BLM auction shows confidence in Vegas housing market

A strong response to a recent federal land sale is being seen as an indicator that the Las Vegas real estate market is still on the upswing despite slowed growth in home and land prices.

The Bureau of Land Management auctioned hundreds of acres across southwest Las Vegas on Tuesday, drawing bids from more than a dozen parties. In a reflection of sustained demand for new homes, some of Southern Nevada’s best-known builders — plus a 20-something local upstart — jumped into the fray.

The auction showed “confidence in the market,” said John Restrepo of research firm RCG Economics.

“Yes, the housing market is not going gangbusters like it was six months ago, but there’s stabilization and a shortage of well-located land in the valley,” Restrepo said. “We are a land-constrained market in many ways. These folks have enough confidence in the market that they will invest at the right price.”

GROWING INTEREST

Tuesday’s auction of 516 acres was the biggest local offering since November 2005, when the agency sold off nearly 3,000 acres. It bested the 440 acres the bureau put on the block in January, when it held its first land sale since the recession.

The latest auction was not only bigger, but more successful. Only 160 acres actually sold in January. But on Tuesday, the bureau sold 415 of its 516 available acres, raising $49.7 million — or double January’s $24 million.

Auction proceeds go to Nevada’s education fund, the Southern Nevada Water Authority, public parks and the purchase of environmentally sensitive land.

Homebuilders and developers dominated Tuesday’s bidding, unlike in January, when individual investors were just as well-represented.

Auction stalwarts American West Development and Lewis Investment Co. of Nevada were repeat customers. American West added 37.5 acres it bought for $10.9 million to the 27.5 acres it purchased for $3.3 million in January, while Lewis bought 48.5 acres for $10.1 million, a big increase from 21 acres for $2.5 million in January.

But Tuesday’s go-round also reeled in Pardee Homes and DR Horton, two big builders absent in January. Pardee spent $1.15 million, or $171,000 per acre, on 10 acres at Valadez Street and Camero Avenue. DR Horton took a 7.5-acre plot at La Cienega Street and Starr Avenue and a 5-acre site at Gilespie Street and Neal Avenue. The company spent $2.5 million, or $178,000 t0 $302,000, per acre.

DR Horton wanted more land but fell short in a bidding war with American West for a 15-acre parcel near Wigwam Avenue and Rainbow Boulevard. The two went 40 rounds, running up the price to $6 million, or $400,000 per acre.

Larry Canarelli, American West’s founder, said the parcel was hot because it was the only one properly sized, zoned and “ready to go” for housing. Canarelli said American West will build 100 homes on the site. Other purchases adjoin the company’s existing holdings, allowing allow the builder to “revise the neighborhoods we’re in and make them better-planned,” he said.

Tomblaine Associates LLC, a company belonging to Canarelli and Southern Highlands developer Garry Goett, bought the biggest chunk of land, a 160-acre parcel at Jones Boulevard and Starr Hills Avenue. The property, adjacent to Southern Highlands, went for $5.15 million, or $32,188 per acre. Canarelli said the low price reflects “topographical” issues and millions of dollars in needed infrastructure improvements. The developers plan to make the parcel part of Southern Highlands.

Also buying several parcels was Mosaic Land Fund Two LLC, a partnership of brokers with Colliers International. The fund bought 22.5 acres for $4.74 million, at prices ranging from $155,000 to $237,000.

But perhaps the most unconventional buyer was Ramak Roohani, a 21-year-old Bishop Gorman High School soccer star just four years ago. Roohani spent $800,000 on five acres at Cougar Avenue and Edmond Street, adding to the 27.5 acres he bought for $4.23 million at the bureau’s January auction.

Roohani’s father, Khusrow Roohani, took the call when the Review-Journal called the family’s Seven Valleys Construction firm in Summerlin.

Khusrow Roohani said his son wanted the five acres he bought Tuesday to go with a 12.5-acre parcel the he and his son already own to the south. Both properties are zoned residential, though half of Ramak’s newest purchase is entitled at just two units per acre. Khusrow Roohani said the partners hope to see that raised to the eight units per acre allowed on the rest of their land.

Asked where his college-age son got millions of dollars to buy property at he auction, Roohani said he earned the money handling land investments for Seven Valleys.

MORE TO COME?

Whether there’ll be more investment opportunities through the Bureau of Land Management is uncertain. Property comes on the block after municipalities nominate it for sale, usually because a developer or investor has expressed interest.

Canarelli said above-average local household formation rates and rising homeownership rates will probably mean more interest in any developable land the federal government can put on the market. The intense bidding over that 15-acre site proves the demand is there, he said.

Restrepo said “moderate” economic expansion will spur additional auctions, though growth threats he is eyeing include flat wages and a statewide jobless rate of nearly 16 percent if you include discouraged workers and the underemployed.

“I think we’re still in a tentative situation. We have good, decent growth in the economy, but it’s not vibrant,” he said. “We’re not necessarily going backwards, but we’re sputtering along. We’ve made great strides compared to three years ago, but I’m a little hesitant to say we’re booming.”

Khusrow Roohani, who also bought a 7.5-acre parcel Tuesday, said his family will “100 percent” be on board for future auctions, though his buys haven’t always paid off.

He spent $2 million on five acres in Kyle Canyon in 2005 but can’t sell it for $200,000 today.

“I don’t think that day (of boom prices returning) will ever come, at least not in my lifetime,” he said.

“If you bought land then, you will sit on it and just say, ‘I’ll leave it to my kids.’ If you have patient money, you can never lose. Then, it’s like the stock market.”

Contact Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.