LAS VEGAS HOUSING 3Q17: With the Market at 2007 Levels, Production Moves to Higher Price Points
- Annual New Home Starts are at their highest levels since 1Q08; 3Q17 quarterly starts are also up 14% YoY compared to 3Q16, as builders remain confident in the market.
- Production under $200k has been nearly eliminated and this quarter began to see production under $300k dry up: only 35% of starts were between $200-300k, down from 45% last year.
- Average prices are at their highest levels since 2007: Average asking price stands at $448k – up 15% YoY
Metrostudy’s 3Q17 survey of the Las Vegas housing market shows annual starts are up 12% YoY. 3Q17 quarterly starts are also up 14% compared to 3Q16, as builders remain confident in the market. Closings in the third quarter were 8% more than in 3Q16. Annual new home starts are at the highest level since 1Q08. Through 3Q17; annualized single-family new home closings were 8,280. That is 17% more than in 2016. All of these numbers are indicative of both increased demand, low levels of finished inventory, and tight lot supply.
“Production under $200k has been nearly eliminated as base prices have shifted into the $200-$400k range,” said Greg Gross, Regional Director of Metrostudy’s Las Vegas market. “3Q17 marks the quarter that the market begins to see less product below $300k, as only 35% of starts occurred in the $200-$299k range, while last year, 45% were.”
Pricing in the resale market has increased impressively through September. The average sales price for Single Family Homes has reached $309K, an increase of 16%. This is the highest average sale price since 12/2007. The average asking price of for sale homes is 15% higher, now $448k; again the highest since 2007.
Our average “offer to build” base price for all single-family homes is now $449K; up 8% compared to year ago. Higher land and construction costs coupled with strong demand are forcing builders to raise prices. Total Finished Vacant housing inventory has decreased 10% this year. Single Family Finished Vacant inventory decreased 9%. Single Family units under construction has increased 16%, again, with increasing demand and lack of supply, the market needs more homes under construction. Currently, there is only a 1.1-month supply of Finished Vacant homes at current absorption pace.
The finished lot supply remains at record lows. The majority of the new lots in development are in Summerlin, Inspirada, Skye Canyon, Cadence and the general Southwest Valley. Expect more activity in North Las Vegas during 2018. It is worth noting that this number of finished lot supply has declined over the past year, which will keep supply relatively tight, at least for the next 12-18 months.
Las Vegas has experienced a very robust 2017. Nevada is once again among the top relocation destinations, and more companies are beginning to consider Nevada. Vegas remains an in-migration market, mainly adding population from residents from southern California disillusioned with the rising costs of housing, taxes, and purchasing power. For these buyers, Las Vegas remains an attractive option for its relatively lower housing costs, no state income taxes, and higher purchasing power. The mix of these factors will continue to make Las Vegas an attractive alternative to southern California for the foreseeable future. This should aid in the continued growth of the area’s economy and population base.
Over-supply of lots along with diminished demand has driven down lot prices and land values in the past, but the quickly shrinking supply will force builders to pay more for lots, which will pressure affordability. With that said, Metrostudy is forecasting 9,140 total new home starts in 2017.
Contact: Greg Gross @ 916.231.9370
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
About Hanley Wood
Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.