Updated November 17, 2023 - 7:21 pm
Despite the roller coaster ride Southern Nevada’s real estate market has been on since the start of the pandemic, one sector has remained relatively steady: construction of single-family attached and detached homes.
Amanda Moss, senior director of government affairs for the Southern Nevada Home Builders Association, said there is a new world the real estate market lives in since the pandemic.
“This market is ever changing and ‘not normal’ is our normal,” she said. “Since COVID, we have seen a relatively stable market of at or slightly above 11,000 permits (per year). Despite a much higher demand, skyrocketing population growth, and incredible economic development, given all our challenges, our industry is resilient.”
The Southern Nevada area, which encompasses the Las Vegas Valley, Pahrump, Mesquite and Boulder City is on pace to build approximately 11,000 new homes this year, which would be a slight drop from last year’s number of 11,225, according to data from the Home Builders Association. Projections are for 11,500 new builds in 2024, continuing a steady trend in the market. There was an increase in builds during 2021, when 14,300 homes were completed, but comparing that to the wild volatility before makes that jump look like a blip.
Back in 1991, Southern Nevada saw 11,146 homes built, a number that shot up to 19,784 in 1996 and 21,162 in 1999. The record year for new home builds appears to have been 2006 when 36,000 homes were constructed heading into The Great Recession, a number that dropped all the way to 3,894 by 2011. The market then crawled back to normal by 2018 when 11,050 homes were built.
While Las Vegas real estate sales are on pace for its worst year since 2008, Jonathan Catalano, a Realtor with ERA Real Estate said the resilient new build industry has been a lifeline. He pulled data regarding new build sales from multiple sources and estimates Southern Nevada has completed 9,200 new construction sales through October, which is about a 10 percent drop from 2022.
“So I would say about 35 percent of all our sales this year have been new construction,” he said. “Which is a pretty big number. And I think the reason is two fold, one there continues to be a lack of quality inventory in the resale market, and then when it comes to new construction, there are a lot of options when it comes to lenders and there are also a lot of master-plan communities to choose from and retirement communities.”
Catalano said virtually all new build construction companies now have mortgage lender arms and are able to offer buyer concessions in the form of paying down interest rates or cash back to help with closing costs. He said this has kept the market moving during tough times. He said the overarching challenge remains though, many people bought during rock bottom interest rates after the onset of the pandemic, and they are hesitant to leave their homes and their rates behind.
“The Feds did what they had to do to get inflation under control,” said Catalano, “they did what they had to do by raising rates, and that was quite frankly the logical thing to do and a normal course of action.”
Home Builders Research President Andrew Smith said he considers the Las Vegas Valley new build market “healthy,” adding “given all of the difficulties in the market right now, things are looking just fine.”
Nearly a third of all of the homes for sale in the third quarter across the US are new builds, according to Redfin, an online real estate brokerage. This is the highest share of the market in history, and also a 28 percent increase from this time last year.
Brian Gordon, a partner at Applied Analysis who works with the real estate industry, said supply and demand continue to impact the market locally.
“While recent resale market conditions have largely been a function of elevated interest rates and limited inventory, the new home segment has provided capacity in response,” he said. “Prospective home buyers have faced challenges identifying and acquiring quality product in the resale market. As such, many have migrated to the new home segment, opting to wait for a new build or purchase a nearly completed property.”
A Redfin report from October showed more than a third of all home sales in the US are now coming with some type of concession. That number jumps to half in Las Vegas, the report states.
The report also noted this phenomenon could be even more prevalent if there wasn’t a supply pinch going on.
“Concessions would likely be even more common today if it weren’t for historically low housing inventory, which is fueling competition in some areas,” the report stated. “Inventory is tight because many homeowners are reluctant to put their homes on the market since selling and buying another house would mean giving up their ultra low mortgage rate.”
Contact Patrick Blennerhassett at firstname.lastname@example.org.