‘There’s no such thing as affordability’: Real estate experts discuss land crisis facing valley
Demand is driving up the price of new homes, which is driving up the price of land in the Las Vegas Valley, a major homebuilder said.
Scott Bleazard, vice president of land acquisitions for KB Home, one of the biggest residential developers in the valley, said prices for land and building homes have become detached from economic reality.
“There is no such thing as affordability in Las Vegas,” he said during an panel event for the Southern Nevada chapter of NAIOP, a commercial real estate development association, Thursday at Orleans hotel-casino. “And we just don’t have that much land left, it’s six to eight years if we are pulling 10,000 permits a year.”
The Las Vegas Valley finds itself in a precarious position. The valley continues to grow, adding more than 100 residents a day to its population, however the Bureau of Land Management controls 88 percent of Clark County alone and has been slow to release land for development.
Chris Armstrong, executive vice president for Olympia Companies, said one of the largest land deals to come out of the valley in years, a master-planned community with more than 3,000 homes spread across 505 acres, is former federal land in the northwest valley that was sold at auction. He said the scarcity of available land has definitely become a much talked about issue within the industry.
Armstrong mentioned a bill sponsored by U.S. Rep. Susie Lee, D-Nevada, the Accelerating Appraisals and Conservation Efforts Act, which recently passed the House. The legislation was endorsed by Gov. Joe Lombardo. The bill looks to “tackle federal appraisal bottlenecks” and streamline the appraisal process for land in the valley, which is actually handled by the Department of the Interior’s Appraisal and Valuation Services.
“In terms of land supply, we can feel the land constraints that exist today,” Armstrong said. “And if there is not more land that gets released or there is not some sort of solution to the pending legislation, some of the land on top of that which is still out there is very hard to service. It’s got no water, no power, no utilities at all, so some of these acres that are available over the next six to eight years, it is very difficult to develop.”
An Applied Analysis study estimates the valley only has about eight years of land left to develop.
Bleazard named several large master planned communities and projects that are already sold out or nearly sold out, including Inspirada in Henderson, Summerlin, Tule Springs in North Las Vegas and Southern Highlands in south Las Vegas, highlighting how the valley is coming to the end of large projects that could help alleviate the housing crunch.
Owen Sherwood, who works in the commercial title industry for Fidelity National Title, said the Federal Reserve cutting borrowing costs by a half percent on Wednesday is a good sign for the economic vitality of the country moving forward, however high costs for construction for various commercial products is keeping some projects from coming to fruition.
“Since interest rates went up we have definitely seen the industrial developers, the multifamily developers slow down and they are having trouble getting their arms around what that pricing is and it doesn’t seem like the pricing is moving down,” he said. “If anything it’s maybe going up, but we are seeing the homebuilders still being very active.”
Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.