March 27, 2022 - 9:02 am
The luxury segment of the market has led the way over the course of the last eight to 10 years in really moving away from our traditional Mediterranean red-tiled roof designs to the more simple, open and uncluttered designs featuring exposed metals and glass. As a result, the majority of the new luxury homes being built favor this desert contemporary style, diminishing much of the demand for the luxury resale homes of the Mediterranean style.
For close to 18 months, our inventory levels for single-family homes have registered at, or below, a month’s supply. As Matthew Mullin pointed out in his March 6 Real Estate Insights column, the month’s supply of inventory metric demonstrates that demand is outstripping supply by a wide margin. As such, an opportunity has come forward with many buyers/investors revisiting older luxury communities and transitioning them to more contemporary and modern designs.
This increase in activity not only expands inventory opportunities, but the renewed interest is revitalizing some of our older luxury communities, such as Spanish Trail, Canyon Gate, The Fountains and areas in the historic district. Despite the levels of pricing in the market at acquisition, these older communities still have enough room for buyers/investors to achieve significantly higher values once transitioned into the more modern design.
In years past, floor plans were compartmentalized with rooms for dedicated activities. Now, the newer desert contemporary homes offer more flexibility and utilization through open spaces. With the majority of construction in the valley utilizing trusses over load-bearing walls, the opportunity to open up many of these older homes is relatively straight forward. Some specialty contractors are focusing their efforts in providing transitional services to these luxury communities.
One example is the number of renovations taking place in the Red Rock Country Club. These homes are undergoing significant renovations and in turn setting new price records in the community. This also can be seen evaluating the luxury ($1 million-plus) homes sold, via the Multiple Listing Service in 2021, where 62 percent were 20 years or older, and 42 percent were built in the 2000s.
It is likely to be a matter of time for the architectural standards for some of these communities to become more accommodating to metal roof options and transitional modern styles on the exterior to closer match what is being done to the interiors.
While these market conditions will not last forever, they are having a positive effect for bringing about renewed interest in our older luxury communities.
Don Kuhl is a partner and managing broker for Corcoran Global Living.