Water, lower prices help bedroom communities thrive
BY TONY ILLIA
An hour commute was once considered outrageous here. Today, it seems normal.
Many locals already spend that much time on the Las Vegas Beltway every day. Home builders are now betting big that residents will add to their drive time for a larger home and better lifestyle. Outlying rural towns, as a result, are rapidly becoming bedroom communities to the Las Vegas Valley.
A rural commute offers certain advantages. Home buyers, for instance, can get a larger residence with a bigger yard. Many newer Las Vegas homes are three-level, detached structures on tiny lots. The building footprint often leaves no space for a front or backyard. But rural communities like Pahrump, Mesquite and Coyote Springs offer single-story homes on up to quarter-acre lots.
Clark County is caught in a severe drought. Lake Mead, the valley's primary water source, has dropped 95 feet during the last seven years. The county, in response, has banned new golf course construction. Golf course homes consequently sell for a premium.
Rural communities, by contrast, don't face similar water-related dilemmas. Mesquite, for example, draws water from the Virgin River as opposed to the Colorado River like Las Vegas. Pahrump is in Nye County and Coyote Springs is largely located in Lincoln County. Unlike Clark County, all three areas have plentiful water supplies.
Besides water woes, dwindling land supply for housing is driving up prices and shrinking lot sizes, all while workers' income growth has slowed.
"The Las Vegas economy remains relatively healthy with strong job growth," said John Restrepo, principal of Restrepo Consulting Group, a Las Vegas-based economic research firm. "However, incomes and salaries have remained relatively flat for the last 10 years, after being adjusted for inflation."
Median new home sales prices were $317,341 in the first quarter of 2007, reports Home Builders Research, a local residential analyst. Home prices, by contrast, were $161,893 or about 49 percent less in 2000. Yet, median household incomes are only $53,111 per year, according the Las Vegas Perspective survey.
A rural residence for many working class Las Vegans offers the only opportunity to own a piece of the American dream. Coyote Springs is an example of one such opportunity for buyers.
"Coyote Springs is the largest privately held property approved for development in Southern Nevada," said Kilf Andrews, Pardee Homes vice president of community development. "With rapidly escalating prices in the Las Vegas Valley, we see this as an opportunity to build homes in an attractive and well-appointed golf course community, yet still offer an excellent value."
Affordability plays a large role in shaping emerging bedroom communities for buyers and builders. Rising costs are making it increasingly difficult for builders to make new developments within the metropolitan area work financially.
Vacant valley land prices, for instance, averaged $793,000 per acre in the first quarter or 13.2 percent more than 12 months ago, reports Applied Analysis, a Las Vegas business advisory firm. And that figure climbs to a 31.2 percent annual price appreciation when Strip resort deals are excluded.
Sparsely populated areas can make for more hospitable environments, with fewer taxes as well as fewer restrictions and encumbrances. Rural officials often welcome financial investments into their community, especially when it means higher property values and new job growth.
Pulte, Pardee and William Lyon Homes, are three national publicly traded builders, combined for more than 4,000 local new home sales last year. All three are developing new master-planned communities in outlying rural towns. Their entrance into rural markets could signal the future of housing in Southern Nevada.
"We chose to develop in Mesquite primarily because of what the land offered us," said Steve Wethor, president of Pulte Homes' Las Vegas North Division. "We began looking in outlying markets because the price of land in the Las Vegas Valley has become so high that it is not economically feasible for us to develop large active adult communities in Las Vegas at this time."
Anthem Mesquite is offering new homes priced 20 percent to 30 percent less than comparable residences in the Las Vegas Valley. It has single-story, two- and three-bedroom homes from 1,241 to 3,116 square feet in size. Anthem Mesquite is building homes on 812 acres or 50 percent of the total acreage. Las Vegas, however, now packs up to 14 homes per acre with zero-lot lines. Anthem Mesquite, however, will have a 32-acre regional park and four miles of hiking trails.
William Lyon Homes bought the Mountain Falls master-planned community in 2004. The project was originally envisioned by the late developer E.A. Collins, who was forced to file bankruptcy amid financing woes. William Lyon now plans to build up to 3,200 residences at the site.
"There's a tipping point when home buyers will drive that extra distance for a larger lot and bigger home that's 40 to 50 percent cheaper," said Terry Connelly, William Lyon's vice president of Nevada operations.
"It really comes down to a lifestyle question that buyers ask themselves. I believe Pahrump will be a major contributor to the Las Vegas housing market over the next five to 10 years."
Thirty percent of Coyote Springs lies inside Clark County, while 70 percent is in Lincoln County. Although the initial development is occurring in unincorporated Clark County, Whittemore owns enough water rights to start development. Coyote Springs could have up to 85,000 homes upon build-out.
"This is going to be a different place to live for young trailblazing families," said Jim Rizzi, Pardee's community development director. "We are forecasting that sale prices will be 20 to 30 percent below a comparable community in North Las Vegas."
Fewer than 4,000 people now live in Lincoln County. Whittemore predicts the development will produce $100 million a year in tax revenue for every 40,000 homes constructed.
"As valley home prices continue to escalate, people could soon be forced to commute in order to have a better lifestyle," Restrepo said. "Unless more affordable housing occurs as a result of improved BLM land auction processes and added developer incentives, places like Mesquite, Pahrump and Coyote Springs will become popular alternatives for work-force home ownership."
This story first appeared in the Business Press. Tony Illia is a freelancer who writes for the Review-Journal's sister publication and can be reached at tonyillia@aol.com or at 303-5699.
DOWN THE ROAD A BIT
MESQUITE
Pulte Homes began sales this summer on a 1,600-acre master-planned community called Anthem Mesquite. It will consist of 3,411 home sites built around an 18-hole golf course. The development will increase Mesquite's home inventory by 50 percent.
Pulte, Las Vegas Valley's fourth-largest builder in 2006, is hoping home buyers will follow them to Mesquite. The city, 80 miles northeast of Las Vegas, had only about 18,012 residents in 2006, though that number is expected to grow by 23 percent during the next few years, according to city officials. Las Vegas' high living costs will be a key catalyst to growth, many predict.
COYOTE SPRINGS
Pardee Homes and developer Harvey Whittemore are betting on people's desire to commute for more reasonably priced, larger homes in a lushly landscaped setting. The developers are constructing a 43,000-acre, master-planned community in Coyote Springs, 50 miles north of Las Vegas. Pardee, a unit of Weyerhaeuser Real Estate Co., is the project's master-plan developer. In 2006, Pardee was the Las Vegas Valley's sixth-largest builder with 1,520 new home closings.
The 3,000-acre, 10,000-home initial phase calls for five distinct villages, with the first units to open in the first quarter of 2008. It will have a 17-acre recreational lake, with up to 16 golf courses, including one designed by Jack Nicklaus, plus commercial and retail developments. Residences will be single and double stories from 1,100 to 4,500 square feet.
PAHRUMP
William Lyon Homes has already found success with its 1,050-acre Mountain Falls master-planned community in Pahrump, 60 miles west of Las Vegas. Single-family detached homes from 1,429 to 2,897 square feet are priced in the upper $100,000s to the low $200,000s. Residences, which surround an 18-hole golf course, have access to elaborate water features, otherwise impermissible under Clark County's drought restrictions. Pahrump has a population of about 33,000 people with a 4 percent annual growth rate.
-- Tony Illia, tonyillia@aol.com | 303-5699
