January 7, 2022 - 2:58 pm
Editor’s note: This year, we have launched a new column called “Real Estate Insights.” We have invited some of our local real estate experts to weigh in on different segments of the market. This is a first in a series that we hope to run throughout 2022.
We’ve never lived through a year like 2021. In case you don’t remember, we said that at the end of 2020. I expect the Las Vegas luxury market will get hotter in 2022 and remain hot for at least another several years.
Luxury homes continue to outperform the overall market. Last year set an all-time record for sales of Vegas luxury homes priced over $1 million (1,557 homes) — doubling the number of such homes sold during 2020 (766 homes) and more than tripling the number of million-dollar home sales during 2018 (430 homes).
The luxury real estate buying boom began in 2020 and escalated in 2021. Insatiable demand depleted Vegas luxury inventory and put upward pressure on prices. Driving the luxury real estate boom was a combination of factors pushing forward the idea of the home becoming paramount. Some of them are:
■ Wealthier buyers moving to Las Vegas.
■ Historic wealth growth due to cryptocurrency gains (yes, I said it!), soaring stock markets, rising house prices and increased savings.
■ Historic low mortgage rates.
Buyers searched for safe places to put their wealth, and because of the pandemic re-envisioned home as multifunctional spaces for work, play and sanctuary. They sought out new locations, better living environment, lower-tax climates and a higher levels of community safety.
The question now is: Will 2022 build on this unprecedented momentum?
The demand for luxury real estate continues to build in our valley. It is poised to put more pressure on our market. Because of this, I think, 2022 will take Las Vegas to new heights in all aspects in the luxury market. If we can quench the thirst.
The unknown in the Vegas luxury market is how we solve the low inventory crisis. The buyers are here.
If we don’t deliver, they still buy, but may opt to buy in a competing tax-free state if there are not enough luxury real estate options for them in Las Vegas.
This year is the year for luxury real estate to rise to the occasion and challenge in Las Vegas!
If we can, which I hope we will, here are some key trends I think we can to look forward to in 2022 in the Las Vegas luxury real estate market.
■ New luxury price thresholds
Declining inventory levels, combined with a high demand for desirable properties, have pushed prices up across all luxury price points. As a result, luxury price thresholds rose across Las Vegas. In 2018, the entry-level luxury home price hovered around $750,000 but is now closer to $2 million. The luxury market increased 25 percent in 2021 and the barrier to luxury entry has increased significantly since 2018. I think 2022, pushes up the luxury price threshold above $2 million.
■ Wealthy international buyers
While Las Vegas doesn’t see international luxury buyers like, Seattle, San Francisco, Los Angeles and New York, I am personally going to be keeping an eye on what wealthy international buyers will do now that U.S. travel restrictions are lifted. And, with low inventory levels and turnkey properties commanding a premium, we may see some wealthy buyers pivoting to adjacent aspirational markets like Las Vegas or adjusting their expectations and purchasing properties that need a little work? Something I feel savvy domestic buyers do and should continue to do.
■ High demand for turnkey luxury properties and new construction
Turnkey properties are sparking demand and can fetch the highest prices. Recent supply constraints in the construction industry — from labor shortages to materials hikes on lumber, concrete and tile — have only amplified demand for turnkey and newly built properties. In 2022, I believe this trend will continue. To piggy back on this thought, I think the biggest winners in this category for 2022 could be the smart re-sellers who make their house like new again, by remodeling, upgrading and making their house turnkey for resale so they strike while the iron is hot.
■ Second homes and high-rises
Second, homes are becoming increasingly popular among experienced owners. I think there is a good deal to be had in Las Vegas high-rise long term, as well. Second homes and condos, which were largely overlooked in the pandemic because of people proximity and communal living attributes, may start to become in high demand again as housing prices continue to climb. Current trends lead me to believe that the condo market will heat up. With such a tight housing market, condos should become an increasingly popular option for people who are looking to buy a property. I expect that many millennials hoping to get onto the property ladder will focus on properties such as condos, as there will be less competition for this type of property initially.
■ The California migration will continue
The mass California to Vegas migration that started in 2018, heated up mid-2020 was still in full effect throughout 2021. It’s not that California’s population is declining. It’s just not increasing at the rate it once was. California’s population in 2019 was 39.75 million. According to U.S. 2020 Census results, that population in 2020 was 39.538 million residents and California population in 2021 is estimated to be 39.23 million. I see the great migration from California to Las Vegas continuing in 2022, for sure. If the new proposed Wealth Tax in California goes through, the pressure on Las Vegas luxury real estate will be even greater than anticipated. California also is still proposing an “exit tax” that hasn’t gone through yet. The more tax initiatives California proposes on their wealthy residents, the more California neighbors we can expect in Las Vegas.
If we want to continue to have our real estate values and overall community experience continue to elevate, we need to support and to bring in world-class developers and more new projects that will attract the type of buyers and pricing that we have been able to attract, lately. Las Vegas is an exciting city. The coming years will be an exciting time to live here and to be a part of its continued phenomenal rise.
Happy new year and may 2022 bring you health, happiness and Vegas luxury real estate!
Kristen Routh-Silberman, MBA, Realtor, is a partner at Corcoran Global Living.