Las Vegas uber luxury market sets record in 2020 despite pandemic

Las Vegas and Southern Nevada has not only blown away records on its luxury market for 2020 that are up 38 percent for $1 million and above, but the uber-luxury market of $4 million-plus has hit heights never seen before in the valley and doubled its performance from 2019.

And it’s all happening during a COVID-19 pandemic.

The December numbers from the Multiple Listing Service show there were 129 sales of homes and condos of $1 million and higher submitted to the MLS from the Las Vegas Valley, Boulder City, Pahrump and Mesquite. Most luxury properties listed on the MLS are existing homes, condos and town homes, with a limited number of new homes.

That shatters the record of 98 in November. Many buyers were trying to close by the end of 2020 for tax purposes, and that created a frenzy in recent weeks.

For 2020, there were 824 sales of $1 million or more on the MLS. The previous record was 596 set in 2019, according to Forrest Barbee, corporate broker with Berkshire Hathaway HomeServices Arizona, who tracks the luxury market and provided the stats for the year.

That’s not all for records set. There were 13 sales of homes at $5 million and higher in December. There were 14 during all of 2019, and the December numbers bring the 2020 total to 32 for the year, Barbee said.

That’s quite an ending after luxury sales dipped to 35 in April and 36 in May before a strong rebound over the summer. The COVID-19 pandemic appears to have shaken people to their core in that they want to change their living conditions and create normalcy, and moving and upgrading homes does that, Barbee said.

“I don’t think last spring that anybody was looking at this type of a rebound when the pandemic is worse than ever,” Barbee said.

In breaking down luxury sales in the Las Vegas Valley only and excluding other parts of Southern Nevada, Realtor Rob Jensen of the Rob Jensen Co. said there were 597 sales of $1 million to $1.99 million, up from 340 in 2019. That’s a gain of 32.7 percent.

In the $2 million to $2.99 million category, there were 114 sales compared with 71 in 2019, Jensen said. That is up 60.5 percent from 2019. There were 49 sales compared with 42 for $3 million to $3.99 million. That is 16.6 percent higher.

In the category of $4 million and above, there were 53 sales, up from 26 in 2019, a gain of 103 percent, he said.

“That points to the high-income and high-net worth people having the flexibility to move to where they want whether they are escaping California for not just taxes but to get out of a state that’s closed,” Jensen said. “The ultra-wealthy are taking advantage that Las Vegas has to offer.”

Jensen said that of all of the categories, the one of $4 million and above has increased the most. He said that represents business owners and executives and those in the tech industry who are able to work from afar and people from California and those escaping the East Coast and high-rise living.

“They either have the financial wherewithal to work from anywhere or don’t have to work in the first place,” Jensen said. “It’s not like they’re coming here to work in a casino or got a new job in Las Vegas. I’m seeing these people being captains of industry and ultra-high-net-worth people that can live anywhere.”

Realtors aren’t expecting demand for luxury properties to slow down in 2021 but are concerned if there is enough supply to meet it.

The National Association of Realtors projects Las Vegas sales will increase by 12 percent in 2021, and Barbee added, if that’s the case, it will be driven by the luxury market.

“I think we’re looking at more of the same in 2021,” Barbee said. “There doesn’t seem to be any slowdown. Demand is so strong out there. Half of the luxury sales in December were with cash, but it’s also easier to get jumbo loans. We were having a big problem with that a couple of years ago.”

The momentum right now is so strong in the luxury market that even if things were to slow down, it would take even six months to feel the effects of it, according to Diane Varney, global luxury-certified specialist with Coldwell Banker Premier Realty.

“We have record-breaking sales, historically low inventory, low interest rates and an influx of people from states like California because we have taxes here,” Varney said. “I see the demand holding through the whole of 2021. We’re on the map in Las Vegas in terms of luxury.”

Varney said the buyers prefer the guard-gated golf course communities such as The Ridges, MacDonald Highlands, Southern Highlands and TPC Summerlin. And it’s not only out-of-state residents but Las Vegas residents are moving again as well and seeking either new or existing luxury homes. A lot of people with high incomes work from home, and many can’t pass up buying luxury homes with interest rates in the 2-plus percent range because their money goes further, she said.

“Their needs have changed,” Varney said. “They may need an extra room for a next-gen person, a college student or elderly relative. They may need to downsize because they want to go to a two-story luxury home to one-story luxury home to simplify their life. They may need something grander, so in that case they’re moving up. The work-from-home space is really important, and builders have done an excellent job of meeting those needs in making sure that attractive home office is there, that next-gen site and more closet and garage space. Their kids are not in school and need the room to educate them in the house. They have the means and have to be living in a home that functions for them properly. That’s changed with COVID.”

Barbee said buyers want functionality more than ever. He said he is one of those people who upgraded during the pandemic to get more space — two offices — and moved from a Summerlin town home to a single-family home in Lake Las Vegas to have more open space around him and his wife.

Shannon Smith, a broker/salesman with Realty One Group, said based on the momentum of 2020 and vaccine and economic improvement on the horizon, 2021 should be a good year.

“I’ve been in the business for 12 years, and 2020 has been my best year ever despite the pandemic,” Smith said. “The California exodus is a real thing. Maybe 50 percent of my clients are coming from California who are looking for properties $1 million and above.”

A lot of Californians tend to want to live on the south end of the valley to make it easier to get on the Interstate 15, Smith said. That includes Southern Highlands and Seven Hills and Henderson, he added.

“I have clients (who came) into town on the weekend of New Year’s (Eve) from the Bay Area who are 20-year Raider season ticket holders,” Smith said. “They are using that as an excuse to buy a property between $1 million and $2 million and use it as a second home.”

Gene Northup, global real estate adviser with Synergy Sotheby’s International Realty, said he expects to see continued wealth moving to Las Vegas from high-density areas such as Chicago, Seattle and cities in California and Colorado.

“It’s not only about taxes, but with COVID, especially the cold climates, they are tired of being locked down and want to be in a climate to get outside and do something,” Northup said. “We expect 2021 to be a very solid year in the luxury market.”

The luxury market should contrast to the market below $500,000 because of the high unemployment and economic distress in the hospitality and convention industry, Northup said. He said his firm expects softening and pain in those lower price ranges in the second quarter and beyond unless there is a bounce back or enough federal stimulus to help make a difference.

“That segment has been really solid,” Northup said. “But we got to get the Strip back to work and get through COVID. That’s where our issues are going to be. You will have investors coming into the market and buying those properties. We’re definitely going to see a shift in that lower market.”

Anthony Spiegel, broker and Realtor with the Ivan Sher Group with Berkshire Hathaway HomeServices Nevada Properties, said with the election over and economy expected to recover as the COVID-19 vaccine is distributed, he expects demand to remain strong, especially from California and high-tax states. His concern, however, is that luxury inventory has dwindled over the past six months so whatever is left are homes that need renovations and have other issues. That might reduce luxury sales in 2021.

“There are a handful of decent homes out there in the luxury segment,” Spiegel said. “If you came to me and said I got $5 million and would like to find a great house, I would tell you the probability of finding it is very low. All of the good inventory — the newer homes and better floor plans and more popular neighborhoods — are gone. Not only are they gone, but homes that weren’t even on the market that are good are now no longer on the market. They have been traded privately. There is such a dearth of good properties that agents like myself that have relationships in the community are calling their clients and asking are you willing to sell if I can find you a buyer.”

Spiegel predicts inventory will remain low, but homeowners with no intention of selling will put their homes on the market to fetch a higher price people are willing to pay.

“A home just went on the market in The Ridges for $1,000 a square foot,” Spiegel said. “I think California will continue to make it uncomfortable for people to continue to live there, even the wealthy, and we will be the beneficiary. That’s going to drive high-end prices even higher because there’s nothing there, and people will pay for it. We’re still lagging behind replacement value in a lot of places.”

Jensen said that lack of supply is going to push luxury prices up. The reason is if someone wants to sell but remain in Las Vegas, they have limited options on where to go, he said.

“If I can find something they like to buy, that’s great,” Jensen said. “But some of this new construction stuff you are looking at is a year-and-plus out.”

Ivan Sher, owner of the Ivan Sher Group with Berkshire Hathaway HomeServices Nevada Properties, said he expects 2021 will be strong. More people will be working remotely, and that allows people to relocate to Las Vegas, he said. Sher said a lot of his business came from homes that weren’t on the market so the lack of inventory can be overcome.

“Of my last six transactions, two of them were buyers who couldn’t find inventory, and I found off-market homes for them,” Sher said. “For people in the luxury market, their financial economy has been strong and stable — surprisingly so in this market. There’s opportunity for them to buy, build or diversify.”

Sher admitted that he thought there was “no chance” Las Vegas would end the year as it has with luxury sales after what he saw last spring. He said he thought the market would be down 20 percent.

“My market has gone up 50 percent at least,” Sher said.

The Ivan Sher Group has represented about 40 percent of all sales more than $2 million as the seller’s representation.

“We broke so many records this year, and it should have been a year we barely survived,” Sher said. “There was a frenzy of out-of-state buyers looking to scramble to come into Las Vegas. I think we will see a little more of that in the first quarter, and at the end of the fourth quarter we will see the same feeding frenzy where they want to be in a tax-free environment at the end of the year.”

Kristen Routh Silberman, a luxury Realtor with Synergy Sotheby’s International, said everyone expected a record year after a strong start in January and February but not when COVID hit. Based on what’s on the books now, 2021 will be another big year, all of which is surprising in looking back, she said.

“March was dead, and then by May it was like the horses were let out of the barn,” Routh Silberman said. “It was crazy.”

Builders and developers see that there is a shortage of inventory, and Routh Silberman said she expects them to “rise to the occasion” to provide more luxury homes to the shortage of standing existing home inventory.

“I think you will see lots of big announcements from lots of developers and builders, especially in MacDonald Highlands,” said Routh Silberman, the listing agent for MacDonald Highlands. “Builders can see we have a sheer lack of product. We’ve been gearing up since May and June last year to come up with new products for 2021 and 2022.”

Anybody who has an existing luxury home to sell, Routh Silberman said, have an opportunity for them, but they must improve it and modernize to get the attention of buyers.

“Our demand is going to outpace our supply,” she said.

Heidi Kasama, a Realtor with Berkshire Hathaway HomeServices, Nevada Properties, who was the original listing agent of a Spanish Hills home that set the record price in 2019 at $16 million, said the strong luxury sales will continue in 2021.

She closed on a custom home this week at Red Rock Country Club for $3.75 million that sold in five days with multiple offers. The buyer is a business owner from California.

“I had so many people that wanted to come look at it,” Kasama said. “I knew it was a great house and probably sell pretty quickly, but even I wasn’t expecting multiple offers on it. I do believe we will continue at that type of pace because we have people with money that are looking for a new state to put their money. I just talked to another person because Arizona increased their state income tax. California continues to increase their taxes. Oregon is kind of crazy as people say, and then there’s Washington state, they want to move their homes, money and businesses out of there.”

Kasama said there is a lack of luxury inventory but represents investor clients who rent out homes who are not going to put them on the market because of the price they can fetch.