Las Vegas homebuilders are off to a heated start this year, helped by the improved economy and shortage of resale listings, says a new report.
But the burst in business also raises affordability concerns as prices keep rising in the valley’s tight housing market.
“As one of the major local lenders told us this week, ‘It’s like a frenzy … people are really scared about being priced out of the housing market,’” says the Home Builders Research report, released Monday.
Builders closed 636 new-home sales in Clark County last month, putting the year’s tally at 1,343. That’s up 11.8 percent from the same two-month period in 2017, according to the Las Vegas-based housing tracker.
The median sales price of last month’s closings was $359,555, up 10.5 percent from a year earlier and the second-highest monthly median recorded by the company in its 30 years tracking the local housing market.
Builders also pulled 987 new-home permits in February, bringing the year’s sum to 1,894, up “an incredible” 42 percent, the firm reported.
The sales tally is one of “the strongest we have seen since 2007” – just before the market cratered – “for this early in the year,” Home Builders Research President Andrew Smith and founder Dennis Smith said in the report.
They added that the “intimidation” of rising mortgages rates and prices, a strong economic rebound, the rising population and the tight inventory of available resales are all occurring together.
The tight supply of resales has frustrated many house hunters and “definitely helped new-home sales,” they wrote, adding they don’t expect a sudden rise in availability, especially for homes priced under $300,000.
The bottom line, they wrote, is that “the affordability issue in Las Vegas is more unmistakable” and “there is nothing on the horizon that can improve” it.
In the San Francisco Bay Area, by comparison, home prices are so high that locals talk of a crisis, and people are leaving in droves. Despite its enormous supply of tech jobs, but amid sky-high rents and sales prices, the Bay Area leads the U.S. in net outward migration, according to a report last month from home-listing service Redfin.
That’s not the case in much-cheaper Las Vegas, which Redfin ranked No. 3 for inbound migration.
Last year, Clark County added more new residents than almost any other county in America, according to newly released U.S. Census Bureau estimates.
And, as the Smiths noted, there is a solution to the valley’s rising prices that doesn’t involve moving away and disrupting your life.
But it could deal a blow to builders trying to sell big houses.
Buyers looking for a place under $300,000, the Smiths wrote, “may have to ultimately accept smaller homes.”