The area’s housing market continues to recover, but don’t expect a breakout year for home sales and permits until 2016 at the earliest.
That was the word from a panel of homebuilders who spoke at the Southern Nevada Home Builders Association’s quarterly breakfast meeting Aug. 14 inside Cili at Bali Hai.
Officials with Lennar, Richmond American Homes and American West Development agreed market conditions are on the upswing, but the pace of development should stay slow in the near term because of an incomplete economic recovery, a sluggish permitting process, a lack of developable lots and general caution among builders.
“Everyone recognizes there will be a market. It may not be in 2015, but with all of the economic news coming out of Vegas, we can’t help but have something happen in 2016,” said Danny Welsh, vice president and sales manager of American West. “In 2016, we’ll start to feel the benefits of increasing gaming and taxable sales numbers, and we’re going to hit 41 million tourists. Las Vegas is definitely moving in the right direction.”
What’s more, new resorts — think SLS Las Vegas, which opened Aug. 23, and the planned Resorts World Las Vegas — typically mean new jobs. And where there are new jobs, people need homes, panelists said.
Building those homes will require first finding land, and then getting it entitled for construction.
First, about that land. It’s out there, especially when the federal government is willing to make it available. Witness the nearly 520 acres the Bureau of Land Management plans to auction Dec. 2. The scheduled sale reflects that “the scramble for land is at a height right now,” Welsh said.
But not all builders plan to bite. That’s because 2013’s big run-up in land prices — they doubled to around $400,000 an acre — has many companies in a careful mood.
“Things went up on a crazy basis, but from a public-builder standpoint, everybody is cautious with the big shoot-up,” said Brian Kunec, division president of Richmond American. “We’re just cautious in making sure deals are right. We don’t want to go long in land, like in the good, old days, and have a correction. The cautious approach might be leading to some deal fatigue.”
Then there’s the entitlement process, which makes it tough to quickly develop what land builders hold.
Panelists agreed that cities and counties are taking it a little slow on permitting.
“Municipalities are getting caught up on their staffing to handle the volume of work coming through, and that’s creating a little bit of a bottleneck,” Lennar Division President Jeremy Parness said.
So expect it to take a while to push annual, local new-home permits back into the five-digit range. Builders across the Las Vegas Valley are on track to pull 7,000 permits in 2014.
It could be two to three years before the market hits 10,000 annual permits. And that would still be less than a third of the 35,000 or so permits pulled annually during the boom.
Today some of the biggest promises of development are in master plans that were put on pause during the downturn, but are finally coming back to life.
Lennar and Richmond American are set to build in Cadence, a 2,200-acre master plan The LandWell Co. is building in southeast Henderson. Inspirada is also back on track, and Skye Canyon, the former Kyle Canyon development in northwest Las Vegas, is set to open models in 2015.
Lennar is also betting on a project that’s been consistently more successful. The company plans to build Linden Ridge, a high-end neighborhood at Southern Highlands in south Las Vegas.
Builders say there’s definitely demand for new product: American West is holding lotteries to deal with high interest in its Jones Crossing community near Jones Boulevard and Warm Springs Road, Welsh said. Prices there range from $261,000 to $315,000.
American West expects to deliver three new communities a year, as well as 4,000 homes marketwide in the next five years, Welsh added.
In general, builders said, the industry has a more sustainable future than it did a decade ago.
“There are a lot of positive things happening in Vegas now. I think the city is poised to grow, but on a healthy and smart basis,” Kunec said. “There won’t be any ‘funny money’ out there, which is a great thing.
“There’s nothing wrong with steady growth. The market has stabilized. It’s not going to shoot way up, but will grow on a consistent, healthy basis.”
■ Brokers with Colliers International completed a recent office sale.
Eric Molfetta represented Margaret Lansa in her $500,000 sale of a 5,210-square-foot property at 3834 Silvestri Lane. Jackie Vickers represented the buyer, Kris Sieradski.
Contact reporter Jennifer Robison at email@example.com. Follow @J_Robison1 on Twitter.