Builders scramble to locate home lots in Las Vegas

As demand for new homes increases in Las Vegas, home- builders are scrambling to find finished residential lots suitable for development.

When the housing market collapsed in 2007 and 2008, builders started selling off land holdings to investors or letting it go back to the bank. Now they're back in the market and supply has tightened, said Dennis Smith, president of Home Builders Research.

He reported about 13,500 finished lots available to start new-home construction today, compared with 19,000 lots at the beginning of the year.

"There's a lot fewer than I anticipated, relative to January," Smith said Wednesday. "Builders don't want to face any more risk than they have to, and they're much more conservative than they were four or five years ago."

He counted 4,600 finished lots in the southwest submarket, the most in the valley. That's followed by the northwest (3,150); North Las Vegas (2,600); Henderson-south (1,900); and the east (1,250).

Finished lots are ready for building permits. They have streets, curbs and utilities in place. Most are selling for at least $50,000 to $60,000, depending on size and location, Smith said.

The top of the market is found in the master-planned Summerlin community, where finished lots are typically going for $80,000 to $100,000, he said.

Partially finished lots are mapped and maybe graded, but lack utilities and other infrastructure.

"Between 2004 and 2008, we had a number of communities that were started, banks financed the engineering portion, and when the developer couldn't continue the project, the bank stopped financing and the project stopped," Smith said. "It was everywhere. Primarily among smaller builders, their funds were cut off and they couldn't complete the project."

Most of the partially finished lots are found in master-planned communities such as Mountain's Edge, Providence and Inspirada, Smith said.

Parkview started by Carina Homes in northwest Las Vegas is a good example. When it was halted, Harmony Homes bought the partially finished lots. They lowered the land basis to the point where they could sell homes for less and now it's one of the better-selling projects, Smith said.

After two years in the doldrums, the new-home segment in starting to bounce back in Las Vegas, particularly in light of stiff competition among buyers of foreclosures and short sales.

Home Builders Research reported 462 new-home sales in July, compared with 316 in the same month a year ago. For the year to date, new-home sales have increased 26 percent.

Builders are aggressively looking for land pretty much everywhere in the valley, said Rick Hildreth, broker for Land Advisors Organization. Sales activity is picking up, at least for now, he said.

"I don't see it lasting a long time," Hildreth said. "It's hard to say. It just depends on what banks do with foreclosures."

He sold 63 acres in Henderson to D.R. Horton for $8.6 million in July. The builder also closed escrow on 275 lots in Whitney Mesa Estates in May for $7.5 million.

"D.R. Horton and Lennar are the most aggressive," he said. "Other builders are looking and some are more passive. "

John McLaury, vice president of sales and marketing for KB Home, said the company likes to build close to retail centers, even on 5-acre infill parcels where only 16 to 24 homes can be built.

"We build everywhere we can," he said. "We look at every piece of land available and how much it costs. We want to be everywhere people want to buy."

Geoff Gorman, vice president of sales for Las Vegas-based Harmony Homes, said the builder has already closed out sales in three communities that he thought would go into 2013. Harmony is breaking ground on two new communities in Mountain's Edge, with models to open in early November.

Housing analyst Smith said many of the distressed lots left over from the housing collapse are smaller lots, around 3,000 square feet, because builders needed density when land prices skyrocketed to $250,000 an acre or more. As land prices have receded, they're looking for 5,000- and 6,000-square-foot lots and can't find them, he said.

Contact reporter Hubble Smith at hsmith@reviewjournal .com or 702-383-0491.