As he stood on a dusty road where homes were being built in Inspirada, Klif Andrews talked about how the new home market did the opposite of what some thought it would do following the onset of the pandemic.
“It’s still busy,” Andrews said. “It hasn’t slowed down. It’s a little more difficult to qualify now, which is why we’re a little more focused on town-homes and affordable houses.”
Andrews, the Nevada division president for homebuilder Tri Pointe Homes (formerly Pardee Homes), said he’s seen many ups and downs during his 30-plus years in the business, but that today’s market is unique.
Whether it’s new construction or the purchase of an existing home, prices are up, but demand has shown no signs of a significant slowdown.
In Southern Nevada, the median price for an existing home was a record-high $460,000 in March, according to the Las Vegas Realtors trade group. That represents a 27% increase from the same month in 2021.
In master-planned communities like Inspirada, new homes are typically more expensive than existing homes in other areas.
At Inspirada—the West Henderson community near the Las Vegas Raiders practice facility—Tri Pointe’s selection of new-home choices starts in the high $500,000 range and goes significantly up from there. The majority of those detached homes, according to Tri Pointe construction manager Matthew Gladd, are for former California residents on their second or third home.
“It is unusual that homes have been getting more expensive quickly, but there’s still a lot of demand,” Andrews said. “Some of that is just demographics. More than 50% of our buyers now are millennials or younger, and this is the most qualified group of buyers I’ve ever seen. They have great credit scores and they know what they’re doing.”
At Inspirada alone, Tri Pointe will likely build close to 200 homes this year. Andrews said selling all of them won’t be a problem.
“Supply is so tight, even if demand were to wane a significant amount, which I don’t think it will, we wouldn’t even notice it,” Andrews said. “We don’t have any completed homes that haven’t been sold. That didn’t used to be the case.”
According to the Las Vegas-based firm Home Builders Research, 4,153 building permits were issued in the Las Vegas Valley during the first three months of this year, which represented the highest total for any quarter since the pandemic began.
Since 2018, the Valley has hovered around 11,000 being constructed per year. In Las Vegas alone, nearly 2,800 building permits for single-family dwellings were issued in 2021, a 43% increase from 2017.
Like many other industries, the homebuilding sector has struggled with supply chain shortages and delays.
A big part of that has to do with the effects of the pandemic and the slowing of production of various goods around the world. It’s also been exacerbated of late, Andrews said, by the Russian military aggression in the Ukraine.
Andrews said duct work supplies are hard to come by now, as are air conditioning condensers, an obvious necessity for any home that goes up in the Mojave Desert.
Garage doors were hard to get for a period, though that’s changed recently, he said.
Nat Hodgson, CEO of the Southern Nevada Home Builders Association, said he knows of many builders in the Valley who are stressed. That’s not just because of relentless demand and material supply shortages, but also because of a tight labor market.
“We’re building as many houses as we can right now,” Hodgson said. “I just don’t see how we’re going to be able to build to satisfy the demand that’s out there. It’s never-ending. Look at people coming from California alone … then you look at rising interest rates and the high cost of materials … it just isn’t going in the right direction.”
In Southern Nevada, there are also always questions surrounding water and land availability.
According to a recent report released by research firm Applied Analysis and commissioned by the home builders association, housing demand in the region is expected to “outpace the market’s land capacity within the next 11 years.”
Hodgson said area leaders need to get to work to plan to implement policies geared toward making housing more affordable.
As millions of Southern California residents are expected to continue to seek refuge in Nevada from even higher housing prices in the Golden State in the coming years, it seems improbable that demand within the Southern Nevada housing market will wane at all.
Add to that the fact that the economic effects of the pandemic did almost nothing to quell demand, and that herds of millennials are ready and willing to enter the housing market, and it would seem that the Las Vegas Valley will have a complicated problem on its hands for some time.
“The results of the analysis are clear,” said Brian Gordon, principal at Applied Analysis and author of the report, in a statement, “as Southern Nevada continues to build out, the residential and non-residential land capacity of this community will only diminish over time.”
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