Las Vegas builders sounded an optimistic beat for 2024 and lauded what sports and entertainment has meant for their industry as they deal with a lack of land that continues to impact affordability.
Building executives spoke Tuesday at the annual Southern Nevada Home Builders Association breakfast that attracted 170 people within the industry at The Orleans.
“Good, improving, stable and moderating” were some of the descriptions used to describe the new-home market that has seen a 22 percent increase in net sales in 2023 after a slow second half of 2022 caused by rising interest rates.
Interest rates have been falling since October and are now under 7 percent, and builders have been using incentives to attract buyers.
The builders lauded the growth of the Las Vegas economy by adding sports teams, entertainment and events as a boon for their industry and attracting people to the city.
“I think it’s going to add demand to all aspects of the business from entry-level buyers all the way up to luxury buyers, who want all the bells and whistles,” said Kent Lay, division president of Taylor Morrison. “It’s going to bring more money into the city.”
Aaron Hirschi, president of KB Home’s Las Vegas division said what’s transpiring in Las Vegas has been good for the economy and creates employment, which in turn creates the need for more homes.
“With the Raiders, Golden Knights, Formula One, I think the ultra high-end has been most affected by what’s going on,” said Frank Wyatt, president of Pinnacle Homes. “There are more people (who) have a lot of money that are moving to town in higher numbers than ever.”
Carlos Zuluaga, board president of the SNHBA with Tri Pointe Homes, said no one living in Las Vegas in the 1990s could envision what the sports landscape would look like in 2024.
“It’s amazing for our town,” Zuluaga said.
Chris Armstrong, senior vice president with the Olympia Cos., the developer of Southern Highlands, said they’ve recently brought a lot of custom lots to the market that caters to what’s been happening.
“We find that we have a much different buyer today than you did 10 years ago,” Armstrong said. “With the influx of everything that supports the entertainment and sports industry, it’s created a different buyer who is highly refined as well.”
Armstrong talked about Olympia CEO and President Gary Goett and former homebuilder Larry Canarelli purchasing 505 acres at the last Bureau of Land Management auction. The site is east of Red Rock Canyon and west of the 215 Beltway next to the Providence master planned community.
“Our niche is finding parcels that have a bunch of hair on it (land that has some challenges),” Armstrong said. “There’s a couple of hundred acres that have encumbrances so we have to work through those and provide all of the infrastructure to support that on the edge of town. As for what the project will be, there’s obviously a huge demand for housing in the valley. There’s not enough land. We will be working with all of the homebuilders to figure out exactly what the product demand is. We try to segment the product as we release it so that there’s not an influx of everybody doing the same type of product.”
Armstrong said they’re working with the city of Las Vegas on the project that’s next to the Red Rock National Conservation Area.
“We plan on doing a trailhead that goes into the National Conservation Area, and we will have a bunch of trails through the project as well,” Armstrong said. “It will predominantly be a mix of small-scale commercial to support that immediate area and mostly housing.”
Builders continue to lament the lack of available land and unwillingness by the Congress, so far, to make more federal land available for development, despite lobbying from Nevada’s political leadership and building community. The lack of land and growing cost of what’s available pushes up home prices and makes them less affordable.
“We live and work in a land-constrained community,” Wyatt said. “It’s probably one of the most constrained in the United States. It does nothing but increase the price of the end product to the homebuyer. We pay as much for land as we can justify and the home price is based on our cost. It’s not going to get any better.”
Hirschi said politicians overuse the word “crisis” but in this case he cited how Congress continues to punt adopting a bill that would make more land available.
“I hope we don’t wait until it becomes a crisis, but it’s getting pretty close,” Hirschi said. “The pickings are getting pretty slim out there in terms of developable land, and we need to do something about it. We need our elected officials to step up and get the land’s bill done and get it done in a way that provides us some good developable land that can help continue to supply the demand for housing.”
Armstrong said the problem with the land’s bill in Congress is there’s a lot of competing interests. There are other groups looking to preserve federal land while recreational groups want more made available for those purposes.
“I don’t know what the solution is, but there’s all these confluences of competing interests that make it very difficult. Without the lack of supply, it causes price issues.”
Lay said the lack of land will cause builders to get more creative with plans and products until more is made available.
Hirschi said KB Home doesn’t have a “huge appetite” for going outside the Las Vegas Valley. When the industry goes into slower times, deals in those outlying areas are the ones that get hurt the worst.
“From KB’s perspective, I think we would rather continue to focus on staying in the valley and getting more creative about the product and what it is we do and maybe focus more on in-fill type of development,” Hirschi said.
Lay said Taylor Morrison has a lot of land in Pahrump, and it’s important to get the word out that those areas aren’t that much further out than driving from Lake Las Vegas to the northwest valley. The attraction to buyers is greater affordability.
“If something happens with the land’s act (in Congress), I think it’s one of the valuable options that builders have,”
Lay said. “It’s not a bad commute. From Downtown Summerlin to Pahrump is 40 to 50 minutes.”