Las Vegas land prices slip further

Las Vegas is seeing a shift in land owners as prices continue to decline, a quarterly market report from Applied Analysis business advisory firm showed Wednesday.

Excluding resort property, vacant land prices slipped to $154,700 an acre in the second quarter, or $3.55 a square foot, down 15.2 percent from the previous quarter and down nearly 40 percent from a year ago.

For the first time in several quarters, traditional "arm's length" transactions outpaced lender-owned sales, Applied Analysis reported. Sales volume jumped significantly during the second quarter to 346 parcels totaling 742.7 acres, a level not seen since first quarter 2007.

About 68 percent of the land was transferred through a traditional sale during the quarter, a sharp turnaround from nearly 75 percent of transactions that involved a trustee or lender in the first quarter.

Land prices have depreciated 83.5 percent from their peak in 2007, largely a result of oversupply in residential and commercial buildings.

Significant price declines in residential and commercial product have rippled through raw land, bringing price points to levels not witnessed since late 2002, Applied Analysis principal Brian Gordon said.

"The current outlook also suggests that these external forces will not likely fully recover for several years," Gordon said in the report. "With limited exit strategies for land owners, a depressed land value environment is expected to continue for some time."

Applied Analysis project manager Jake Joyce said elevated vacancy in retail, office and industrial sectors is undermining any chance for near-term appreciation for raw land, whether it's being held for speculative investment or is planned for specific use.

Southern Nevada's 14.5 percent unemployment rate indicates that businesses have yet to invest in human capital, Joyce said. That won't occur until the broader economic recovery, which will be followed by investment in physical assets, including property, he said.

The only resort corridor transaction recorded in the second quarter was a 2.2-acre parcel at Las Vegas Boulevard and Harmon Avenue that was sold by Clark County to BPS Partners for $25 million, or $11.6 million an acre.

The site, within walking distance to CityCenter, is planned for a 100,000-square-foot retail center anchored by Walgreens.

Las Vegas land investor Wayne Leposavic said he's waiting to see when land prices change direction and start appreciating.

"No investor should want to buy something that is going down with no ending in sight," he said. "Improved properties like residential must first move upwards before the land goes up. That didn't happen yet."

Michael Brunson of Ascent Appraisal said he provided a client with basic trend information about half-acre custom residential lots dropping from $15 a square foot to about $4 a square foot in the past year and the inventory of land being at nearly a six-year supply.

"He was discouraged," Brunson said. "He'd bought above $15 a foot."

Banks are hesitant to lend money for raw land right now, which is hindering both residential and commercial development, he said.

Housing analyst Larry Murphy of Las Vegas-based SalesTraq said he's seeing more activity among homebuilders looking for finished residential lots, or lots that are ready for vertical construction. KB Home has been actively buying lots, while Centex sold 532 lots in the master-planned Ardiente community in North Las Vegas to Shea Homes, he said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.