OVERVIEW OF THE LAS VEGAS, NEVADA REAL ESTATE MARKET

There is tremendous development activity on and around the strip. It is estimated that with the projects in place, 45,000 more hotel rooms will be added to the strip area by 2012. Deutsche Bank Securities estimates the casino industry will need to hire 113,500 workers for the positions being created. The projects underway include the 6 billion dollar project CityCenter, 1.8 billion dollar Palazzo and the  1.4 billon dollar Encore. In addition, Boyd Gaming is preparing the closed Stardust site for their Echelon Place, a 4 billon dollar project. Station Casinos has broken ground in February on their 600 million dollar hotel casino in North Las Vegas. Additional projects scheduled to open in the 2008-2009 period include Turnberry Associates Fontainebleau and the Trump International Hotel and Tower.

Downtown is also turning into a hot bed of development. Union Park, a 61 acre development just west of Fremont, is becoming a reality. The Lou Ruvo Brain Institute has broken ground and the Smith Center for the Performing Arts scheduled to break ground in 2008. The World Jewelry Center with 1 million sq. ft. is in the planning stages as well as a number of retail and residential projects. The World Market Center, just to the west of this is partly finished and in operation. The World Market center will have over 12 million sq. ft. of floor space when completed. Three new residential high-rise developments are under construction, Streamline Towers, Newport Lofts and Juhl. Soho Lofts is now completed. An number of upscale bars, shops and restaurants are moving into the area.

A recently released study of the local market, commissioned by the Southern Nevada Homebuilders Association and done by Applied Analysis, forecasts the following: "the largest wave of openings (strip area projects) in the regions history is set to begin....later this year. We estimate that this and other contributing factors will stimulate demand for 177,400 housing units between 2008 and 2012, a 13.3% increase over the demand reported during the preceding five-year period (ie., 2003 through 2007)." This 75 page study predicts that housing supply will peak late 2007/early 2008. They estimate that cutbacks in permitting activity combined with this increased demand could possibly create a housing shortage by late 2009.

Below represents by own calculations, base on raw data provided by the greater Las Vegas Association
of Realtors. Prices are for free standing homes only.

June  2006 median home sale price (resale)  $319,000  Median list price on these homes was $324,000.
July 2006 median home sale price (resale)  $316,000  Median list price on these homes was $326,000.
August 2006 median home sale price (resale) $310,000 Median list price on these homes was $315,000.
September 2006 median home sale price (resale) $313,000 Median list price on these homes was $319,000.
October median 2006 home sale price (resale) $308,000 Median list price on these homes was $311,000.
November  2006 median home sale price (resale $306,000 Median list price on these homes was $310,000.
December 2006 median home sale price (resale) $305,000 Median list price on these homes was $310,000
January 2007 median home sale price ( resale) $309,000 Median list price on these homes was $312,000.
February 2007 median homes sale price (resale) $305,000 Median list price on these homes was $310,000.
April 2007 median homes sale price (resale) $304,000 Median list price on these homes was $310,000.
May 2007 median homes sale price (resale) $300,000 Median list price on these homes was $308,000.
July 2007 median home sale price (resale) $297,000 Median list price on these homes was $305,000.
September 2007 median sale price (resale) $295,000 Median list price on these homes was $300,000
October 2007 median sale price (resale) $283,000 Median list price on these homes was $290,000.
November 2007 median sale price (resale) $274,000 Median list price on these homes was $282,000.

From June 2006 to November 2007 resale sales prices for free standing homes decreased  a little over 17%. The raw data for this calculation  is courtesy of the Greater Las Vegas Association of Realtors. The figures presented are based on my own calculations. The last 60 days has shown the largest downward price adjustment for any 60 day period since I have been keeping track, at just over 7%.

Snapshot of the market as of November 28, 2007 shows 21,496 free standing homes on the market (up 4,089 from January) with 949 having gone under contract of sale over the last 30 days. That is down 213 from last month. The National Association of Realtors regards a 5 to 6 month inventory of homes as a neutral market, neither a buyer's or seller's market. Now we have over a 20 month inventory of  free standing homes available. For the last year we have seen the indicators of a buyers market in the Las Vegas area. Prices have dropped substantially from a year and a half ago.  New homes sales are down 49% from last October with existing home sales down 44.3% for the same period. New home sales prices

Short sales and foreclosures- Of the 26,684 properties on the market, at the time of this writing, just under 20% are represented as being

short sales or foreclosures. 49% of all listed properties are represented as vacant (note that historically, this figure has been in the 41% range for the last number of years). Some builder now represent that they are selling at prices below replacement costs. That being the case, some of the new home deals out there right now may not get any better.

 In the way of new information, I have included the elevations of all the major planned communities and age restricted communities on their respective pages. There is a wide range of elevation at which homes are constructed inside the valley ranging from just over 1,600 ft. to over 3,500 ft. The lower elevations are generally on the east side with the highest elevations in the newer areas of Summerlin. Elevation can be a factor in temperatures as well as possibly air quality.

High-rise construction is well under way in Las Vegas with over 95 projects in the works or on the drawing board. There has been talk of some of these offering lower priced product, but on average, the starting price for smaller units is around $400,000. Those projects built close to the strip now have prices of over $1,000 a square foot.  One interesting option to a high rise is planned condominium developments, also referred to as "New Urbanism". Here the concept is that you can potentially live, work and shop in the same proximity, where you can literally walk to everything you need.

The demand, lack of available land and low interest rates have led to the price increases last year. 4 years ago builders were paying well under $100,000 an acre for raw, BLM owned land. Now $600,000 and acre is not unusual.

The local economy is still exceptionally strong with little let up in the number of people moving into the Las Vegas Valley.  The "smart money" is still betting on Las Vegas as every week I read of another billion dollar plus project breaking ground (see above). As of July 2006, Nevada has lead the nation in job growth for 13 consecutive quarters.

The thrust of economic development in Las Vegas, Nevada is greater than anywhere in the United States, and greater than anywhere on the planet earth.  The gaming industry alone has spent 20 billion dollars over the last 14 years. This incredible economic growth, combined with available land, water and a political climate favorable to development has led a very strong market for both new and resale homes. 

General Economic Indicators as of July, 2007
(Courtesy of the Las Vegas Review Journal)

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 Overview of the Las Vegas Nevada Real Estate Market

Information updated November 28, 2007.

 

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