Luxury sales of $1 million and higher through the first six months of 2022 are running 16 percent higher than a record-setting 2021, led by two of the highest sales in Las Vegas history recorded in June.
But luxury Realtors said the luxury segment of the market is finally leveling off with one saying “the frenzy is definitely over.”
There were 992 sales of existing homes and high-rises of $1 million and up in Las Vegas between January and June compared to 857 in the first six months of 2021. Despite the strong showing, luxury sales are slowing slightly, according to numbers collected for Southern Nevada by Forrest Barbee, corporate broker with Berkshire Hathaway HomeServices.
The 155 sales in June were the fewest since February when there were 122 sales. There were 197 sales in March, 218 in April and 178 in May. June 2022 saw 15 fewer sales than June 2021 despite rising prices by themselves creating more $1-million-plus homes in Las Vegas.
The amount of inventory increased from five months in May to seven months in June, according to Barbee. There were 167 pending sales at the beginning of July, down from 230 at the beginning of June.
Barbee said some luxury sales could be impacted by rising interest rates. Others who are trading up would have two deals at risk.
“People are adjusting to things and being more tentative, and some people think prices will fall so they’re backing away,” Barbee said. “I came across a couple of those situations in Lake Las Vegas. They sold their home and were planning to purchase another luxury home but decided to rent to see where the market goes. Demand hasn’t really dropped. We haven’t fallen back to lower levels, at least not like the resale below $1 million, which is back to 2018 and 2019 levels. We’re not seeing that yet.”
In a further breakdown of luxury sales in the valley, luxury broker Rob Jensen said there were 500 luxury single-family home sales of $1 million and higher in the second quarter this year. That compared to 437 in the second quarter of 2021, 105 in 2020 when the COVID-19 pandemic hit and 152 in 2019.
There were 81 sales between $2 million and $2.99 million in the second quarter compared to 71 in the second quarter of 2021. There were 22 sales between $3 and $3.99 million the second quarter of 2022 compared to 16 in the second quarter of 2021, Jensen said.
As for sales of $4 million and above, there were 32 in 2022, four fewer than the 36 during the second quarter of 2021, according to Jensen.
Despite a slight reduction, sales higher than $17 million dominate the news cycle in June with two high-profile sales. There were two sales in the $9-million-plus range.
1. A Summit Club home that set the mark in October as the second highest sale in Las Vegas at $18.75 million was sold again eight months later in June for $18.95 million. California tech entrepreneur and his wife — Jonathan and Nicole Cronstedt — sold it to Kevin Elder, according to Clark County property records.
2. Billionaire Steve Wynn sold his mansion on Enclave Court in Summerlin, known as Billionaires Row, for $17.5 million. The home measuring 15,000 square feet sits on 1.41 acres in Country Club Hills with six bedrooms and 9½ baths. Kristen Routh-Silberman, a partner with Corcoran Global Living, was the listing agent for the home.
3. A home on Echo Peak Lane in Summerlin that measures 10,693 square feet sold for $9.6 million. It has five bedrooms, 6¼ baths and an eight-car garage. The listing describes it as nestled in the mountains on a 1-acre lot. It has a tree-lined driveway
4. Another sale on Boulderback Drive in Henderson sold for $9.14 million. It measures 8,770 square feet with four bedrooms and 5½ baths.
Gavin Ernstone, broker/owner of Simply Vegas, the listing agent of both $9 million-plus sales, said luxury buyers are looking at what’s happening to the economy and stock market and what the government is doing to steady that.
“It’s definitely quieter than it was at this time a year ago,” Ernstone said. “It was ridiculously busy. We’re definitely seeing a softening in the market. The good stuff is still selling quickly and at good numbers, but the average stuff (without the upgrades and finishes), which a year ago was selling immediately, isn’t. That’s the biggest difference.”
Routh-Silberman said she doesn’t consider it a softening. She called what’s happening is how “the market is going back to normal. The frenzy is definitely over, but our market is still strong and dynamics are super solid. The new normal is still very much above where we were five years ago. Our market has shifted incredibly. The old high mark used to be $5 million, and the new base high mark is $10 million.
“We have lots of sales over $10 million that never happened pre-pandemic. I feel like the luxury market is strong, vibrant and smart. California continues to send people to Nevada because of a high tax rate, and that migration isn’t slowing,” Routh-Silberman said. “Las Vegas is still a seller’s market in the luxury segment but it’s more “rational and reasonable.”
“When there was less inventory, the sellers could price up a bit; and now they have to price it right or they will get passed up because buyers have more options,” Routh-Silberman added.
Luxury Realtor Ivan Sher with the Ivan Sher Group at Berkshire Hathaway HomeServices, Nevada Properties, was the listing agent for the high sale of the year at the Summit Club. He said, historically, there’s a slowdown during the summer. But when someone goes looking for a luxury home in the heat, they are serious, he said.
“They are either moving in from out of state and they need to get a new school so they will take on the heat,” Sher said. “The last two summers have been blistering hot in temperature and activity. This summer feels more like 2019, 2018 and 2017 activity. While we don’t have that frenzy anymore, our pricing is elevated to a level where we never have been before. I’m very optimistic about our market (with our dysfunctional neighboring state government in California). Wealthy people don’t want their finances controlled.”
Sher said homes are sitting longer, but those homes with good finishes and are contemporary are selling. While the inventory is higher, buyers are willing to pay a premium for a great product, he said.
“This is the worst of where we will be for a while,” Sher said. “I mean people watching and buyers don’t know what the market is going to do. There’s interest rates (rising), the stock market (declining) and crypto (declining). Real estate is relatively stable. People are not as liquid as they used to be but also they don’t want to put their money back into stocks. They want to place it in real estate but don’t want to place it at the top. These last two months, the sales should be minimal. There should have been nobody buying $15 million to $20 million homes, but they are. They are buying because real estate is still the best investment for your money.”
Elizabeth Schwartz Fray, a Realtor with Urban Nest Realty who represented Simon Dolan, the British businessman who bought the Wynn mansion, said an increase in interest rates isn’t impacting ultra-luxury buyers but could affect those in the lower luxury level above $1 million. If there’s any slowdown, it’s because it’s summer and not the best time to go looking at homes in the extreme heat, she said.
“When you’re hitting July, things slow down,” Schwartz Fray said. “Most people are vacationing. I think the buyers in the luxury market are still out there. If people of that net worth can afford it, they buy it.”