Homebuilders look to buy more land as market thaws

Lennar Homes has begun site development for about 200 new homes on a 40-acre infill parcel at Desert Inn Road and Tenaya Way, with model homes opening in May or June, an executive for the homebuilder said.

Lantern Gardens is adjacent to a sand and gravel pit to the west, but will have a landscaped buffer zone and abundant open space, including parks and trails, Lennar Nevada Division President Jeremy Parness said.

It’s within walking distance to Desert Breeze Park, and a new school is under construction south of Spring Mountain Road.

“It’s a very clean site for an infill location,” Parness said. “The location is very unique, just outside of Chinatown, which is really expanding with commercial. A lot of jobs are being created there. It’s a great neighborhood with beautiful homes around it.”

After selling off much of their land holdings during the recession, Las Vegas homebuilders started aggressively pursuing land acquisitions as the housing market tightened in 2012.

“They’re all looking to buy land,” housing analyst Dennis Smith of Home Builders Research said. “KB (Home), D.R. Horton, Harmony, Beazer ... they’re all looking for land. That’s why asking prices went from $200,000 an acre to $280,000 and $290,000 an acre.”

The 40-acre piece acquired by Lennar is rare for infill, he said. Many builders are buying 5-acre parcels at a time.

Frustrated by competition from cash investors in the resale market, prospective homebuyers turned to new homes in 2012. Builders sold 5,544 new homes last year, a 42 percent increase from the previous year, Smith reported. New-home permits jumped 58 percent to 5,908.

Greg McBride, senior financial analyst for BankRate.com, said he expects mortgage interest rates to remain “favorable” throughout the year, which is conducive to more home sales and improvement in the housing market.

“From a borrower’s standpoint, mortgage rates are not going to be an impediment in any way to a well-qualified borrower,” he said.

Lantern Gardens will offer Lennar’s next-generation home designed for multiple-family households, with floor plans from 1,600 to 5,000 square feet, Parness said. Prices will start from the high $100,000s.

Lennar is actively selling in about 15 subdivisions around Las Vegas Valley, and is opening more subdivisions as others close out, he said.

“We have always been a big believer in Las Vegas,” he said. “We have a product offering that meets people’s needs, so we’ve been aggressive at finding places for them to live.”

Las Vegas didn’t see much infill development until the recession because everyone wanted to build around the valley’s periphery, Smith said. The change in the marketplace required builders to look at more infill property, which is historically priced lower than master-planned communities.

“They have to look everywhere to get the best price on replacement lots,” Smith said. “As long as their lot basis allows them to produce houses that are competitive in the market, infill can be better because they get a better land deal.”

Las Vegas real estate investor John Boyer said the rising price of land is helping him get rid of his “bad” investments, hopefully within two years.

“There is substantial interest in buying the many parcels of raw land I own,” he said. “Prices are north of $225,000 per acre and builders are looking at parcels as little as 2.5 acres.”

Las Vegas had 184 active new-home subdivisions at the end of last year, a 21.7 percent decrease from 2011, research firm SalesTraq reported. Average sales per subdivision more than doubled in annual growth to 3.29 in December, and median new-home prices rose 4.1 percent from a year ago to $219,963.

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