Cadence in Henderson bucked the trend of master plans across the country shedding sales in the first half of 2022 by finishing No. 7 in the nation, according to midyear rankings.
National consulting firm RCLCO said Las Vegas’ master-planned communities had fewer sales than the first six months of 2021, but master plans held steady in their rankings with the exception of Valley Vista in North Las Vegas. That project of D.R. Horton fell from No. 6 to No. 51.
The RCLCO numbers show a smaller decline in sales than a report from Las Vegas-based Home Builders Research that has net sales for Las Vegas as a whole declining from 7,348 during the first six months of 2021 to 5,868 in the first six months of 2022.
Summerlin continued its top five national showing by coming in at No. 4 in the midyear ranking with 592 sales, a 38 percent decline from the 962 in the first six months of 2021.
Cadence saw a 4 percent increase in sales in the first six months to reach 459 sales, up from 440 a year ago. It’s No. 7 ranking comes after placing 13th a year ago through June.
Inspirada in west Henderson was No. 12 with 388 sales, down 16 percent from 460 in 2021.
Skye Canyon in northwest Las Vegas had 333 sales, down 11 percent from 375 in the first six months of 2021. It jumped in the rankings to No. 18 after placing 23rd at the midpoint in 2021.
“You have your mainstays on the list,” said Karl Pischke, a principal at RCLCO. “Summerlin, Cadence, Inspirada and Skye Canyon are all again within the top 20 master-planned communities in the country. Summerlin had a bit of drop in sales, but that’s not dissimilar to what we’re seeing broadly. We’re continuing to see issues as it relates to supply chains and a lack of inventory. In the beginning of the year, that prevented a lot of master plans from fully capitalizing on demand. What we have seen in the last couple of months is rising interest rates have put pressure on consumers in the market and in some cases reduced traffic. That has reduced the overall buyer pool, and we’re seeing the impacts.”
The four Las Vegas master plans on the top 50 list saw sales decline 15 percent from 2021, less than the 17 percent to 18 percent for the overall national list, Pischke said. It’s not a surprise because year-over-year sales have been falling nationwide since April 2021, he said.
“By and large, Vegas has done a lot better than other markets, which may have experienced a more significant drop on the list,” Pischke said. “We continue to be optimistic about the sales pace and potential for future residential growth, but we are entering a period where for the remainder of the year we’re probably going to see some of those impacts of rising home prices and interest rates on overall sales potential. The future of master-planned communities, however, might be brighter since it represents a flight to quality. There’s evidence in times of recession (if one occurs) they are able to capture an outside share of demand.”
Pischke said Cadence’s gains are attributed to a strong start to 2022 with a mix of products such as town homes and duplexes and a low homeowners association assessment.
“They’re seeing some of that ability to attract buyers at more attainable price points, which is helpful as interest rates have gone up,” Pischke said. “Their inventory at the beginning of the year was a big part of that.”
The drops at Skye Canyon and Inspirada are similar to what they’ve seen in the national market more broadly, Pischke said. He said they may have been hurt by a lack of inventory and supply chain issues that prevented them from capitalizing on demand.
“Interest rates slowing traffic is something that didn’t start happening in the national data until April so that would only have affected the last couple of months (of the sales),” Pischke said. “I would be hesitant to say that is what caused the overall decline, but it is to likely have an impact moving forward.”
As for communities at the top of the list, the Villages in Florida had a 25 percent decline while No. 2 Lakewood Ranch in Florida had a 33 percent drop. Pischke said it’s difficult to maintain a sales pace over time, and that’s why Summerlin fell 38 percent.
“If you go back to early 2021, Summerlin was setting a fast pace of sales that even without the continued supply chain issues that we have seen would be hard to keep up with that level of sales,” he said. “Partially, you are seeing some of that reflected in the data, too. We’re also talking about a more established and mature community with higher price points in some cases than we’re seeing in other communities. As interest rates rise, however, it will be interesting to see what component of consumers end up priced out of some of these homes in higher-end communities.”
Valley Vista, which fell to No. 51 on the list, had 202 sales in the first half of the year. A year ago, Valley Vista in North Las Vegas had 506 sales.
“Valley Vista communities have been in high demand for the past few years and as result many of the communities began selling out during 2021,” D.R. Horton said in a statement. “Therefore, there were fewer homes available to sell recently than in previous years.”
D.R. Horton said it successfully completed and opened Galaxy Park in May and is slated to begin construction on the final community park in the coming months.
“As Valley Vista matures and grows with the addition of amenities like community parks and walking trails, we look forward to its continued success,” the builder said in a statement.
Kevin Orrock, president of the Las Vegas region for The Howard Hughes Corp., the developer of Summerlin, said declining sales is a function of rising interest rates in addition to continued supply chain issues. Sales started strong at the beginning of the year and have trended down from there, he said.
“With interest rates increasing like they have recently, folks are pushed off the fence to buy or sit back to see how things settle out,” Orrock said. “That’s what you are seeing across the board. There is still demand out there, but builders haven’t been able to keep up because of the supply chain.”
Orrock said he’s not expecting 2022 to reach 2021 sales numbers and can see a decline of sales numbers of 20 percent to 30 percent. There will be buyers because interest rates are still low by historical standards, hovering around 5 percent, he said.
“At some point, this rate increase is going to abate, and we hope to see people getting more comfortable,” Orrock said. “People need homes. There’s still 70,000 people a year coming into Vegas. They need some place to live. Some of them are going to choose multifamily, and that’s why you’re seeing that market as hot as it is, but there’s folks who want to own a home. That is going to swing through the upside as we move through the year. But that depends on a lot of things with the economy and how that goes.”
Orrock said Las Vegas remains affordable for those coming from California, which isn’t going to deter those buyers.
Summerlin is opening six new neighborhoods this summer, and another five are in the pipeline that will open later in the year and at the beginning of 2023, Orrock said.
“The pipeline of housing stock from our builders is in place, and you will continue to see inventory in various products, most of it in the west,” Orrock said. “We have product diversification — attached and detached — 1,500 square feet to 5,000 square feet.”
The average price in Summerlin is just over $700,000, Orrock said.
Pulte and Toll Brothers bought 216 acres off Town Center Drive and Tropicana Avenue for $135 million where it plans to build hundreds of homes. Grading is underway and single-family homes are expected to be available in 2023. It will be similar to Mesa Ridge with prices ranging from $700,000 to $1.5 million with homes 3,000 square feet to 5,000 square feet.
Summerlin is building off its Redpoint Village (detached) and Red Point Square (attached) in the western portion of the master plan with its new Kestrel community (detached homes) and Kestrel Commons (attached homes) to its north. Woodside Homes and Taylor Morrison have started selling homes.
Kestrel’s boundaries are Lake Mead Boulevard on the north and Summerlin Parkway to the south and west of the 215 Beltway.
Orrock said there’s a lot going on in residential and commercial development in Summerlin, and the company is excited about the future of Las Vegas.
“Our newest office building is going to make quite a statement as is our new multifamily product that will open the first part of next year,” Orrock said. “We’re excited. We have a lot in the pipeline, and we think there’s a lot of opportunity in the Las Vegas market, and Summerlin is going to take advantage of that and continue to do what we’ve been doing for over 30 years — providing a community people love to work, live and play in.”
Cheryl Gowan, Cadence’s vice president of marketing, said after their first-half increase they have a positive outlook for the second half of the year.
“The first half we had some town home products and duplex products that came online and helped the increase in sales,” Gowan said. “That was prior to mortgage rates increasing.”
Richmond American town homes are priced at $389,000 and Harmony Homes had town homes mid-$300,000s, Gowan said.
“I can’t speak for the other (master plans), but I can speak for Cadence that it was mostly the town house and duplex products available,” Gowan said. “Storybook Homes had some single-family detached homes in the $400,000 range. That made it more affordable for folks.”
Woodside Homes will be bringing on some new neighborhoods later this year. That includes two-story homes.
Robb Beville, division president Nevada for Century Communities, which acquired remaining parcels from the original developer the Olympia Cos., said it’s going into its fourth phase of the master plan as many builders out there have completed their projects.
Beville said they are off on what they anticipated to start the year. Builders, including Century, were having difficulty in completing models because of labor shortages and supply chain issues. That slows sales because buyers want to see a model, he said.
“All the pieces and parts are taking longer for trades to get their hands on,” Beville said. “That’s still an issue delaying the length of time to build a house.”
Beville said he expects a slower pace to continue as buyers are sitting on the sideline waiting to see the economy and builder inventory. Century will have more inventory coming online in the fourth quarter, he said.
“I think you will see a lot of builder incentives with rate buy-downs to get people to buy their homes before the quarter ends and year ends,” Beville said. “That’s a great time for buyers to take advantage of that situation. But I’m fearful the builders are pulling back on their starts a little too much, and we will be back to a cycle of being undersupplied next year.”
As for Skye Canyon, Beville said it continues to have a bright future for the builders there.
Century is opening Marvella, a 1,700-square-foot to 2,100 square-foot community that starts in the low $400,000s. Eaglepointe is larger at 2,100 square feet to 2,300 square feet and starts in the upper $400,000s. A third community broke ground on models that measure 2,700 square feet to 3,400 square feet and will open in the high $500,000s.
“Our buyer profile is more of a move-up buyer, someone a little older and not quite as sensitive to (interest rates),” Beville said. “We do feel like the traffic coming out to look at homes, today, has settled on the rates and will negotiate with the builders to buy down the rates somewhat to get that payment.”
Aaron Hirschi, the new president of KB Home’s Las Vegas division, said the decline in Inspirada sales aren’t a reflection on KB, which he said has sales on par with the first six months of 2021. He attributed that to a maturing of the master plan and how other builder partners have built through the majority of their land.
The builders sold out of some of their communities and had a gap before they opened the next ones. They are moving into their last pieces of land, which are smaller than what they had in the past, Hirschi said.
“Inspirada continues to be our strongest-selling community,” Hirschi said. “We’re still selling at comparable volumes to what we have the last several years.”
Hirschi said KB has had success with its four product lines in Inspirada and will continue with those to meet the demand of their buyer demographic of millennials and first-time buyers and first-time move-up buyers. That includes town homes that start at $311,000 to single- family homes that go up to $496,000.
Construction is underway on Motagna Park that’s expected to be completed in 2023. The $16 million park will have two baseball fields and pickleball courts, dog park and other amenities. It will be tied into a trail head that accesses the trailway system in the hills behind Inspirada, Hirschi said.
What’s also exciting, Hirschi added, is in the town center portion of Inspirada where retail store openings have taken place in the last six months.
“We are at that tipping point where retail developers are moving in,” Hirschi said. “It’s nice to see it reach its point of maturity where the retail is coming together and some of the multifamily developers have started construction in the urban core of it. It’s coming into what it was envisioned to be.”