When the economy was limping along a decade or so ago, Las Vegas’ homebuilding market was barely breathing.
Home sales had evaporated, builders had filed for bankruptcy and unfinished condo projects had been abandoned by their developers.
Today, the economy is badly battered again, albeit for very different reasons, but Southern Nevada’s homebuilding industry has heated up.
Builders landed more than 11,000 net sales — newly signed sales contracts minus cancellations — last year, the most since 2007, according to figures from Las Vegas housing tracker Andrew Smith, president of Home Builders Research.
They also booked record prices in 2020: For closed transactions, the median sales price of newly built single-family homes — builders’ best-selling product locally — was $415,000 in October, above the previous all-time high of $411,425, set in August, Home Builders Research previously reported.
The coronavirus pandemic has devastated the tourism industry and sparked huge job losses in casino-heavy Southern Nevada. The valley’s homebuilding market, however, has been boosted by a tight availability of resales; newcomers moving here, especially from California; and, above all, record-low mortgage rates.
‘Demand is still very strong’
Shrunken borrowing costs have let people — or at least those who can still afford to buy a house — lock in lower monthly payments and stretch their budgets.
“That’s what’s really honestly making all this happen right now, is the fact that money’s so cheap,” Smith told me.
He’s not seeing signs of a slowdown, either.
“The demand is still very strong,” Smith said.
Kevin Orrock, Las Vegas regional president for Summerlin developer Howard Hughes Corp., indicated that home sales are up more than 40 percent year-over-year in the 22,500-acre master-planned community.
Orrock, whose company sells land to homebuilders in Summerlin, doesn’t expect a big jump in mortgage rates anytime soon and noted the market’s momentum hasn’t stopped.
“If it continues, this will be a very good year,” he said.
Las Vegas’ housing market was initially hit with a burst of turbulence when the coronavirus outbreak sparked sweeping business shutdowns and other closures. Buyers got cold feet amid the chaos as sales cancellations briefly surged and the volume of deals plunged.
Kent Lay, Las Vegas division president of builder Woodside Homes, said that when the pandemic hit, he set out to protect the sales that were already in the pipeline and stopped breaking ground on new houses.
Casinos and other businesses eventually were allowed to reopen from state-ordered lockdowns. And, as Lay noted, the housing market “quickly came back.”
He said that low interest rates have been “huge” and that more people than usual have been moving here from California, as they can work remotely in a more affordable housing market.
Two recessions, two different markets
Of course, the market’s surprising strength is still nowhere close to the frenzied mid-2000s bubble, when easy money for buyers and builders alike fueled a wild construction boom.
Homebuilders notched just over 28,800 net sales in Southern Nevada in 2005, though after the bubble burst and the broader economy tanked, sales plunged to just 3,890 in 2011, Smith’s data shows.
Las Vegas was ground zero for America’s real estate boom and bust, with its once-roaring housing market all but wiped out by sweeping foreclosures, plunging property values, a near stop in development and soaring job losses in the construction industry.
The pandemic has ravaged Las Vegas’ economy, but for homebuilders, this crisis has played out much differently than the last one.
“I was just glad it wasn’t a repeat of that,” Lay said.
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