Don’t fear a bubble despite rising new-home prices in Las Vegas

Las Vegas’ housing market is a far cry from the boom days of a decade ago, but at least one thing is approaching those levels again: new-home prices.

In Clark County, builders fetched a median sales price of $335,000 in October, according to Home Builders Research. It was the fourth-highest monthly median since the company started collecting local housing data in 1988.

The highest, reached in August 2007, was $338,560.

Does this mean Las Vegas is creeping back into bubble territory? No, for at least one reason: sales totals remain a fraction of what they used to be.

Builders closed 6,273 new-home sales in Clark County this year through October. That’s up 14 percent from the same period in 2015 but nowhere near the almost 39,000 sales that builders closed in 2005.

Homes only sell for what people are willing to pay. But industry pros say prices are climbing because builders’ costs are rising, not simply because of stronger demand – and faced with higher expenses, developers have been churning out bigger, pricier houses.

Las Vegas builder Wayne Laska, founder of StoryBook Homes, says contractors are in more demand – and thus more expensive – because of the burst of apartment complexes being built, and land prices have climbed as well.

He figures his construction costs have jumped $8,000 to $10,000 per home in the past few years.

“The only way you can absorb these costs is building bigger homes,” he says.

Resales, meanwhile, are a different story: prices remain well off their peak.

The median sales price of previously owned single-family homes – the bulk of the market – was $233,250 in October. That’s up 5 percent from a year earlier but far below the market’s high point of $315,000 in mid-2006, according to Greater Las Vegas Association of Realtors data.

The S&P CoreLogic Case-Shiller index, a gauge of U.S. home prices, in September was just above the peak it reached in July 2006. But cities that “experienced the biggest booms,” including Las Vegas, Miami and Phoenix, “remain well below their all-time highs,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said this week.

“Vegas is a real outlier,” National Association of Home Builders economist Robert Denk told me.

National Association of Realtors chief economist Lawrence Yun figures it’s still a “few years out” before resale prices hit new highs in Las Vegas, noting the size of the valley’s housing bubble and the severity of its crash.

Are new homes too expensive? Are resales too cheap? That all depends on which side of the transaction you sit on.

But as many people in real estate say, no one is rooting for a return to the rip-roaring boom years of a decade ago, because they all know how that ride ended.

Contact Review-Journal writer Eli Segall at 702-383-0342 or esegall@reviewjournal.com. On Twitter at @eli_segall