HIGH-RISE FRENZY: Going Up?

Monday, March 28, 2005

The idea of vertical living taking root in Las Vegas

By JOHN PRZYBYS
REVIEW-JOURNAL

When most Southern Nevadans think of residential growth here, the image that usually comes to mind is of single-family homes sprawling out to the edges of the valley in every direction.

Lately, though, residential growth in the valley seems to be heading in another way.

Straight up.

Over the past year, the Las Vegas area has become awash in plans for high-rise condominium developments.

Many of the 40-plus developments that have been announced are being aimed at out-of-town buyers who will use the units as second homes or vacation homes.

However, area developers say area residents also are showing interest in a living option that, until now, hasn't been a significant facet of the valley's residential landscape.

In 1998, John Riordan moved to Las Vegas from Southern Florida to build Turnberry Place, a pioneering example of late-model vertical life here.

At the time, Riordan recalls, most people "felt like it was a mistake that we were making."

Most, he says, figured that "if there was some high-rise demand, it'd be relatively small, and for us to come in and expect to build an 800-unit community -- which is what Turnberry Place is -- we'd never succeed."

"That was not even the naysayers," Riordan adds. "That was virtually everybody."

But Turnberry Place not only sold out, it became a portent of things to come. Now, on the Strip, near the Strip and in downtown Las Vegas, plans for high-rise condos are appearing like mushrooms after a spring rain.

Dennis Smith, president of Home Builders Research Inc., notes that condominiums "have always been a viable product in Las Vegas because it has been a transient market."

What's more recent, Smith says, is "that we are seeing a new kind of condominium project that has been tried and proven in other parts of the country and are new to Las Vegas, that being primarily the high rises, (as well as) some of the new low- and mid-rise products."

What's driving the trend? "The primary reason would be the high cost of land," Smith says.

According to Smith, a chunk of developable land in the northwest that might have cost $50,000 an acre five years ago now would be going for about $600,000 an acre. So, as building out becomes more and more expensive, building up becomes more appealing.

Beyond dollars and cents, the trend toward high-rise living here also stems from Las Vegas' maturation as a city, says George Maloof, developer of the Palms, which plans to break ground on a luxury condominium tower next year.

"It's just part of the overall expansion of Las Vegas -- the maturity of it, the evolution of this town," Maloof says.

In addition, Southern Nevada is becoming home to a universe of new residents for whom high-rise condos long have been an accepted housing option.

Such newcomers are "more comfortable" with high-rise living, Smith says. "If you lived that way in New York, you would be happy to get that kind of product in Las Vegas."

Richard McCann, designer of Loft 5, a 272-unit mid-rise condominium project proposed for Las Vegas Boulevard South at Pebble Road, adds that the valley is "getting a demographic now that is not going to be happy with the sort of Tuscan-style stucco subdivisions that have pretty much filled up the valley."

"You're getting a homeowner now who is tired of the suburbs and wants to get in closer" to the city, he says. "They want to simplify."

Grant Garcia, executive vice president of sales and marketing for Cherry Development, which is building SoHo Lofts, a 112-unit condo complex planned for Las Vegas Boulevard and Hoover Avenue, says the trend also is part of a general, nationwide return to the downtown.

"Not only in Las Vegas but, really, across the country, the move is out of the suburbs and back into the city," Garcia says.

But most of all, Riordan says, "I think the high-rise lifestyle is one that is very appealing to anyone who's had it before.

"It's just a very convenient lifestyle. When they leave here, it's just a matter of locking the door."

Garcia says high-rise luxury condos are popular among baby boomers whose "kids are off to college, or empty nesters who've now got yards and just don't have the energy or time to take care of a yard."

"As baby boomers continue to get into retirement age, there's not a great need to have those (large) homes," notes Michael Mirolla, a managing member of Sandhurst Development, which is building a 40-story condo tower just south of the Clark County Government Center.

Instead of dealing with yard work, pool maintenance and the other hassles of home ownership, Mirolla says, "I can have a turnkey environment with a concierge and a valet and be able to leave my keys with a concierge and say `See you in a week.' "

McCann says he was surprised to see interest in Loft 5 coming from both ends of the demographic spectrum, from young professionals to "a lot of older couples: `We want to sell our house in Summerlin, we want to simplify, we want to move into something that's closer (to town) and not as much maintenance.' "

Clark Seegmiller, principal owner of Seegmiller Partners, co-developer of the 23-story Newport Lofts project at Casino Center Boulevard and Hoover Avenue, says his project even is attracting people who are "buying just to have a place downtown, and they're still going to live in the northwest."

High-rises along the Strip generally are targeted toward out-of-towners. In fact, says Beverly Ann Lacey of Elite Realty, "all of my clients are out-of-state investors.

"They're primarily buying a second home, a third home, a vacation home," says Lacey, who specializes in luxury high-rises. "And they'll buy, maybe, two or three units and keep one for themselves, one to possibly flip, and one possibly to have as an investment property."

But, for projects that are proposed for downtown and off the Strip, some Southern Nevadans seem to be planning for their high-rise homes to become their primary homes.

At the Palms, "we've been getting a lot more locals than I originally thought," Maloof says.

McCann says about half of the prospective buyers at Loft 5 indicate they'll use their condos as their primary residences.

And, at Sandhurst Las Vegas, "we are not taking investors," Mirolla says.

However, Mirolla notes also that seeking full-time residents sometimes involves educating first-timers about the high-rise lifestyle.

"You have to reach out and educate them and sell them on the quality of life, because, to make that move, it's a change of behavior," he explains.

Bruce Langson, president of Langson Development, says Las Vegas Central -- a 1,000-unit condo project on Sierra Vista Drive between Paradise Road and Swenson Street -- is designed specifically for locals who plan to live in their units.

"Almost all of our advertising dollars are being spent here in the valley so we can attract Las Vegans," Langson says. "I'm not looking for investment buyers (or) the second- or third- or fourth-home owner. I'm looking for persons who will consider Las Vegas Central as their primary residence."

However, that means developers must provide to such clients the same sort of amenities -- parks and recreational facilities, shopping venues, restaurants and the like -- found in and around any other master-planned community.

At Las Vegas Central, Langson says, "we are actually offering an entire thousand-home subdivision in a vertical community with enormous opportunities to meet and know your neighbors and feel like you're a part of the community."

Mirolla says Sandhurst Las Vegas plans to offer amenities ranging from cafes to a health club and various green spaces designed to serve as a sort of "urban backyard."

Such amenities, he adds, are key to providing "a social environment, versus having a building with (units) in it."

High-rise living isn't for everybody. The prices of units in the developments that have been announced here currently range from $300,000 or so for a studio to millions of dollars for penthouse units.

And, developers agree, high-rise living wouldn't be ideal for, say, parents who are raising two or three children.

But, for many Southern Nevada homebuyers, high-rise living at least becomes another residential option to consider.

Riordan says many prospective buyers who aren't familiar with high-rise life "look at one of these projects and say, 'This has some merit. It might be a neat way to live.' "

And, Riordan says, "because of all the awareness now that has been created because of all of these projects that have been announced, you do have people looking at it out of curiosity, if for no other reason, who have never even thought of having a high-rise (home)."

Copyright © Las Vegas Review-Journal

Boom and bust in Las Vegas

KELLY ZITO (San Francisco Chronicle)

Las Vegas' lucky number last year was 52 , as in 52 percent. That's how much real estate prices jumped in the nation's fastest-growing city in one year, as a housing shortage set off a wave of speculation by investors.

But as any gambler knows, Lady Luck eventually turns a cold shoulder. Las Vegans wanted to cash in, too, and so many put their houses up for sale that they flooded the market. By the end of the year, some homebuilders were slashing prices.

For investors from states like California where prices seem to move in only one direction _ up _ it was a stark example of a deflating bubble.

"When you lose money in real estate, you really feel it," said Igor Doncov, a software engineer who lives near San Francisco and bought two new houses in Las Vegas early in 2004 but sold them at a loss after his builder, Pulte Homes, cut prices on its new models by $180,000.

"I thought I couldn't lose," he said in a telephone interview. "But it turned into a total disaster."

Housing analysts don't think Las Vegas' slowdown is a sign that prices will soften soon in other fast-appreciating regions. But they say it is a warning of what could happen in the Bay Area as interest rates go up _ particularly for people trying to "flip" houses for a quick profit.

"Everyone is watching Las Vegas with its price appreciation and flipping, " said John Karevoll, an analyst at DataQuick, a real estate research firm. "If something weird happens, it'll happen there first."

For years, Las Vegas real estate was cheap. Myrna Kingham, president of the Greater Las Vegas Association of Realtors, remembers not-so-distant days of driving around in a pickup wearing high heels and showing clients dusty 5-acre parcels listed for $20,000.

But as the population of Las Vegas and surrounding Clark County grew 81 percent in the 1990s, adding 621,160 people, housing prices caught up, matching the national median of $145,000 in 2001.

Then last year, the market caught fire, boosted by healthy job gains, a growing stream of retirees, Californians drawn to lower home prices and an influx of investor money.

Builders, faced with a shortage of workers, had trouble keeping up. Add rock-bottom interest rates, and the scene resembled the go-go days of the San Francisco Bay area's tech boom. Hundreds of would-be buyers descended on open houses, and home prices seemed to increase as quickly as the progressive jackpots in the slot machines on the Strip.

In the spring of 2004, the median price for a single-family house was $269,000, 52 percent higher than the year before _ a national record for appreciation, according to the National Association of Realtors.

"The market was hotter than blazes," Kingham said. "People were looking for affordability _ they wanted a nice home in an area with nice weather that they could buy for $200,000."

Californians, who pay some of the highest home prices in the nation, took notice. Golden State residents have snapped up nearly 27,000 Las Vegas properties since 2000, according to DataQuick. In 2004 alone, California residents bought 11,600 homes _ 12 percent of the transactions in Clark County for the year.

But in less time than it takes to build a single house, the market changed.

Egged on by the stratospheric prices their neighbors were asking _ and getting _ homeowners in Las Vegas flooded the market with "for sale" signs. The number of existing houses posted for sale on the Multiple Listing Service ballooned from about 1,400 in February to more than 16,000 by October.

Among them were never-lived-in homes offered by investors who had bought them only months before from national homebuilders _ who were selling their own brand-new houses literally across the street.

In early fall one of those builders, Pulte Homes, took the extraordinary step of slashing prices by $25,000 to $180,000 on more than 20 of its Las Vegas-area developments.

By December, it was clear the peak of the frenzy had passed.

Residential building permits that month were 34 percent below the previous December's, as measured by the Center for Business and Economic Research. And 15 percent fewer people were moving to Las Vegas _ some undoubtedly spooked by the region's steep jump in home prices.

Analyst: Las Vegas resale home surge likely to subside

March 02, 2005

By Jennifer Shubinski
LAS VEGAS SUN

While the Las Vegas Valley continues to have a strong residential real estate market, the days of hyper-appreciation are not likely to come back any time soon, a market analyst said.

Local real estate experts Dennis Smith, president of Home Builders Research Inc., and Richard Lee, vice president of First American Title Co., on Tuesday gave their yearly presentation about the Las Vegas housing market.

The pair spoke to about 2,000 industry professionals at the 2005 Southern Nevada Housing Day, a merger of the Las Vegas Housing Outlook and the Southern Nevada Home Builders Association Builders Show.

"The days of 50 percent price increases are gone," Smith said.

Smith told the audience he expects the number of resale home sales to drop this year for the first time.

"I have never (before) projected a downward trend in resales," he said.

Smith reminded the crowd that while there may be a decrease, it's a decline from a record year (2004) when 64,168 existing homes closed escrow. He expects about 58,000 resale homes to close escrow this year.

"It will still be a good year; 58,000 resales is still a lot," Smith said.

Prices for resale homes, which led the nation in appreciation, are expected to increase slightly, between 2 percent and 3 percent, reaching a projected $255,000, he said.

The reason the resale market cooled is in part because of the increase in the number of resale homes on the market, Smith said.

The number of single-family homes listed through the Multiple Listing Service in January was 13,803, the Greater Las Vegas Association of Realtors reported. That is a decline from last year when more than 16,000 single-family homes were listed for sale during late summer. But both numbers are an increase from last spring, when fewer than 4,000 homes were listed.

Smith maintains the number of single-family homes on the market could again increase when investors, who still own properties in Las Vegas, start to put them back on the market because of a variety of issues, including higher property tax bills.

"It will be a long time before the resale supply is back in control," he said.

Annual sales of new homes are projected to reach 34,000 sales this year, an increase from 2004 when 29,472 new homes were sold, Smith said. That increase is because of the 6,000 apartment-to-condo conversions expected to close this year, he said. Apartment-to-condo conversions are included in new home sales because they are classified as a "new" product.

If apartment conversions are subtracted from the projected new home sales, the sales of new homes actually is projected to decrease slightly over the previous year, he told the audience.

Smith projects that the new home median price will go up about 8 percent to $313,509.

"A lot of builders think it will stay below that," he said. "I am still seeing small price increases, but 8 percent could be aggressive."

Lee, with First American Title, told the crowd that land supplies continue to be an issue in the Las Vegas. According to Lee's annual analysis with RGR Development & Real Estate Services, the valley has 327,274 acres remaining within the Bureau of Land Management disposal boundary.

Subtracting out for land that cannot be used for residential development, the valley has about 11 years left of developable residential land.

The limitation of land is causing developers to build denser and different types of products and neighborhoods, he said.

"Exactly what is going to happen, I don't know, it's crazy," he said. "The way we think about our city needs to change."