Experts say Las Vegas new-home market robust

While all the economic stars are aligned to create a robust new-home market in Las Vegas, a millennial culture tempered by the Great Recession, difficult financing and a shortage of affordable land has held that back.

That's the assessments of real estate experts who spoke at the Southern Nevada Home Builders Association economic forecast meeting Wednesday. The economic news was good — even very good — but that's not translating into throngs of buyers lining up to plunk down money on new homes.

So first, the good news:

Las Vegas is not only getting more jobs, and at a rate much higher than the national average, it's getting better and more diverse jobs.

Steve Hill, director of the Governor's Office of Economic Development, said the Faraday electric car plant in North Las Vegas by itself will have a $5.5 billion impact on the valley when it's fully functioning in the 2020s, and it will pay an average $22 an hour — plus benefits — for 4,500 employees. That means more people buying real estate, including new homes and resurging projects.

"It brings Coyote Springs back into the process," Hill said.

Coyote Springs is a large master-planned community 55 miles northeast of Las Vegas put on hold during the Great Recession. This summer, it re-emerged from a four-year legal battle with its homebuilding partner, Pardee Homes. It is expected to resume work on the development later this year.

While Faraday will anchor the Apex industrial site, there are more than 6,000 developable acres there, depending on how willing investors are to build on a slope.

With electric car company Faraday; an announced test facility for a futuristic transportation system by Hyperloop Technologies Inc., also at Apex; the Tesla battery plant in Reno; Nevada being named a test state for drones; and a proposed speed train to the edge of Los Angeles, Las Vegas is becoming a much bigger player in transportation nationally.

"The future of transportation is happening in Nevada," Hill said, "particularly in Southern Nevada."

Jeremy Aguero, principal analyst at Applied Analysis, echoed the optimism about how the traditionally important numbers are looking good for Las Vegas, including job creation, people moving to Nevada (the state is second in population growth), growing construction permits, school enrollment, driver's licenses and demand for housing.

"By all measures, there should be an increase in demand for housing," he said.

But it's not there yet, at least not in alignment with economic numbers.

Aguero blamed much of that on the cultural shift brought on partially by the recession and because the millennial generation just looks at the world differently.

The pain of foreclosures, losing houses and living on the edge made people skittish and insecure about getting in over their heads — just like the Word War II generation that grew up in the Depression and will never throw anything away.

But millennials also work fewer hours (38 a week before the recession and 33½ now), and often by choice. We still have 30-somethings living in the parents' basement, and millennials may be more into "biking, painting or puppetry" than trying to get ahead in a career and buy a house, Aguero said.

"They have other passions."

Meanwhile, the population growth is leaning older — because of retirees moving here and a slower birthrate.

It's been mostly good news also by the reckoning of Dennis Smith, president of Home Builders Research. He also said home sales should be stronger with the numbers Las Vegas is putting up, including more than 14 percent more permits issues. If other regions had that success, he said, "there'd be a lot of champagne corks going off. In Vegas, it's like … ehh."

More than 7,000 new homes were built and sold in Las Vegas last year, still maybe a third of the boom (which wasn't normal times). We should be doing about 10,000 a year, but Smith doesn't expect that to happen next year, or the year after — although the trend is in the right direction.

Two headwinds builders face are the ability to get financing for people whose finances were trashed in the recession and getting land inexpensive enough to build, make a profit and still produce an affordable house.

"Someone show me where the land is," he said.

Smith also sees more baby boomers coming in, including to more distant locations like Pahrump, Mesquite, Laughlin and even nearby Arizona.

— Hal DeKeyser is director of product development for the Las Vegas Review-Journal and a real estate licensee.