(Las Vegas, NV – May 8, 2013) As 2013 begins, the Las Vegas housing market has stabilized and is beginning to quickly improve. One of the more challenging issues over the next 2 years will be the availability of lots. This is according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
Annual job growth has remained positive through February, adding 16,000 jobs. Overall employment is up 2% from one year ago. The total number of people employed in Las Vegas has risen to 826,500, the strongest start to a new year since 2009. “While Las Vegas remains much more diversified today than in years past, the market is still heavily reliant on the Leisure Industry. Overall improvement in the broader U.S. economy will do nothing but improve the local economy,” said Greg Gross, regional director of Metrostudy’s Reno, Las Vegas and Northern/Central California markets. The unemployment rate continues to improve and has fallen to 9.8%. The last time the unemployment rate has been below 10% was December 2008.
Through 1Q13; annual single-family new home closings were 5,581. That’s 52% more than in 1Q12. The annual closing pace continues to increase, as does the quarterly start pace. We counted 1,471 new home starts during the first quarter of 2013 compared to 884 starts during 1Q12. That’s an increase of 66%. The annual start pace increased an impressive 71%. “The good news is that production in increasing and at the same time we are seeing price increases. Even the once burdensome attached market has stabilized and new projects are beginning to appear. Annual closings for SFD housing will grow this year but with new inventory depleted, starts will continue to increase,” said Gross.
Finished vacant attached housing makes up 46% of all housing inventory this year, the market continues to suffer with excessive mid-rise and high rise projects that when conceived simply had no real occupancy demand. The finished and vacant attached product represents 80% of all attached inventory; which is 77 months of supply. “The high rise market has seen a significant flurry of activity this year as investors have realized the value of Las Vegas. Entry and mid-level product will be opportunistic as the market slide ends,” said Gross. The attached market has seen sales prices increase nearly 70% this year. Even the once problematic condo market is beginning to recover strongly.
Total finished lot supply has retreated considerably over the past year and lot deliveries have remained slow. Months of supply has decreased to 18.6 which is 58% lower than 1Q13. The net absorption of lots highlights the dearth of deliveries as we are depleting the supply. “The overall supply of finished SFD lots is declining and development opportunities for delivery in the next 4 years must be considered today. With only 9,568 SFD lots and only about 9,000 lots under development, immediate production capacity is still healthy for the next year, however the last time we had this few finished lots was 2002,” said Gross.
“Through February 2012, builders pulled 6,655 Single Family permits over the past 12 months. Compared to 3,908 during the same period of 2012; an increase of 70%. Builder confidence in the market continues to strengthen as the market is at 2008 levels. The new normal will be steady absorptions, increased construction costs and a tightened labor supply. However, a thorough understanding of competitive framework, buyer segmentation and conducting crucial strategic planning will be vital for success. Future projects are beginning to be re-evaluated and the rush will be on to get some of the larger master-planned projects re-started, Kyle Canyon, Park Highlands, Inspirada and Lake Las Vegas to name a few, “said Gross.
For information contact:
greg gross @ 702-739-5855
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
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Hanley Wood, LLC is the premier media, event, information and strategic marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, Newsletters, websites, marquee trade shows and events, Market Intelligence data and strategic marketing solutions. The company also is North America’s leading publisher of home plans.