Las Vegas, Nevada home prices have hit the jackpot, but new builder's rules may slow down speculative homebuying and nothing is slowing down occupant homebuyers.

"Las Vegas is still experiencing approximately 7000 new residents a month and demand for homes and condos is still very strong," says Realtor Bruce Hiatt. "We get frequent calls from clients and prospective clients asking how much higher can home prices go. When we think we've seen a residence price point we find ourselves observing how that expensive home three months ago seems like a bargain now. We've seen major appreciation in the past 12 months and now we are seeing builder pricing velocity beyond belief."

Hiatt says, "On February 28, one major builder in Summerlin held their grand opening and 24 hours later, their new home prices increased a gigantic $150,000! While that revised price is for December 2004 delivery; nonetheless, is this builder truly a fortune teller for future home prices in Las Vegas? We don't think the appraisers are going to be happy campers over this, and yet buyer demand continues even at this crazy price point for this builder. So in Las Vegas, that 1900 sq ft single story home will now cost you $602,000 before lot premium and before upgrades! That's still an OK price compared to California's housing market, but nonetheless it is a record for Las Vegas at this price per square foot. This price increase has created a significant gap between existing home sale prices and new home prices. Therefore, we believe the next 6 to 9 months will see significant price increases for the resale housing market as a result of this major new home price increase. With just a handful of years left before we exhaust buildable land in Las Vegas, it is no doubt that the scarcity of land is one driver of these price increases. It is also no doubt that the Manhattanization of the Las Vegas Strip is about to take off like a rocket. There are more luxury condos on the planning horizon including Conrad, Trump, and another very cool community near the Palms casino that we know will sell out fast but so far no concrete details."

Hiatt says, "We are not happy about the new home builders' rules for buying new homes in Las Vegas. You can only buy a new home if you are the primary resident. No investors and no second home purchases are permitted. You cannot buy a home for your relatives. Second, you will most likely be asked by the builder to sign an addendum to the contract which requires you to occupy the home for 12 months after the home is closed in your name and you cannot sell or rent the home until the 12-month period is over. Many builders are now placing cash buyers ahead of those financing home purchases. We know of one builder who ranks your position on their 1000 person waitlist in order of cash buyer, if you already live in Las Vegas, your choice of lender, your credit scores and several other factors. Further, some new home builders are placing onsite loan officers in their offices to immediately pre-approve you when you walk into the sales office and the results of that analysis will help determine where you get placed on the long waiting list.

"We are now seeing hundreds and in some cases thousands of names on waitlists to buy a new home in Las Vegas," he says.

"In January of 2004 the price increases have started to accelerate, rising greater than 2 percent in most (1990 and newer) areas," says Realtor Sean Brown. "The under $400,000 market is experiencing a severe supply shortage. Builders' waiting lists average an easy nine months, if you can get on a list. (Many lists have more than 1,000 people on them with less than 200 houses available). Multiple offers is definitely the norm, and most transactions are above list price. It is not unusual to see a house sell $20,000-$60,000 above the listed price."

"Between October and December 2003, we had a slight dip in the number of multiple offers being made on houses and the days on market seemed to move toward a week instead of the 1-3 days it had been," says Brown. "The doubling of the sales transfer tax on October 1st may have caused a slight intensification of sales through September and a subsequent decline in sales post Oct 1. As of January 2004, it seems the frenzy is back on with a more intense furor. I've seen a house listed at $240,000 sell for $300,000, and that included an addendum stating the buyer would automatically agree to pay the difference between the sales price and the appraised price."

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Published: March 16, 2004

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