Nearly 300 miles southeast lies Phoenix, a city that nearly mirrors Las Vegas in climate, demographic and housing prices. Both Southwest cities were among the top fastest-growing metropolitan areas in the nation, and both were hit the hardest during the Great Recession. Still, there is one major difference that has helped propel Arizona’s capital forward ahead of Sin City in recession recovery.
“They both attract similar consumer groups, which are entry-level buyers and retirees,” said Dennis Smith, president of Home Builders Research in Las Vegas. “However, the biggest difference is the economic base.”
According to Smith, Phoenix has a more diverse economy as opposed to Las Vegas, which relies primarily on gaming.
“If you’re going to be based off one industry like Las Vegas is, you’re more susceptible to ups and downs,” he said.
Another difference, Smith added, is that Southern Nevada is surrounded by land that is owned by the Bureau of Land Management (BLM).
“Phoenix has a large supply of land and we’re landlocked,” he said. “When your supply is limited, your price will be higher and they don’t have that issue. Phoenix is in a good position to keep expanding.”
In order to swell locally, Smith said there’s a lot that needs to happen.
“The freeway and infrastructure would need to be improved if they’re going to keep expanding, which you can’t because it’s BLM land so it won’t happen anytime soon,” he said.
Forrest Barbee, corporate broker for Las Vegas-based Berkshire Hathaway HomeServices, said Phoenix is approximately six to eight months ahead of Las Vegas in terms of their recovery.
“When you look at what’s left in terms of what we have on the market and what they have on the market, they have a lot less distressed sales and cash purchases,” he said. “I look to Phoenix to see where we’ll be mid-summer.”
According to Barbee, the median price of a single-family home in Phoenix is $225,000 while Las Vegas trails close behind at $220,000.
“We’re kind of in the same range but there’s a little more play in their high-end market,” he said.
The median home price in Phoenix was $211,000 in September, an increase from $194,000 a year prior, according to the Arizona Regional Multiple Listing Service. The number of homes sold also increased in September to 6,935 compared to 6,252 a year earlier.
Like Smith, Barbee cites Phoenix’s diversified economy as the main driver behind their fast recovery.
“They’re in a better position to grow jobs after the recession compared to us because we’re dependent upon gaming and conventions and if one of those is going down, the other is going down, too,” he said. “There aren’t a lot of other industries to feed us and pick up the slack.”
Barbee added that he is hopeful for the future of Southern Nevada’s recession recovery.
“We’re looking at the possibility of adding soccer and hockey teams and welcoming Faraday Future to North Las Vegas so there are great signs that we’re getting there and that we’re back on track to create jobs,” he said. “I think we’ll be fine.”
Gordon Miles, president of Americana Holdings, which includes Berkshire Hathaway HomeServices franchises in Nevada, Arizona and California, said while both areas offer the same type of product in the suburbs, Phoenix boasts historic neighborhoods and has a larger inventory of luxury and custom homes.
“Phoenix has old historic homes from the 1900s, which we don’t have because anything that’s old here gets torn down,” he said. “Over there, a lot of their historic areas have some of their highest end and pristine properties.”
According to Miles, Phoenix’s housing market is stronger than Las Vegas right now.
“It comes down to the job base,” he said. “I see Arizona remaining on a strong path and moving forward, but I also see Las Vegas continuing to experience a nice, stabilized, steady growth but it’ll be stronger in Arizona because of job growth and creation.”
Miles called the state of Las Vegas’ housing market “refreshing.”
“Every day for eight years you work up and it was a different scenario,” he said. “The inventory and opportunities are at good levels and both markets will continue to increase in price.”
He added, “Both will move forward at a nice, strong and leveled pace and it’s a relief to see that and move forward in that direction.”
Contact reporter Ann Friedman at firstname.lastname@example.org or 702-380-4588. Follow @AnnFriedmanRJ on Twitter.