Larry Canarelli spent his childhood in poverty, living in a tent alongside a river, in an orphanage, in shacks, and sleeping in a fold-out chair.
But he’s long had an entrepreneurial bent and a strength for numbers. And over the course of more than 30 years, he’s built a Las Vegas homebuilding empire.
Canarelli founded American West Homes in 1984 and has built more than 17,000 homes in the valley through the company. In a market dominated by out-of-state, publicly traded companies, American West is the only privately held, locally based builder among the area’s top sellers.
Overall, builders closed 6,800 new-home sales last year in Clark County. American West was No. 6 with 451 closings, and the next-closest private builder was Jim Rhodes’ Harmony Homes, which was No. 13 with 161 sales, said Dennis Smith, founder of Las Vegas-based Home Builders Research.
Canarelli owns roughly 1,000 acres throughout the valley for more homes, as well as thousands of acres outside Las Vegas in Pahrump, Mesquite and Boulder City. He doesn’t have a timeline for developing the land in Mesquite and he wouldn't say what his plans are for Boulder City. But he says he aims to develop a 4,400-home community in Pahrump and open model homes there by spring 2018.
Like other builders, Canarelli was hit hard by last decade’s housing bust and recession. His company went from selling 1,000 homes a year in the early 2000s to around 100 during the downturn, and his American West Development Inc. filed for bankruptcy protection in 2012, claiming $55.4 million in assets and $207.7 million in liabilities, court records show.
But Canarelli, who as a child read his grandmother’s books about mansions in Beverly Hills, Calif., stuck with it.
“This is an instinct and a street-fight business, and you have to love it,” he says.
The 69-year-old builder recently sat down with VEGAS INC in his office on Pilot Road, just south of McCarran International Airport. Edited excerpts:
I was born in Roseburg, Ore. My birth father was in the Coast Guard, and my mother lived in Oregon. She had already had a child, and I was born after they got married. We lived in a tent on the Umpqua River. He was a laborer in the lumber camps. They had no money; we just lived on the river. Then we moved to California. My father worked in another logging camp, and we lived on a river. I was 1 or 2. My mother washed the sheets in the Merced River. We moved to the mountains and had a little cabin, a wood-cutter shack thing; we collected rain in a cistern. Then we moved down into the San Joaquin Valley. My dad was a laborer at a dairy. We had a little two-room shack. I guess we were no longer homeless.
We had bunk beds, but I slept in a fold-out chair. We pumped the water with a little hand-pump out front. We had outside toilets, of course. Every morning we got a 2 1/2 gallon thing of milk. My dad left, and I never saw him again. I was around 5.
My mother was 21 years old and had four children. She brought me to a Pentecostal orphanage voluntarily. We went to all the tent revivals in the early ‘50s and went to church five times a week. That was the first time I had a real bathroom, in the orphanage. I was there about a year and a half. Afterward, we moved around, rented houses. My mother met my stepfather, and we lived in this little one-bedroom house.
There were seven of us — I had four sisters. We moved into town, and we lived close to the library. I used to go there every day, and the librarian took me under her wing. She let me check out two books a day, and I’d read two books a day. I was 7 or 8 at the time. I had been a little behind in school; the poor kids don’t get pushed, they don’t get as much attention in school. It’s just kind of how life is.
Early on, did you notice you had an aptitude for certain subjects over another?
When I was in third grade, I wasn’t even in the top reading groups. But that was the year they start pushing math, and I have a very high math aptitude. I’m extremely good with numbers, and the teachers realized I was smart. They worked with me, kept me after school.
When you were growing up, were you in a low-income area and everyone around you was struggling?
I don’t think so. It was a stand-alone city with a nice downtown. The area of town you live in, it really tells you what your status in life is. I was always really sensitive to not being one of the haves. My older sister, she and I basically raised our younger sisters. We were much older and had to take care of them. Sometimes we didn’t have anything for sandwiches, we’d just have mustard. We never asked for help. When I was 9 years old, I got my first paper route, for the Fresno Bee. I’d read the paper and found a house in the classified ads. My mother worked a little bit as a waitress and had a tip jar; my stepfather was working at a feed store for $1.50 an hour. They called the guy from the ad and took me with them. They assumed the seller’s VA loan and bought the home; it was the 12th house I had lived in, a three-bedroom, one-bath, 950 square feet. It was a typical subdivision like you’d see in the older Las Vegas areas. I got the paper route in there and ended up having 100 customers. I was always fairly entrepreneurial, even when I was little. When I was born, my last name was Graves. I started going by Canarelli when I was 9. That’s my stepfather’s name. He’s from Brooklyn.
I was always going to go to college; it never really occurred to me that I wouldn’t. Fortunately, tuition was a lot less then, and I worked for people when I went to UCLA. I worked for this couple in Bel Air, every Saturday morning for four hours, $2 an hour. They liked me and paid my tuition the last three years of college. Not a huge thing — it was only $100 a quarter in those days. He also paid my tuition for graduate school. The man, George Page, came to L.A. from Nebraska when he was 14 or 15, saved every nickel, started Mission Pak, a dried-fruit business, and assembled all this land. Just a humble old guy. He built the Page Museum in L.A.
I eventually went to work for a homebuilder in Santa Monica. It was a wonderful deal for me. In the 1973-74 recession, they let go everybody ahead of me, so I was promoted to vice president in charge of marketing and sales. I had a pretty high profile as a real young guy. I wasn’t 30 yet. Metropolitan Development hired me in 1976 following the closure of that business. Metropolitan had one community in Las Vegas and one in Tucson, Ariz. I loved Las Vegas instantly. You could put your arms around it; it’s a big island.
What was Las Vegas’ reputation at the time? What did you know about it before you came here?
Like a lot of people, we knew about the Strip and not much more. There might not have been much more to know. Builders sold houses out of garages, so competing and doing great marketing and aggressive floors plans was a piece of cake.
It wasn’t too competitive here?
It wasn’t. When the market was good, everybody sold everything; when the market was bad, nobody sold anything. There wasn’t very much sophistication. Builders didn’t merchandise; they furnished models a little bit, but it was really basic. Their salesmen wore leisure suits and were extremely casual; there was no follow-up with prospective buyers. It was just really seat-of-the-pants. I started working here in 1976 and bought all the land for Metropolitan. By 1979, we were the biggest builder in the state. From ‘81 to ‘83, it was very difficult. Mortgage rates were over 18 percent, and you had to figure out how to sell houses. In 1982, we did 237 closings, and just one other builder had more than 100 closings. There was a terrible national recession. Still, the company wanted me to move here to establish a stand-alone division. I didn’t really want to leave Manhattan Beach and Beverly Hills and that lifestyle, but in the end, I didn’t have any choice. But I knew that as soon as I got here, I’d leave the company and do my own thing. By 1984, I left and started American West. We were the biggest builder here by 1986. We had 667 closings that year. There had been a lot of publicly traded builders here, but they would come and go. They couldn’t keep their division presidents off the Strip and in tune with what they were sent here to do.
They’d come out and gamble and party?
They’d get distracted at the very least, because of all the gambling and partying. They wouldn’t throw their lives away, but it was hard. Then KB Home came in the early ‘90s, and D.R. Horton came in ‘93. Everybody got established and started competing. It was highly competitive through the mid- to late-90s.
What were some of the things you noticed in the peak bubble years last decade that you thought weren’t normal?
When you have your pricing meeting, and we had one every week, every one of the communities had taken 10 deposit checks. It was unreal. Your marketing people would show you that the public builders around you had just raised their prices by $60,000, so to stay even we could raise our prices by $60,000. We raised our prices enough that we could buy more land, but we were far behind the other builders in our pricing. We made a huge amount of money, but as a result of not raising prices so high, we had less foreclosures in our communities than any other builder in Las Vegas. All of our communities have a lot of grass turf in the front yards, so even if there were foreclosures, when you drove down the street, you couldn’t see that the house was abandoned.
Did a lot of people abandon the homes you had sold them?
In a 20-house cul-de-sac of ours, I don’t think it would be uncommon to see two or three empty houses during the recession. But it was not uncommon to see 15 or 18 empty houses in other cul-de-sacs. It was enough to scare you, even as the eternal optimist that I am.
One thing I’ve read about you is you’re particularly good at buying land. Can you talk about your land-buying strategy and how much you own today?
I do assemble land — the larger the pieces we can assemble, the nicer the communities we can make. I’ve raised all four of my children here, they’ve all gone to public schools. That’s all part of being ingrained into the fabric and culture of Las Vegas — you coach (baseball), you coach soccer, you know the families. You just have a huge advantage on where people want to live and what they want to do. I know almost every single piece of land in town, and I know what that land was 10, 20 and 30 years ago. I’ve been immersed in this. I wasn’t going down to casinos and gambling or going to shows 30 years ago; I was driving around looking at communities and coaching and knowing what’s going on in our city.