With higher land prices making single-family houses less affordable, Las Vegas builders are cramming sites with more units by putting up condos and townhouses.
Such homes typically sell for less money, but one builder getting in on the condo action is a luxury developer that doesn’t sell cheap.
Toll Brothers has revived the once-bankrupt Mira Villa complex in Summerlin and restarted its Fairway Hills project, also in Summerlin, which it shelved when the economy crashed.
The Pennsylvania-based builder bought the remaining 10 acres of vacant land at Mira Villa a year ago. It plans to open its sales office this month and finish its model units in about a year, said Toll group president Gary Mayo, who oversees Las Vegas operations.
Toll plans to build 103 condos at the half-finished project. According to its website, prices start in the $500,000 range.
Meanwhile, Toll built 30 units at Fairway Hills before the market tanked and now plans to build 99 more, Mayo said. Prices start at about $682,000.
By comparison, builders’ median sales price of attached homes in Clark County in June was $289,900, according to Home Builders Research.
Mayo sat down with the Las Vegas Review-Journal recently. The interview was edited for length and clarity.
Home Builders Research reported that the market’s share of condo and town house sales has jumped in the past year. I know there used to be a lot more of this construction in Las Vegas, but why do you think there is an uptick?
It’s just pure economics. As land prices continue to escalate as quickly as they are, land being one of the biggest components of the sales price of a new home, you’re starting to price certain segments out of the market if you build single-family houses. So the only way you can reduce that land cost is to increase the density of units.
This type of construction is a lot more common in other big cities, but there’s been very little in Las Vegas for the past several years.
You’re correct, but if you look back at ’05, ’06, there was a lot of attached product being built, again for the same reasons. Land prices forced the increase in density. And then, of course, during the downturn, there was not much, if any, built. There wasn’t the need for it.
Would you look to build another attached-home project?
Absolutely. We’re looking at some land deals right now where potentially we could build some housing priced below $400,000. So far it hasn’t played out, but we’re working on it.
Overall, what do you see as the strengths and weaknesses of the valley’s homebuilding market?
I think the biggest plus is the employment drivers aren’t limited to one industry, gaming. There’s a lot of different types of industry coming to Vegas that we didn’t have previously. The things that keep me up at night are the prices of land, labor and materials. If you combine those, it’s very difficult to keep pace with the sales momentum.
Is the construction labor shortage making it take longer to finish a project or pushing your costs up?
It’s pushed costs up. Luckily we’re able to raise prices more than costs are increasing, so from a financial aspect, we’re fine. It has added somewhere between 30 and 60 days to the time frame to complete a house. But it’s manageable. I can’t say that it’s easing, but I also don’t think that it’s getting any worse.
Contact Eli Segall at email@example.com or 702-383-0342. Follow @eli_segall on Twitter.