Las Vegas Homes and Real Estate News
After hyperhot appreciation of '04, home prices tick up 19.2 percent in '05 Hearing Wall Street housing analysts and California university researchers, homeowners should sell their homes now and buy them back in six months to a year at a 30 percent discount. Rumblings of tumbling real estate prices in California have many experts predicting that Las Vegas will incur some of the brunt. Possibly, but don't expect the tide to turn quickly in Southern Nevada, said Larry Murphy, president of Las Vegas-based housing research firm SalesTraq. The 40 percent and 50 percent Las Vegas appreciation rates that led the nation for much of 2004 were a "once-in-a-lifetime thing," Murphy said. Coming back with a 19.2 percent overall gain in 2005 is not a bad follow-up act. "I thought, 'Next year (2005), I hope it doesn't fall and I'm reporting negative appreciation.' But we came back with 19.2 percent after doing 45 percent. That's almost a miracle, too. I was saying there would be no crash, but prices would hit a plateau. This town just keeps blowing my socks off." The highest appreciating neighborhoods in Las Vegas Valley are no longer concentrated in upscale master-planned communities such as Summerlin, Green Valley and Anthem. Home prices have already skyrocketed there. You had to look at the northeast and central parts of Las Vegas, where median prices start much lower, to find the largest gains in 2005, a year-end pricing analysis broken down by ZIP code shows. SalesTraq reported that ZIP code 89109, the Winchester area east of the Strip, posted the highest home appreciation rate last year at 69 percent, based on average price per square foot. Inner-city ZIP codes 89101, 89104 and 89106 showed appreciation rates of 36 percent to 44 percent, while 89030 in North Las Vegas increased 36 percent and 89115 near Nellis Air Force Base jumped 37 percent. "We calculated it three different ways so nobody can complain," Murphy said. "We did it by average price, by median price and then average price per square foot. The reason for price per square foot is if someone goes into a ZIP code and builds 800 or 1,000 condominiums where they traditionally have 2,300-square-foot single-family homes, we didn't want that number to be skewed." The amazing thing, Murphy said, is that the overall appreciation rate came out about the same for each method when he looked at 55,728 transactions. The calculations did make a difference in a few ZIP codes, which is why Murphy didn't include those with fewer than 50 transactions during the year. For example, 50-year-old homes in 89004 around the town of Blue Diamond sold for enormous gains from their previous sale, but there were only 13 of them, he said. Another tricky ZIP code is 89011, or Lake Las Vegas, where the average home price slipped 4 percent, from $1.17 million in 2004 to $1.12 million in 2005, but average price per square foot rose from $361.52 to $440.94, or 22 percent. Again, a large percentage of the 73 sales at Lake Las Vegas were luxury condos, which are lower in total price but higher per square foot. Chet Nichols, executive vice president of Amland Development, a condo builder at Lake Las Vegas, said it costs more to build attached housing, about $250 a square foot, compared with less than $100 a square foot for detached, single-family homes. Some of the "darling" ZIP codes from 2004 -- 89134, 89135 and 89138 in Summerlin and 89052 in Anthem -- slacked off last year, Murphy noted. "I think a lot of flipping was going on out in Anthem with Pulte (Homes)," he said. Homes in 89109 sold for an average price of $415,777 in 2005, an 86 percent increase from 224,114 the previous year. Average price per square foot rose 69 percent from $130.16 to $220.19. Murphy said the increase there is primarily due to resales at Turnberry Place, the luxury high-rise condos on Paradise Road where units are averaging more than $1 million. As long as Las Vegas continues to post strong job and population growth, the real estate market will remain healthy, said John Restrepo, principal of Restrepo Consulting Group. "We're not going to see the high double-digit growth rates of '04 and '05, largely because speculators have left the market," he said. "We're headed toward a more normal market, maybe 10 percent (appreciation) in terms of housing. It's just cooling off." Kip Pinette, California-based market analyst for housing research company Metrostudy, said single-family home appreciation in Las Vegas is basically flat and the high-rise condo market is where the highest appreciation occurs. "There was a time in Vegas when you could buy a single-family home for under $200,000. That's gone now and it's been picked up by condo conversions at the low end," he said. "The luxury condo market is another animal. There's a huge market for high-rise luxury condos." Housing affordability will become an even bigger issue in Las Vegas as household incomes fail to keep pace with dramatic increases in home prices, Murphy said. The only way to stem escalating home prices at this point is to increase density, he said. Focus Group has been hinting at that with its development of 2,000 acres in west Henderson and 1,700 acres at the gateway to Kyle Canyon. "Grab your socks," Murphy said. "We're going to see density hit eight, 10, 12 even 16 units (an acre) on residential zoning. When you go five or six stories, you can do it. There will be a midrise element in virtually every new development from here on out." The new definition of condos in Las Vegas may be four stories. Amland Development was the first to build midrise condos, with Park Avenue on Las Vegas Boulevard South. Other condo projects such as Manhattan, Boca Raton and Loft 5 are following the trend. "We, as an industry, are not creating anything new. We need to be innovative," Alex Edelstein, developer of Manhattan, said. "We're going to have more innovations in our next project than I've ever seen in my three years in Las Vegas, amenities and features that have never been done before, and we'll remain in the affordable luxury class." Nichols of Amland said projects such as Park Avenue only resolve the housing issue for a small portion of the population, singles and couples who can live in smaller square footage. For those who need a larger, single-family residence, get ready for long commutes. "You're going to see it like Los Angeles where people move to Riverside and Victorville and Apple Valley. Here, it'll be Pahrump, maybe Glendale," he said. "I think it's going to be a problem." Restrepo said he consults with developers who want to build "podium" residences, four or five stories of wood-frame units on top of a concrete parking garage. Towne Vistas, a Nevada limited liability company, is developing the midrise Echelon community on 15 acres at Durango Drive and Deer Springs Road in the 89149 ZIP code, where prices appreciated by 14 percent last year. The $200 million project will have six buildings with 372 homes, priced from the $300,000s to more than $1.5 million. Pinette of Metrostudy said there's still demand for housing in Las Vegas and production will continue to grow. "Sales didn't slow down, just appreciation," he said. "You see appreciation, but if you take out attached housing, it's pretty much flat." Any appreciation in downtown Las Vegas is simply due to various redevelopment projects such as SoHo Lofts and World Market Center that are market-driven, not municipality-driven, Pinette said. "You're bringing affluence to the area, so even parcels that are next door to affluent projects but haven't been developed are going to pick up," he said. 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