Tight supply limits sales of high-rise condos in Las Vegas


Sales of high-rise condos declined in the third quarter because of a limited supply of lower-priced units, with very few bank-owned properties on the market, Marc Ehrlich of Las Vegas-based HiRiseLiving.com said.

Condos in the process of foreclosure now represent less than 3 percent of the overall market, Ehrlich said.

Foreclosures are at their lowest point since 2007, down 90 percent from their peak.

He reported 229 sales transactions in the third quarter, excluding CityCenter, a 3.8 percent decrease from 238 in the previous quarter.

Sales fell 28 percent from a year ago.

Third-quarter sales volume totaled $66.3 million, compared with $68.7 million in the second quarter and $65.9 million in the year-ago period.

"I think the market is reasonably strong," Ehrlich said. "There's just not enough product for buyers to get their hands on, which bodes well for prices. People are willing to pay more, and traditional resales aren't getting hammered as much because they're not competing with distressed sales."

HiRiseLiving.com showed a current available inventory of 5,655 condo units, including 51 bank-owned units and 125 units currently in default.

Banks are slowing down foreclosures and short sales, resulting in fewer units being offered at attractive prices, the condo market analyst said. Available units that are priced well move extremely fast, he said.

Highest average price was $329 per square foot for condo-hotel units, up 1 percent from the previous quarter. The south Strip market showed the largest increase of 7 percent, with an average price of $103 a square foot.

Some high-rise buildings are starting to show more stability with the number of condos that are "underwater," where the mortgage balance is significantly higher than the current value of the unit, Ehrlich said.

A recent ruling by the Nevada Supreme Court validated the Mortgage Electronic Registration System, or MERS, which favors lenders and could lead to an uptick in foreclosures, he said.

"It could be backlogged, but we've been hearing about that for so long," Ehrlich said. "It could be a function of underwater properties and existing owners that are going to ride it out."

A third-quarter luxury condo market report from Las Vegas-based Northcap showed 245 sales transactions, including 90 condo-hotel units.

There were 493 sales in the past 180 days and 1,087 sales in the past 12 months.

A breakdown by property showed Signature at MGM with the most condo-hotel sales at 41, while the Martin (formerly Panorama North) had the most traditional condo sales at 29.

The average price for all condos sold in the third quarter was $262,963, or $180 a square foot, Northcap reported. For condo-hotel units, it was $196,291, or $260 a square foot.

Matt Brimhall, sales and marketing director for the 1,282-unit Trump tower on the Strip, said he closed 15 transactions in October, about one every other day, at $500 to $600 a square foot.

"I think that our brand and amenities are the key," Brimhall said. "The fact that they can come and go as they please, yet still lease it out when they're not here is a huge plus. These buyers from international destinations, they trust the brand.

"Owning at Trump is the ultimate status symbol for many of them."

John Tippins, chief executive officer of Northcap and regional manager for ST Residential, said he's seeing increased demand for living in downtown Las Vegas.

The Ogden is 98 percent occupied, and Juhl has signed 40 lease agreements in the past 30 days, he said.

"It's unbelievable. We thought we'd lose some people from Ogden to Juhl. There really is no inventory downtown. As fast as they become available, they're getting leased right away," Tippins said.

Tippins said he signed seven letters of intent for live-work space at Juhl, or residential units above retail stores, something that hasn't been successful in other markets.

Most of the condo resale inventory has been purchased has been put back into the rental market, he said.

"People have bought foreclosures and short sales at close to the bottom. They bought them right," he said. "As foreclosures slowed down, people that bought now aren't stuck. The investor that comes in and buys at $200 a foot typically paid cash, so they're not forced to sell. You don't have the competition that the garden-style (condo) has."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

TOP-SELLING CONDOS IN LAS VEGAS

Condominium Sales Average price Price/sq. ft.
Signature at MGM 41 $184,005 $303
Trump 33 $249,072 $431
The Martin 29 $369,997 $288
Turnberry Place 17 $364,306 $172
Palms Place 14 $182,544 $238
Allure 14 $230,464 $188
Sky Las Vegas 12 $225,822 $183
Park Avenue 10 $114,496 $104
Panorama Tower 2 9 $293,889 $194
Data from the third quarter of 2012
SOURCE: Northcap
 

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