Tuesday, December 03, 2002
Copyright © Las Vegas Review-Journal

New-home median price rises

Soaring prices for land continue to drive cost of housing upward

Construction continues Monday on KB Homes in Summerlin. Rising land prices continue to drive up the valley's median home price. Photo by Steve Andrascik.

The median price of a new home in Las Vegas rose nearly 7 percent in October to $182,670, compared with the same month a year ago, Home Builders Research reported.

That's down from a high of $183,456 in August.

It probably won't reach $200,000 by the end of the year, as some experts had predicted, but as the price of land continues to escalate, home buyers will have more difficulty finding affordable housing.

"We do not perceive any change in the trend of rising land prices," said Dennis Smith, president of Home Builders Research, which tracks the local housing market. "Just compare what was paid for the BLM land at their (Nov. 15) auction with the earlier auctions."

The Bureau of Land Management sold 1,130 acres at an average of $159,455 an acre, an 80 percent increase from the $88,550 average a year ago.

"It makes us wonder what the prices will be for the upcoming BLM land auctions," Smith said. "The trend sure doesn't appear to be helping the supply of new affordable housing projects."

New home sales, buoyed by low interest rates, have remained strong, though the yearly totals are falling short of last year.

Smith counted 1,821 new sales in October, down from a monthly record of 2,227 in October 2001. For the year to date, there have been 18,368 new home sales, a 2.1 percent decrease from a year ago.

"Will we beat last year's record of 22,940? It will be very close, too close to call," he said.

"And it really doesn't make a hill of beans difference if we do beat last year's record. The important fact is that the new housing market in Las Vegas has been able to keep this pace in the face of many uncertainties that presently exist in the nation and in the world."

There were 3,540 sales of existing homes in October, bringing the year-to-date total to 32,337, a 10.7 percent increase from the previous year. The median price of an existing home is $155,000.

One number worth noting is the 2,261 new home permits pulled in October, almost 400 more than September. For the year, permits are down less than 1 percent.

Looking at land transactions, Smith reported that William Lyon Homes, Pulte, Woodside and KB Home all paid upward of $202,000 an acre for parcels in The Vistas, the hot new development in Summerlin.

Juliet Properties, a successful builder of condominium projects in the valley, purchased 11 acres at the BLM auction at an average of $109,000 an acre. The land is in the south submarket, around Eastern Avenue and Pebble Road.

"As the supply has tightened, the price per acre has risen at an incredible pace. We believe that currently there are few land deals that are in escrow for under $200,000 to $250,000 an acre," Smith said.