Speculators 'Back Out Of Deals' In Las Vegas
Maybe so, but this town is still growing like a weed (I live in LV and my wife is a realtor). Bubbles may pop elsewhere but not here in the near future. No Atlantic and Gulf hurricanes, no northern tier heating bills that will be sky high this winter, still cheaper than Taxifornia with no Santa Ana driven fires and earthquakes to worry about. And a friendly business climate. Southern NV, southern UT, and AZ are going to continue to lure vast numbers of people, IMO..
reviewjournal.com
Vacant acre lot tops $600K
Investment, speculation driving up land prices, analyst says
By HUBBLE SMITH
REVIEW-JOURNAL
The price for an acre of vacant land in Las Vegas Valley topped $600,000 during the second quarter, a 42 percent increase from the first quarter and an 88 percent increase from a year ago, a local economic analyst said.
A report from Applied Analysis showed the average price at $601,600 an acre, or $13.81 a square foot, based on 416 transactions involving nearly 2,300 acres.
The comparable period from a year ago included the Bureau of Land Management sale of 1,940 acres in Henderson to Focus Property for about $550 million. Excluding that transaction, land values were up 81 percent.
Parcels ranging in size from 20 acres to 50 acres, suitable for residential development, averaged $890,000 an acre and represented 12 percent of land transactions during the quarter. Property close to the Strip, especially along Tropicana and Harmon avenues, is going for more than $3 million an acre.
"It just confirms the amount of investment and speculation that's taking place in the market," said Brian Gordon, principal of Applied Analysis. "It's just driving property values north, and developers are willing to pay premiums to get in the game."
Gordon said high-density projects are allowing developers to make the land prices affordable by spreading the land basis across multiple residential units.
As high-rise development progresses, suitable parcels will continue to command premium prices, he said. Several midrise condo projects are going up in traditional suburban areas around the valley, which places upward pressure on prices.
"The pressure on costs here is tremendous," said Steve Fifield of Chicago-based Fifield Realty, developer of the Allure high-rise condos under construction on Sahara Avenue. "People selling land say it's so busy here, we can triple the price of our land."
The residential market in Southern Nevada is pressing forward and appears to have avoided the bursting of the housing "bubble," Gordon said. Home values have remained within a relatively tight range, maintaining newly established pricing levels after 30 percent to 40 percent increases in 2004, he said.
That's one of the factors contributing to pricing levels for vacant land, Gordon said.
"The typical single-family suburban homes will continue to develop in the periphery of the valley, particularly in Mountain's Edge (master-planned community by Focus Group in the southwest valley) and the far northwest because elevated land prices have reached out there," Gordon said. "They're expensive, upwards of half a million an acre, but residential developers can make that work."
In his August housing market letter, Dennis Smith, president of Home Builders Research, reported prices from a high of $803,217 an acre paid by CK West for 31 acres in southwest Las Vegas to a low of $254,555 an acre paid by Centennial West for 37 acres in northeast Las Vegas.
"There is no reason to expect land prices to decrease," he said.
Smith said Astoria Homes and Woodside Homes are looking at Phoenix, where land is about $200,000 an acre. Focus Property Group purchased about 600 acres in Victorville, Calif.
"For the first time, we have Las Vegas builders looking at other markets because land is cheap enough to get to the price points they want to achieve," he said.
Smith said he talked to a landowner in Bullhead City, Ariz., who has 350 acres for sale at $47,500 an acre.
In Mesquite, land varies from about $40,000 an acre on the outskirts of town to $200,000, even $300,000 an acre on the golf course.
Gordon said he's seeing a lot of office condominiums being sold to end users by developers who find it more economically feasible to build and sell rather than lease the property.
"Rental rates are on the uptick, but they have not kept up with land prices," he said. |
