January 15, 2021 - 12:17 pm
Updated January 29, 2021 - 12:34 pm
Led by Summerlin remaining No. 3, Las Vegas placed three master-planned communities in the top 10 national rankings in 2020 as buyers during the COVID-19 pandemic sought open space and refuge.
Summerlin, which celebrated its 30th anniversary in 2020, saw its sales rise 10 percent to 1,436 with a strong second half of 2020 in which it sold 24 percent more than in the final six months of 2019. It came in third behind two developments in Florida, one in The Villages and the other in Sarasota, according to rankings put out this week by national research and consulting firm RCLCO.
Kevin Orrock, president of the Las Vegas division of The Howard Hughes Corp., the developer of Summerlin, said when the pandemic shut down the economy and slowed sales after a strong start to the year he never expected such a big recovery and so soon. Sales were down 5 percent during the first six months of 2020.
“The recovery was phenomenal,” Orrock said. “It was the best year since the (Great) Recession, and it’s been impressive (to do that during a pandemic). I think 2021 is going to be a good year for Las Vegas and homebuilders on the residential side.”
Summerlin’s sustained performance throughout 2020 is due in large part to master-planned communities having proven to better hold their value during times of crisis when there’s historically been a flight to quality, Orrock said.
“The reprioritization of values triggered by the pandemic, the concept of home — and a quality work-life experience — has never been more important,” Orrock said. “Summerlin’s active, healthy lifestyle is the ultimate perk for both home and office. Particularly as Downtown Summerlin continues to expand its office offerings and capitalize on the national trend to move workplaces closer to home, more residents will enjoy shorter daily commutes, further enhancing overall quality of life.”
Summerlin wasn’t the only beneficiary of that trend.
There was a new entry to the annual list of 50 master plans as Valley Vista, a project of DR Horton in North Las Vegas that opened in 2018, emerged with a bang at No. 6 with 1,046 sales. It had 476 sales during the first six months of 2020 and 570 between July and December.
Cadence in east Henderson ranked No. 10 in the nation with 849 sales, a 13 percent increase over 753 in 2019. It was No. 9 in 2019.
Inspirada in west Henderson fell to No. 32 in 2020 after finishing No. 13 in 2019. It had 544 sales, down from 645.
Skye Canyon in northwest Las Vegas had 3 percent higher sales in 2020 with 472, which is 12 more than 2019. That didn’t stop it from dropping in the rankings from 28 to 46.
Experts’ take on Las Vegas housing
Karl Pischke, vice president of RCLCO, said in Las Vegas and elsewhere nationwide developers that had the inventory to meet the robust demand have prospered and those who weren’t as well-prepared did not keep up with a similar pace as in previous years.
This is the first time Las Vegas has had three master plans in the top 10 since 2007 when Mountain’s Edge was first, Providence fifth and Summerlin eighth.
“Having three master plans in the top 10 is an impressive feat,” Pischke said. “It’s a testament to Vegas — a market that’s attracting a sizable volume of new households despite the pandemic, and it will be interesting to see how this progresses moving forward.”
Pischke said Summerlin did a “great job and had a great year” and it and others were able to meet the demand.
“The ability of Vegas to provide attainably priced new housing to meet that demand is going to contribute to success and have a similar number of master plans within the top 50 and top 10 in the coming years. How we move out of this pandemic and into 2021, it will be interesting to see how Vegas is going to respond.”
With millennials aging and migration to Nevada, that should continue to increase demand for housing, Pischke said. Low interest rates and recovering economy with the coronavirus vaccine means 2021 has the “ability to be an excellent year for master-planned development and sales.”
RCLCO Managing Director Gregg Logan said home sales slowed in late March and first few weeks in April before picking up again in May. At first, it was thought the sales that followed only made up for what was lost, but it picked up “quite a bit more over the summer” — a trend across the country.
“Vegas is different from other cities in that it gets equity migrants from California, and people who are value seeking,” Logan said. “People were saying it was flight from density and flight from COVID, and I think what we saw was people who weren’t really moving for COVID per se. But in some cases it was people stuck in their house and thinking about moving up or getting out of apartment living. For some people, COVID spurred them into action to better housing they liked to have with more space with an attainable price.”
Pischke said in times of recession there tends to be a “flight to quality or safety” given the perceived value people show to master plans. During the pandemic, the extending trend of households valuing green space, outdoor amenities, hiking, biking and walking trails has accelerated at a time when people want to safely use them and social distance while it’s dangerous to go to the gym.
“That is something consumers have long ranked highly in their list of preferred amenities,” Pischke said. “It seems to be more relevant this year at a time social distancing is of utmost importance.”
Pischke said the “explosion onto the list” of Valley Vista is a testament to the more affordable product and inventory it had ready with homes that start in the low $200,000s.
“The first-time buyer market that’s coming out of apartments that had been somewhat suppressed for a while has picked up,” Logan said. “That helped with DR Horton in particular.”
Pischke called the 13 percent gain in Cadence impressive. He also said Skye Canyon improving its sales by 3 percent shows the strength of master plans in 2020. The cutoff to make the top 50 in 2019 was a little more than 350 sales. It was 450 to make the top 50 in 2020, he said.
As for Inspirada, Pischke said that’s likely a function of inventory because its location in west Henderson is one that is sought out by buyers and there’s demand for the master plan.
“You have to have the homes available to meet that demand,” Pischke said.
What’s happening in Vegas happened elsewhere.
Nationwide, John Burns Real Estate Consulting, which put out its own top 10 list, said the nation’s master plans sold at least 437 per community, which was the highest threshold in the 10 years of the survey.
More than 37,000 buyers purchased homes in those master plans, reflecting a 31 percent increase from 2019 and new combined sales record. Six master plans, including Summerlin, had sales of 1,000 new homes or more in 2020, increasing from five in 2019.
The firm said they expect demand to remain strong in 2021 and home prices to rise but supply challenges could hinder sales in the short term. The industry inventory is low with homes and available lots and faces delays with building products.
The impact of the shutdown meant builders stopped buying land in 2020 until late in the year, Orrock said. Builders thought the market would slow down and wanted to see what would happen, he said.
“You don’t turn the homebuilding business on a dime,” Orrock said. “When it starts accelerating, they’re quickly going through their inventory. This is an interesting year (in 2020) where home sales are up, but land sales are going down for the most part. They were holding off and just recently started going back and acquiring land.”
There’s plenty of opportunity in 2021, Orrock said. Las Vegas will be on everyone’s radar screen in 2021 because it’s a great place to live, especially as Californians seek to relocate, Orrock said. He said the majority of Summerlin’s new home sales were relocations throughout Southern Nevada and California, the dominant state for outside buyers. Las Vegas needs the vaccine to take hold and people to travel again before hospitality recovers, he said.
“I think (demand) will continue to be strong if not stronger if things continue in California,” Orrock said. “There are a lot of positives to be said about Las Vegas going forward with the caveat that we need to get the hospitality business — the engine that really drives this market — back hitting on all cylinders, and it will.”
Despite a down hospitality industry and job losses, there’s movement in the Las Vegas Valley within Summerlin and from other locations, Orrock said. People are rethinking how they want to live from upsizing to downsizing.
In-migration has helped the growth in sales during the pandemic because their jobs can be in California but their home in Las Vegas, he said.
“Given what we have been through this year, you don’t need to live where you work,” Orrock said. “If you look at where you want to live, there are compelling reasons to be in Vegas.”
Summerlin is selling in 31 neighborhoods and subdivisions.
During 2020, Summerlin opened 10 new neighborhoods, including several in Summerlin West, the newest region of the community to take shape with the districts of Redpoint and Redpoint Square leading the way.
Orrock said homes in Redpoint started selling in November. It’s north of Far Hills Avenue west of the 215 Beltway and is part of Summerlin’s strategy for homes on smaller lots and town homes and other attached products. There’s a focus on affordability in a master plan where the average new prices have been $550,000 to $600,000, he said.
“It’s doing well,” Orrock said. “We’ve opened five neighborhoods. There’s rooftops coming out of the ground and really strong sales. There’s a diversity of product up there in terms of single family, two-story, town houses and duplexes. It’s one of the target markets excited about opening. It gives us a diversity of products and price points. You will have neighborhoods that start at $500,000 or less and two neighborhoods that start in the low $300,000s. It’s good entry-level points for new-home buyers and a product for empty nesters. It’s going to be successful for us, and we’re really excited about it. The views are fantastic, and it’s going to be a popular community. We’re going to see surprising numbers out of that development. The more affordable market isn’t one we have participated in before. The $300,000 homes are a large part of the Las Vegas market.”
This year, more than a dozen new neighborhoods are expected to open in Summerlin, most of them in the districts of Redpoint and Redpoint Square with one in the village of Stonebridge and the other in Summerlin Centre, Orrock said. A major 10-acre village park in Stonebridge is also expected to be complete in the spring.
In 2020, Summerlin commenced planning for additional Class-A office space and luxury apartment homes in Downtown Summerlin where it opened 15 new stores and restaurants. Orrock said Downtown Summerlin will continue its evolution as a live/work environment with new developments that will be announced soon and new names added to its retail, he said.
“Stay tuned,” Orrock said of its 2021 announcement for its urban core.
Summerlin’s higher-end segment of production homes is $1 million to $1.5 million and is doing well and bolstered by California buyers, Orrock said. That should continue, but he cited how there’s less inventory in that price range.
“We’re getting down to a very few homes left in our custom-home communities,” Orrock said. “This business doesn’t turn on a dime so the builders are going to have to address that. That’s why you have seen such an increase in prices — supply and demand. The reason is a lack of inventory.”
Summerlin has 4,000 acres left to develop and is planning new custom-lot communities going up the slope of the western area of the development.
“We will be able to deliver what the market wants and needs,” Orrock said.
Cheryl Gowan, Cadence’s vice president of marketing, said the master plan that’s been selling for six years and finding “its footing and groove. Folks know what Cadence is and what it offers for residents. There’s quite a variety of home types from first homes to moving up or scaling back to downsize. There is something to fit everyone’s lifestyle. We’re finally hitting our sweet spot.”
Gowan said the year started strong until the lockdown in March, and it was a surprise for the homebuilding industry and master plans to see such a strong comeback. It’s a reflection in what people were searching for during the pandemic, she said.
“Whether it was a bigger kitchen or another bedroom or study — that space they were looking to make their own,” Gowan said. “Folks are staying home and working from home with students doing their school remotely, and they need space for that. Also, it was about some of the amenities that master plans offer like the parks. We have an outdoor fitness court and Wi-Fi in a central park. There are opportunities to be at home but still get that fresh air and do it in a safe way.”
Cadence is adding Century Communities and DR Horton, which will start selling in the summer. Gowan said they feel good about Cadence in 2021.
Cadence has four builders that have been building in the community and a fifth in Harmony Homes will start selling town homes in January. Those prices start in the mid-$200,000s.
In Skye Canyon, DC Graham, the chief marketing officer for the Olympia Cos., the original developer that in early 2020 sold 400 acres left to be developed to Century Communities for $59.1 million but retained a marketing role, said he was “pleasantly surprised” by the sales results.
“The first quarter was exceptional, and then we saw a significant decline with the pandemic,” Graham said. “The desire in Las Vegas combined with low interest rates played a big part in the rebound in sales. We have seen that with the other master plans, too.”
Skye Canyon with its location in the northwest and focus on parks and open space remains primed to do well in 2021, Graham said. There are seven new communities opening, including one this month, he said.
“It’s going to have a lot more activity than we saw in 2020,” Graham said. “Some builders delayed their openings until 2021. That added inventory should lead to continued strong sales.”
Brian Kunec, president and regional general manager of KB Homes’ Las Vegas and Seattle divisions, said the decline in Inspirada sales comes as KB’s sales ended up the year up about 10 percent in the community. Toll Brothers and Pardee Homes, each which had three to four subdivisions a few years ago, are now down to one or two, he said.
“It’s just that we’re at a more mature state than other master plans with a lot more runway with multiple builders generating the volume,” Kunec said. “Our sales have been as good as they have ever been. The other builders are slowly closing out of their projects.”
Kunec said he sees 2021 as being bright for KB in Inspirada since west Henderson is “one of the best submarkets in the valley” and they remain bullish long term. They have four subdivisions selling there.
“We expect a tremendous year out at Inspirada, and we expect to be up again in volume year over year,” Kunec said.