Wednesday, March 05, 2003
Copyright © Las Vegas Review-Journal

Even as land prices rise, housing market stays hot

North Las Vegas was the hot spot last year in terms of home builders buying land, Home Builders Research President Dennis Smith said Tuesday. Photo by Jeff Scheid.

As long as Las Vegas maintains positive employment numbers and in-migration, land and housing prices will continue to rise, a local housing expert said Tuesday.

The valley remains one of the nation's hottest housing markets, even as land prices creep to $200,000 an acre and new home prices jump 8 percent a year, said Dennis Smith, president of Home Builders Research.

That's because Las Vegas is getting 6,600 new residents every month and job growth was 2.8 percent in 2002, Smith said at his annual Las Vegas Housing Outlook, which drew about 500 people to the Stardust.

"We gained 25,000 jobs year to year while the rest of the nation was losing jobs," he said.

Smith tallied 22,500 new-home sales last year, down slightly from the previous year, and 38,621 existing-home sales, up 12.2 percent.

The top 10 builders in Las Vegas accounted for 11,867 new home sales last year, or 52.7 percent of the market share, led by KB Home with 2,959 sales.

"Show me another market in the United States with under 2 million population and five builders selling 1,200 homes," Smith said.

North Las Vegas was the hot spot last year in terms of home builders buying land, he said.

"It's basically sold out up there where the beltway is finished. There's still some lots available, but not much. KB's all over North Las Vegas, then you have Richmond American out by the pig farm with a big piece they're working on. You've got Pardee, Beazer, Stanpark. It's crowded up there."

That area will boost residential permit activity in the next couple of years and home buyers can expect to see prices go up $10,000 easily because of the prices being paid for land in North Las Vegas, Smith said.

Henderson had the highest median new home price in the valley at $195,990.

"They used to be called Hooterville. Now they want to be Yuppieville," he said. "I heard they're changing their ZIP code to 90210."

Real estate brokers were hoping to see land prices stabilize with the release of 27,000 acres under the Southern Nevada Public Land Management Act. Congress recently added 24,000 acres to the disposal boundary.

That won't happen, said Richard Lee, public relations director for First American Title.

Only a major downturn in the economy would cause land prices to drop, he said.

"The current climate is not going to change. You're still going to see affordable housing disappear as land disappears," Lee said. "We think land prices are going to stay like they are and go up."

With 5,500 acres being absorbed each year by home builders, the supply of residential land will run out in about 12 years, Smith and Lee have calculated.

Klif Andrews, vice president of community development for Pardee Homes in Las Vegas, said builders are counting on new home price appreciation to make land deals work.

"It depends on the part of town. In the southwest, we're right on the cusp of affordability," he said. "If I can't continue to raise prices, then it doesn't work out for me."

Andrews said he's paying about $125,000 an acre in North Las Vegas, which is still expensive compared to what Pardee paid for its Eldorado community.