When the economy stalled about a decade ago, the housing market in Las Vegas was barely breathing.
Home sales had evaporated, home builders had filed for bankruptcy and unfinished condominium projects had been abandoned by their developers.
Today, the economy has been hit again, albeit for completely different reasons, but the housing industry in southern Nevada has warmed up.
Home builders made more than 11,000 net sales – new sales contracts minus cancellations – last year, most since 2007, according to Andrew Smith, president of Home Builders Research.
They also posted record prices in 2020: For completed transactions, the median sales price for newly built single-family homes – the best-selling product for local builders – was $ 415,000 in October, above the previous all-time high of $ 411,425 in August, Home Builders Research previously reported .
The coronavirus pandemic has devastated the tourism industry and caused huge job losses in the casino-heavy south of Nevada. However, the residential construction market in the valley was strengthened by the scarce availability of resales. Newcomers moving here, particularly from California; and above all record-low mortgage rates.
“Demand is still very strong”
With the cost of borrowing falling, people – or at least those who can still afford to buy a home – have received lower monthly payments and stretched their budgets.
“That’s what makes it really honest is the fact that money is so cheap,” Smith told me.
He also sees no signs of slowing down.
“Demand is still very strong,” said Smith.
Kevin Orrock, Las Vegas regional president for Summerlin developer Howard Hughes Corp., said home sales in the 22,500 acre master-planned community increased more than 40 percent year-over-year.
Orrock, whose company sells land to builders in Summerlin, doesn’t expect mortgage rates to rise much and noted that the momentum of the market hasn’t stopped.
“If this continues, it will be a very good year,” he said.
The Las Vegas real estate market was initially hit by turmoil when the coronavirus outbreak sparked widespread store closings and other closings. Buyers got cold feet in the chaos when sales cancellations rose momentarily and the volume of stores fell.
Kent Lay, division president of Las Vegas construction company Woodside Homes, said when the pandemic broke out, he set out to protect sales already in the pipeline and stopped building new homes.
Casinos and other companies were finally allowed to reopen after state-ordered bans. And as Lay noted, the real estate market was “coming back quickly”.
He said the low interest rates were “huge” and that more people than usual had moved here from California because they could work remotely in a more affordable housing market.
Two recessions, two different markets
Of course, the surprising strength of the market is nowhere near the raging bubble of the mid-2000s, when easy money for buyers and builders alike sparked a wild building boom.
In 2005, the builders achieved net sales of just over 28,800 in southern Nevada. After the bubble burst and the economy as a whole rebounded, 2011 sales fell to just 3,890, according to Smith’s data.
Las Vegas was the zero point for America’s housing boom and bankruptcy. The once roaring real estate market has been almost wiped out by extensive foreclosures, falling real estate values, an almost complete freeze on development and a rapid loss of jobs in the construction industry.
The pandemic devastated the Las Vegas economy, but for home builders, this crisis turned out very differently than the last one.
“I was just glad it wasn’t a repetition,” said Lay.
Contact Eli Segall at [email protected] or 702-383-0342. Follow @eli_segall on Twitter.