Wednesday, November 19, 2003
Copyright © Las Vegas Review-Journal

Local housing market still hot in October

New home sales up 20.5 percent from previous year

Las Vegas continues to put up the kind of numbers that make it one of the hottest housing markets in the country, said Dennis Smith, president of Home Builders Research.

He counted 2,195 new home sales in October, a 20.5 percent increase from the same month a year ago.

The number dropped by 400 from September when there was a rush to beat the increase in the real estate transfer tax that took effect Oct. 1.

Through 10 months, total new home sales are at 20,072, compared with 18,368 a year ago.

The median price of a new home is up 13.2 percent to $206,852 in October.

There were 4,411 sales of existing homes in the month, bringing the year-to-date total to 40,902, a 26.5 percent increase from last year. Median price of a resale was $172,000, up 11 percent.

Builders pulled 1,852 new home permits in October and the total for the year is up 12.6 percent to 20,738, a good indication of forward supply.

Smith said the biggest news in the local home building industry was the Nov. 6 Bureau of Land Management public auction.

Pulte-Del Webb bought 480 acres for $66.5 million and Kimball Hill Homes bought 115 acres for $28.4 million.

It was the no-bid action on 1,940 acres west of Henderson that stunned everyone.

The land was appraised at $250 million, or $128,865 an acre, which is a fair price in today's local market.

However, an estimated $225 million in needed infrastructure and engineering costs, along with a requirement from the city of Henderson that nearly one-third of the land be designated as open space, killed the deal, Smith said.

"Possibly the final straw that pushed the price of this parcel out of reach of the bidders was Henderson's intent to include something called `inclusionary zoning' in the development agreement," he said.

The zoning, which is new to the Las Vegas Valley, would require at least 10 percent of the lots in each new residential community to be designated as affordable housing, with the definition of "affordable housing" tied to Henderson's median income.

Other cities that have incorporated similar zoning include Boston; Boulder, Colo.; Cambridge, Mass.; Davis, Calif.; Denver; Irvine, Calif.; Sacramento, Calif.; and Santa Fe, N.M.

"Before this is forced on the development community by Henderson, it seems a little more discussion and analysis would be prudent," Smith said. "This sounds like a drastic measure and could be a nightmare to implement and regulate."

Smith said it sounds as if 90 percent of the homeowners in a new community would be subsidizing the other 10 percent.

"We believe that the ringing silence by developers for the 1,940-acre parcel was a message to the entities, the BLM, land speculators and everyone else that the price of finished lots has reached the upper limits and there is a limit to what the market can tolerate," he said.