Experts bullish on Las Vegas housing market

Updated January 14, 2020 - 3:47 pm

Groundbreaking ceremonies were held Wednesday at Lake Las Vegas for a resort-style clubhouse that will serve Del Webb’s first age-qualified community in the valley in more than a decade. Analysts said it’s a further sign of the strength in the 2020 new home market. Del Webb, part of the PulteGroup, will open Del Webb Lake Las Vegas and a community in North Las Vegas early this year.

Danny Welsh, vice president of sales with Pulte Homes, said they have seven new communities coming online in 2020, ranging from Summerlin to North Las Vegas and Lake Las Vegas.

“We’re very bullish on what’s going on here in Las Vegas and expect it to be slightly better than 2019 and why we’re coming online with all of these new communities,” Welsh said. “The housing market started way behind (in early 2019) and made up a lot of ground in the third and fourth quarter. We’re hoping that trend continues as we get into the selling season. We have seen some of the best traffic in December and surpassed October and November traffic counts. I’m anxious about getting it out to the market so everyone can come and visit, and the jewel of what we are working on is that Del Webb Lake Las Vegas project.”

In March, Pulte acquired private Las Vegas builder American West Homes with its 10 communities to add to the 10 that Pulte already had, Welsh said.

“The transition has been real good,” Welsh said. “I was with American West for 17 years. It’s two great companies with the same values and the same city that merged. There’s going to be good pricing that comes out of American West, and with Pulte we have a little bit of the higher end for move-up buyers. With Del Webb, we cover all markets now.”

In 2020, PulteGroup will offer homes that start in the high $200,000s in a North Las Vegas community called Ashcroft at North Ranch near Centennial Parkway and Losee Road.

The Del Webb active-adult community at Lake Las Vegas will have its grand opening in late January or early February. There will be about 460 homes.

“We are pre-selling now. It’s one of the cooler projects we have done,” Welsh said. “It has a 10,000-square-foot clubhouse and views of the lake. Active adult hasn’t been done in more than a decade, and it shows the strength of the market. Las Vegas is less of a transient town. It’s a great place to retire, and we’re tapping into that market.”

The prices start in the high $300,000s and go to the mid-$500,000s at the Lake Las Vegas project for units that start at 1,500 square feet and go to 2,800 square feet.

“As soon as we are done with Del Webb Lake Las Vegas, we’re going to do Sun City North Ranch Feb. 29,” Welsh said. “We call it the New North because there’s so much development going on out there.”

There will be 400 homes there, and prices will start in the low $300,000s, Welsh said. The sizes range from 1,200 square feet to 2,000 square feet.

Del Webb has Sun City Anthem in Henderson, Sun City Mesquite, Sun City Aliante in North Las Vegas, Sun City Summerlin and Solera at Stallion Mountain.

Experts talk existing home sales FHA increase

Realtors and brokers are optimistic. Mark Stark, the CEO of Berkshire Hathaway Home Services, said he expects 2020 to be a “very productive year.” Job growth and population growth, along with low interest rates, continue to set that stage, he said.

“I don’t see big adjustments in prices,” Stark said. “I don’t see them coming up or down.”

One outside influence that will help with home sales in 2020 is the Federal Housing Administration increasing loan limits by $23,000 to $345,000, according to Meyer’s Research. That’s expected to add about 23 new communities that are available to buyers in Clark County.

“It’s very important and good thing that happened,” said Andrew Smith, president of Las Vegas-based Home Builders Research. “It increases the number of homes that are available to those people. Not everyone can qualify for a conventional loan, especially first-time buyers. It’s opening up more opportunity. It benefits the buyers and the sellers and builders because they have that many more people to market their houses to.”

The FHA share of sales continues to increase. It was 12.7 percent during the third quarter of 2019, a 63 percent increase over the same period in 2018, according to ATTOM Data Solutions. The national average increase was 16 percent.

Tom Blanchard, the new president of the Greater Las Vegas Association of Realtors, said he expects a good year, with sales to remain consistent with 2019 because of a lack of supply.

“What you saw in 2019 should continue in 2020,” Blanchard said. “It’s going to be a good year. It’s an election year, and historically election years are good for real estate unless something dramatic happens. Las Vegas is a great place to live and raise a family and is no longer the Sin City of old.”

Blanchard said that, given the demand, the prices should have appreciated more in 2019, and he expects them to go up 3 percent to 6 percent in 2020 after double-digit increases in previous years. There are limits to how far they can go, he said.

“The folks who live here can only afford so much,” Blanchard said. “That may be the factor keeping prices in check. If we were making money like they are in Seattle and San Francisco, the prices would be outlandish. We don’t have that type of labor force. We’re limited by the amount of money people here earn.”

The ability to make a substantial down payment is determining the decision of whether to buy.

Southern California-based Meyers Research recently conducted a study that shows people are willing to rent homes in Las Vegas so they don’t have to come up with a down payment to purchase.

“The single-family rent side is becoming attractive to many different profiles,” said Tim Sullivan, the firm’s senior managing principal.

The study shows that a buyer putting 20 percent down would pay less a month on a mortgage payment than a rental payment. With a 4.5 percent interest rate, that buyer would pay $157 less for a mortgage than for rent, Sullivan said. In contrast, someone who put only 3.5 percent down would have a mortgage payment that was $326 more than a rental payment.

“If you don’t have a whole lot of dough saved up, keep renting,” Sullivan said. “If you have the dough to put down, it can make sense to buy. I think there’s a solid runway for ownership, because prices are still reasonable to incomes.”

That equation could change if rental rates of Las Vegas homes continue to rise, said Frank Nothaft, chief economist at research firm CoreLogic. He said home rental rates have risen more than 5 percent the past year.

Lack of inventory cited as concern

Las Vegas has less than three months of inventory on the market, compared with a normal market of six months.

Nothaft said one reason inventory of existing homes is lean and people are holding onto their homes is that, while prices have mostly recovered from where they were before the recession, some people haven’t seen it recover fully and want more. Others have seen their needs change, he said.

“They have waited it out and want to wait a little bit longer until they are above water or can generate some capital gains before selling,” Nothaft said. “Another reason is the baby boomers. Some have retired, but they’re mostly still working. They might have an adult child in their 20s who moved back into the home. They may need the space and are not ready to sell yet, and maybe in five years they’ll be looking to downsize to a smaller home.”

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