Dazzled by the lights of Sin City and bolstered by the dollar’s weak standing, wealthy citizens from Canada, Europe and the Middle East are scrambling to buy some of the nation’s most valuable property: high-end, high-rise condominiums towering above the Las Vegas Strip.
While only 409 units exist today — Sky Las Vegas’ luxury condos that sold two years ago for $400 to $600 per square foot — four multi-billion-dollar projects have been announced over the past year, which will add roughly 1,500 luxury residences to the cityscape by 2011.
Demand is strong: Condos at the Residences at Mandarin Oriental, priced at $1,500 to $2,500 a square foot, won’t be ready until late 2009, but 90 percent of them sold out in the first two weeks of sales in 2007.
Still, in the current economic climate, buying any home in Sin City could be seen as a gamble. The city’s median price for new homes hit $259,847 in August, the most recent data available, dropping for the fifth month in a row. The figure is down 24 percent from August 2007, according to SalesTraq, a Las Vegas-based research firm.
For existing homes, the numbers are just as bad: The median price dropped to $200,000 in August, down 27 percent from August 2007.
“For someone to say that Vegas isn’t in a real estate recession, they’re lying to you,” said Aaron Auxier, an agent with Shapiro & Sher Group, who last year broke Vegas’ price-per-square-foot record after nailing the sale of a $2,400-per-square-foot condo.
“But the knowledge of how valuable property is on the Strip isn’t completely understood,” he continued. “Global buyers understand it, and are buying it. In a way, they’re saving Vegas’ economy.”
With one in every 91 households on the receiving end of a foreclosure filing in August — a pace that’s about 80 percent of that of current home sales — Nevada continues to lead the nation in foreclosure rates. The phenomenon is just starting to affect the upper echelon of real estate in Vegas.
So far this year, banks and lenders have bought back 87 properties valued at $1 million or more, nearly five times the number of repossessions of luxury homes in 2007. The Las Vegas Review-Journal reported in September that of the 7,363 listings that
are bank owned, 16 are priced at more than $1 million.
Just two, however, are over $3 million.
“The financing has gone away for luxury homes that cost $1 million to $3 million,” said Patty Kelley, president of the Greater Las Vegas Association of Realtors. “But homes over $3 million? That’s a different story. The folks buying those are paying cash.”
Many of those wealthy clients are third- and fourth-home buyers from the West Coast who are looking to establish Nevada residency for the tax benefits. Robert Jenson, CEO and principal realtor for the Jenson Group, finds that they tend to buy homes in two master-plan communities: Summerlin, located about 15 miles from the Strip, and MacDonald Highlands, about 13 miles south of Las Vegas.
In Summerlin, gargantuan custom-built homes fetch up to $9 million, feature green and high-tech amenities and are centered around nine golf courses, including the Jack Nicklaus-designed Bear’s Best Las Vegas found in the Ridges, the most exclusive area of Summerlin. Its neighborhoods also abut Red Rock Canyon National Conservation Area, state-protected land. Late last year, a custom estate in MacDonald Highlands — a 1,200-acre development nestled in the foothills — sold for $19 million.
“Vegas is a bargain for luxury real estate buyers,” said Bruce Hiatt, a founding partner of the Luxury Realty Group in Las Vegas. “You can pick up some condos and some luxury homes for below what the cost of replacement would normally be.”
So far this year, overall home-sales volume has exceeded last year’s — the Greater Las Vegas Association of Realtors reports a 93.3 percent increase in units sold compared to the same period in 2007 — but many luxury real estate agents say the Wall Street meltdown has caused their clients to think more cautiously when it comes to buying multiple homes. The question is, for how long?
“We’ll probably see price points continue to erode over the next two quarters and then stay at the bottom for upwards of one year,” said Brian Gordon, a principal at Applied Analysis, a financial consulting firm in Las Vegas.
“There’s no magic switch, obviously,” added Dennis Smith, president of the Las Vegas-based Home Builders Research. “We just have to ride it out. Unless you have cash —then you can get some unbelievable deals.”
Average sales price
$249,828 (Jan.-Aug. 2008)
$382,671 (Jan.-Aug. 2007)
Median sales price
$245,000 (Jan.-Aug. 2008)
$294,000 (Jan.-Aug 2007)
Inventory
20,623 units (August 2008)
27,321 units (August 2007)
Average days on market
62
Top five sales in 2008
1. $11.5 million: 59 Promontory Ridge Drive, a 5-bedroom, 5-bath single-family home carved into a mountain on a 2.36-
acre lot.
2. $6 million: 8280 Via Olivero Avenue, a 7-bedroom, 11-bath single-family home on a 1.5-acre lot; includes room for RV parking; master suite has its own wing.
3. $5.8 million: 15 Wild Ridge Court, a 4-bedroom, 7-bath home featuring views of Red Rock Canyon National Park.
4. $5.1 million: 34 Promontory Ridge Drive, a 4-bedroom, 6-bath home featuring a private pool and granite, marble and onyx counters.
5. $4.3 million: 45 Club Vista Drive, a 7-bedroom, 9-bathroom home on a 1.2-acre lot featuring an in-ground pool with a disappearing edge.