excerpts:
How is business this year for Century? Searching Clark County records, it seems you closed about 220 sales this year through late November.
That sounds about right. Our goal is to hit 265 closings this year. We want to grow the existing operations. We’re positioned to have a dozen communities in the next year and 500-plus sales in 2016. Our big stores this year are Rhodes Ranch and Tuscany. Those are our motherships.
Why did Century buy those communities? What was their appeal?
It was a package deal, so it was all or nothing. They’re both in prime positions in their submarkets. When you look around the valley for a golf-course community with production homes being built, your choices are pretty slim. Century is in a growth mode. The company went public last year and has purchased other companies’ operations in Atlanta, in Houston, here in Las Vegas, and in central Texas.
Overall in Las Vegas, new-home sales rose more than 30 percent in 2013 but fell about 20 percent in 2014. This year, sales are climbing again. It looks like the industry is still volatile. Why do you think that is?
When you look at what happened in 2013, that was the first catch of breath from the recession. The pendulum always swings a little too far left or right. Housing had dropped 40 or 50 percent before rising in 2013. That was a one-time ratchet-up in the opposite direction. Historically, if the market goes along at 3 to 5 percent annual appreciation, that’s normal. It’s a steady, healthy climb this year, but I don’t expect the market to just, all of a sudden, accelerate and shoot up like it did in 2013.
Can you give an update on Rhodes Ranch and Tuscany? How many more homes can be built, and are there other builders in those communities besides you?
At Rhodes Ranch, we’re the exclusive builder. We’ve got about 500-plus lots left and about three more years of building and selling houses ahead of us. Same thing with Tuscany — we’ll be out there through 2018, 2019. Lennar is building there, as well. I can’t speak for Lennar as to when they’ll finish, but I know they bought 340 lots and probably have 225 to 240 left. We’ve got about 450 lots left at Tuscany.
The valley grew fast for decades, but from 2004 to 2007, it really accelerated. What was different about those few years, the peak of the bubble before the market collapsed, versus, say, the 1990s?
Money was accessible. One can argue whether that was good policy or bad policy or somewhere in between, but the policy drove a lot of this phantom market. Everybody and their brother had a house. The fundamentals of lending were compromised — stated-income loans, no-doc loans. I have my opinion on that, which I’ll reserve, but the money was flowing — people were using their houses as ATMs, the resort corridor was booming, everybody had their new $2 billion casino. And then the music stopped, and there just weren’t that many chairs for people to sit down in.
What were the signs for you that those days wouldn’t last forever? Was it the stereotypical, say, stripper with five houses, or were there other things you saw behind the scenes as a builder?
All the above. You cited an example which I know is for illustrative purposes, but it’s kind of right on. Even for the people just entering the industry in that bubble era, with no other reference point or context, you knew it wasn’t normal and it wasn’t going to last. You didn’t know how it was going to all end, and I’m not going to sit here and say I knew it wasn’t going to end pretty, because I didn’t. But we all can look back and read the literature where, once upon a time, Vegas was recession-proof. There were many articles coming out that said that.
Las Vegas’ homebuilding industry almost evaporated during the recession. Was there a point when you thought it couldn’t get any worse, or that you’d never seen this kind of recession before?
I was as scared as the next guy. Back in the late ‘80s with the oil crisis, that was more localized; I happened to be in Texas at the time with Pulte Homes, and the state got pummeled because it was a one-horse town. But with the recent recession, everybody felt the pain. Look at what happened to home prices. Lending dried up. Everybody was running scared. Our published unemployment was 14 percent. God knows what the real unemployment rate was.
Today, what are the strengths of Las Vegas’ home-construction market?
Nevada has a very favorable tax basis. As California continues to tax the heck out of its constituency, we applaud so they all come running over here. We have favorable weather. Retirees will always find Vegas a nice place to live for those reasons.
How is lending right now?
It’s not as tight as it was two or three years ago, but it’s not as loosey goosey as it was during the bubble era. It’s a fluid process and will adjust as it needs to — maybe not as quick as others would hope — but I don’t think lending is an impairment to our industry right now.
Are you seeing or building any speculative homes? I know it was common 10 or 11 years ago, but the past few years builders usually haven’t been breaking ground on houses without first getting a deposit from a buyer.
Builders now, including us, are building spec homes as part of their production machine. On average, we probably keep 20 percent of our annual production as spec.
What are the weaknesses you see in the homebuilding market? Las Vegas still has a lot of foreclosures, underwater borrowers, and residents with spotty finances.
For single-family resales, we still have a disproportionate amount of distressed properties. We also have an excess amount of rental properties in our single-family inventory.
What does that do to builders when you’ve got so many rental homes out there and a big inventory of unsold existing homes?
Those are housing alternatives for somebody. There’s also a big price difference between new homes and resales. When somebody’s got an option to buy the same square footage and you have that big of a gap — a new home generally has a lot more to offer than a resale, but that gap needs to be narrower. Historically, it’s always been a 15 percent spread.
I assume you’d prefer resale prices to come up rather than new-home prices to come down.
Absolutely. The free marketplace will get things right, but it’s all going to take some time.