LAS VEGAS HOUSING 4Q17: With Prices and Production at Record Levels, a Booming Market Shows No Signs of Slowing Down
- For 2017, Annual New Home Starts are at the highest level since 1Q08 – up 9% YoY
- Production is moving into the higher price points as only 21% of starts were priced below $300k, while in 2016 42% were.
- Average Prices for new homes are up 7% YoY to $455k; the average asking price of for-sale homes is 21% higher, now $476k; again the highest since 2007
Metrostudy’s 4Q17 survey of the Las Vegas housing market shows that through the end of 2017, annualized single-family new home closings were 8,411, up 15% from 2016 levels. For 2017, annual new home starts are up 9% YoY. 4Q17 quarterly starts are also up 9% compared to 4Q16, as builders remain confident in the market. Closings in the third quarter were 7% more than in 4Q16. All of these numbers are indicative of both increased demand, low levels of finished inventory, and tight lot & labor supply. Annual new home starts are at the highest level since 1Q08.
“Production of all homes – including attached – priced under $200k has been nearly eliminated as base prices have shifted into the $300k-$500k range,” said Greg Gross, Regional Director of Metrostudy’s Las Vegas market. “4Q17 marks the quarter that the market begins to see less product below $300k, as only 21% of starts were below $300k range, where as last year, 42% were.”
Our average “offer to build” base price for all single-family homes is now $455K; up 7% compared to year ago. Higher land and construction costs coupled with strong demand are forcing builders to raise prices. Pricing in the resale market has increased impressively this year. The average sales price for Single Family Homes has reached $314K, an increase of 15%. This is the highest average sale price since December 2007. The average asking price of for-sale homes is 21% higher, now $476k; again the highest since 2007.
Total Finished Vacant housing inventory has decreased 10% this year. Single Family Finished Vacant inventory decreased 6%. Single Family units under construction has declined 13%, 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 single-family homes at current absorption pace.
The finished lot supply remains at record lows. There are now 7,372 Finished SFD lots today, which is only 10 months of supply. The total number of finished lots has dropped 26% over the past year. 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 remains an in-migration market, mainly adding population from residents from southern California residents disillusioned with the rising costs of housing, taxes, and declining purchasing power. The mix of these factors will continue to make Las Vegas an attractive alternative to southern California for the foreseeable future, which 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 10,400 total new home starts in 2018.
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
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