Real estate:

Long time coming: Homebuilders are busy once again in Las Vegas

New homes under construction in Henderson seen on Wednesday, May 23, 2012.

Home Construction

New homes under construction in Henderson seen on Wednesday, May 23, 2012. Launch slideshow »

Las Vegas homebuilders can’t build houses fast enough these days to keep up with buyers’ demand.

Yes, you read that right.

The valley’s new home market is booming. Developers say they haven’t built, or sold, so many houses in years.

“I’m as much as 80 to 90 percent higher in volume than last year,” said Robert Beville, president of Harmony Homes. “I’ll probably more than double my deliveries this year.”

Applications for new home permits in Henderson, North Las Vegas, Las Vegas and Clark County have increased 40 percent from last year, according to Home Builders Research. Prices have risen 6 percent to an average of $201,000, and sales have jumped 20 percent. By June, experts expect to see 500 new-home closings a month.

“Some of the builders are selling one or more new homes a week,” said Kolleen Kelley, president of the Greater Las Vegas Association of Realtors. “That’s up considerably from last year.”

There’s always a market for new houses. Certain buyers prefer new residences so they can choose layouts and customize finishes. They don’t want to worry about inheriting previous owners’ problems.

But the demographic is growing mostly out of necessity. A shrinking inventory of existing homes in the valley is forcing buyers who might typically prefer older homes to buy new.

There are 20 percent fewer single-family homes available on the Multiple Listing Service today than last year. There are 30 percent fewer condos and townhouses.

Properties that a year ago would have sat on the market for weeks or months are now getting as many as 15 offers, Kelley said. List prices have become minimums. Most existing homes are selling for thousands more.

That’s if buyers can get them. A little more than 5,000 units are available for sale right now, the fewest since 2006 and an almost 60 percent drop from last year. Market conditions have combined to make it difficult for most buyers to purchase older homes.

Inventory began to shrink rapidly at the end of last year when a new state law took effect requiring lenders to prove they have the legal right to foreclose on properties. Legislators intended to curb fraud with the bill and hoped it would reduce robo-signings. Instead, it scared banks into limiting foreclosures rather than risk breaking new, stricter rules and facing potential prosecution.

Last month, there were only 258 bank repossessions in the valley, the fewest on record in two decades, according to SalesTraq.

At the same time, banks are approving short sales at a brisker pace. Investors unable to find foreclosed properties are snatching them up. Home Builders Research reports that 90 percent of available short-sale homes have contingency offers pending.

Combine that with the fact that 54 percent of today’s buyers are cash investors, and it’s nearly impossible for a conventional buyer with a small down payment and mortgage to find a house to buy. When banks or sellers have multiple offers on a home, they most often choose the cash investor over a buyer with a mortgage. Who would turn down money in hand for 30 years of payments?

Generally speaking, investors aren’t interested in buying new homes. They can’t make the same kind of profit renting them as they can with older, cheaper homes.

Drive down Horizon Ridge Parkway in Henderson, and it’s easy to forget this is 2012. It feels more like 2006. New houses are popping up left and right.

At Gibson Road alone, one intersection is home to three new housing projects. KB and Ryland Homes are developing a swath of desert into plots for more than 200 single-family houses. Across the street, heavy equipment operators are flattening dirt for a third housing complex.

A mile down the road, Lennar Homes is hard at work building a neighborhood of multigenerational homes. Across town at Mountain’s Edge, Ryland Homes recently debuted Maravilla Courtyards, the region’s first housing development with roof-top decks.

Ryland is selling houses in 12 neighborhoods. Harmony is building in 11. The company already sold out of three neighborhoods this year.

“The single largest impact has been houses under $200,000,” Beville said. “Homes in the $130,000 to $190,000 (range) are getting a lot of love. The ones in the $200,000 to $300,000 are getting a little bit less.

“There are buyers in that range who can afford that mortgage and just can’t find what they are looking for in existing homes. It has pushed them into the new home market.”

For the first time in five years, homebuilders are raising prices as developments sell out. Typically, the first homes built in a neighborhood sell for less than the last ones. Beville said Harmony Homes had increased prices from 1 percent to 10 percent in its developments.

Even so, don’t expect to see prices peak to 2006 levels. Even if demand could justify it, developers have to work with lenders in mind.

“They can only raise their prices so much. The problem is getting appraisals to match those prices,” Kelley said.

Still, there’s profit to be made. Most of the land being developed has changed hands since it was bought during the boom. The developers building on it now, in most cases, acquired it empty or half developed from others who paid a premium a few years ago.

“Every one of our projects had started and was taken over from banks or builders,” Beville said. Harmony bought one development from Pardee Homes, another from Story Book.

Perhaps the biggest winners in the revived housing market are construction workers, particularly specialists. Framers, for example, are in high demand. Many left the state when the housing market deflated, and the ones who stayed took jobs in other fields. Now, homebuilders are entering bidding wars to hire those who are left.

The housing resurgence hasn’t created a job boom like it did five years ago, but it is helping to put people to work. Builders say they are “cautiously optimistic” that current market conditions will remain and are beefing up their staff levels slowly. Most have operated with skeleton crews since the bust.

Naysayers may grumble that another bust is imminent. With a glut of inventory lurking in the shadows, they worry the market will be flooded with new and existing homes once banks start releasing foreclosures again.

Kelley doubts it. Developers are, for the most part, building on demand, she said, and have learned lessons about speculation.

“They have a good sense of the demand going a few months out,” she said. “I think we are headed in the right direction.”

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Discussion 24 comments

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  1. no no no no....silly silly silly silly.

  2. I'm still a little skeptical.

  3. Interest Rates are incredibly Low making many homes affordable. Yet there is still the forecast of over One Million Homes entering the Foreclosure Market, making housing projections difficult.
    Add to that the ever increasing volume of Rental Homes and the potential exists for many neighborhood to become shabby because of weak regulations and a transient population. This is a recipe for creating a new urban Ghetto.
    Judging our Local Elected Leaders from their past failures to plan, do we really think there will be anything different this time?

  4. WAY too much inventory already. Building permits (for new houses) should be suspended.

  5. Ah yes, Horizon Ridge at Gibson Road. The new homeowner will be able to stand in his yard, looking at the view of the Strip. Wow. Of course, he will have to also look at the 3 empty office buildings directly in front of him/her. One is unfinished, with plywood windows. But wait, there's more. There is the absolute monstrosity that is Vantage Lofts, abandoned and decaying, blocking many homes from any views. There are also beaucoup piles of solid fill everywhere. House builders must be counting on the fact that there is a sucker born every minute.

  6. For every ten new building permits, two homes should be demolished in Clark County. Every new home in Nevada should be required to have solar, active and passive installation options.

  7. This is great news for the Las Vegas area and a long time coming.

    However, the statement, "Ryland Homes recently debuted Maravilla Courtyards, the region's first housing development with roof-top decks" is inaccurate. Ryland built the Indigo development here several years ago, and it featured three-story homes with rooftop decks.

  8. I love Las vegas, but why do we never learn. I agree with a previous comment about rental houses turning this town into a ghetto. Renters never have the same sense of pride and community that a homeowner has. Why cant the banks choose to sell foreclosures to owner occupied rather than some greedy guy out of california who already owns ten houses in las vegas that he doesnt take care of?

  9. Every comment thus far has missed the point.

    Yes, there are plenty of existing houses that are on the market or are coming to the market. But the average Joe can not buy them. They go to cash rich buyers only. Average Joe is locked out because he does not have the cash. His only option is a new house. It makes perfect sense that new housing is going to grow.

    The shame in the matter is, that average Joe can not buy the really good deals, the low priced town homes, and foreclosed houses. He would have to rent them from a cash buyer. The interest rate could be 0 and it would be meaningless, when the low cost houses are unobtainable.

    Regulate investment house buying!

  10. I predict the housing market over the next 10 years will grow even more than the last explosive growth period. How can I say that. As soon as the market allows housing prices to grow in the "Democratic Peoples Republic of California", we will see a mass exodus of those people to leave that state for greener pastures. Wealth creators and productive people want out of that political "Hellhole".

    I would even guess that the state will change it's name to "Detroit" since it is on its way to becoming the same cesspool that Detroit has become.

  11. I think they are forgetting about a sleeping giant. What about all those people who bought homes from 2008-2010 after the recession hit who are already more than $100k underwater due to continued declining home values over the last several years? Don't worry, there will be many more foreclosed homes on the market for you investors to gobble up.

  12. brilliant

  13. Pipe dream, the housing market isn't rebounding. RE agents and others who suck off hype is feeding people a line of dung. It will be years before the market changes, Obama still in office and he alone will screw that up.

  14. Lot sizes still .01 acres? Still building houses with windows facing each other and 6 feet between them? True & True. They should sell these homes at the new Henderson 99 cent store. People will sit outside and wait for 2 hours for crap there.

  15. Yay! What will really help the market is when banks start lending again. A $100K mortgage is around $500/mo, yet rent on a $100K house is $1,200/mo; priced as such due to demand from all the people who have good jobs but can't get loans.

  16. Help make California Public Service retirees wealthy. Oh yeah, and Las Vegas firemen.

  17. We just bought a house. Construction began on it a few weeks ago. There are six other houses on our street alone being built too. This is in the Mountain's Edge area. It's nice to see our area making a recovery.. even it's a small one for now.

  18. Author, I think you received some rah-rah information or you're trying to put a positive face on Las Vegas' continued recession.

  19. The problem in the Bush era was, the price of homes was completed distorted. Those homes were not worth the the price asked for. Now that the banks have been forced to re-assess the real price, to those that are under foreclosure, we discover that Henry ford was right----If the people building those homes can't afford to buy the homes they are building...something's very very wrong. We must have stronger regulations to keep everybody HONEST.........

  20. Builders are building homes. They are employing people to build these homes, they are buying building materials.

    People are buying these homes, moving, spending their money.

    It is all good in the long run. Better then nothing being built at all.

    Las Vegas is slowly moving up, most all numbers have been good. Some people want the town to fail for some unknown reason, maybe they are "shorting" Vegas stock. ;-) We have a long way to go but one step up is better then two steps down.

  21. bankv correct--u almost can't buy a foreclosure property without big cash, or all cash in lv. bottom has been in for months and the market has turned, prices will inch up slowly next few years to a more normal price area. appraisers are now slow to catch up again with market and are appraising property on conditions 2 years ago--now homes are coming in below value in appraisals because everyone is scarred to be first to give higher value.

  22. Hmmm, the hotels really haven't started hiring BACK the employees they laid off 3 - 4 yrs ago. So I wonder WHERE these homebuyers will be getting their money to pay their new mortgages. I fear it won't take long for home prices to go up to levels where they were prior to the Great Recession starting. Yet we don't see any work on Echelon Place or the FoutainBleu. Something smells fishy here....

  23. Outrageous..we have a huge inventory to bring down first. Has anybody looked at Lake Mead lately, or read some of the articles on the delays of the lake tap work in progress, (they call it a straw), and that's exactly what it is. Who knows when or if this will get done, even if it does we need water, lots of it. We need snow in the mountains, record breaking snow for the next 10+ yrs.
    Common sense does not live long around the valley.
    What about us people who have been hit by the housing market who want to get the sam h___ out of here???

  24. This is nothing but a typical push by the NAR members to stimulate business.......I investigate sites for environmental due diligence, and as a part of my job, property investigations require visits to the local building departments. EVERY building official I speak with notes a small uptake in building permits.........not this RAMPANT development returning to the valley. Like several of the commentators so accurately pointed out......there are NO jobs to support this housing boom.......is nothing more than a vehicle to artificially inflate prices again........the true numbers that are an indicator of the state of economy..........TWENTY FIVE PERCENT commercial vacancy.....and limited funding mechanisms for growth..........regardless of what the people who sell houses and make a commission of of them, the housing market is NOT BACK.....because there is nothing to support it.........