Friday, June 3, 2011 | 2 a.m.
- New-home sales up, but pace remains sluggish (5-24-2011)
- Foreclosures making it difficult for new homebuilders to compete (4-22-2011)
- Report: Providence, Mountain’s Edge among top-selling communities (4-6-2011)
- Boom-bust era leaves architectural scars across valley (12-19-2010)
- Master-planned Rhodes Ranch looking to add 222 new homes (10-14-2010)
- New-home communities take a step back (4-16-2010)
On one side of Gibson Road in Henderson sits Vantage Lofts, a cluster of half-finished structures developers once dreamed would house modern condominiums with sweeping views of the Strip. Touted as an alternative to the typical suburban home, the $160 million development broke ground in 2005.
Today, it sits empty. Chicken wire pokes from unfinished patches of stucco. Plywood covers holes where windows should hang. Shards of glass litter an entryway to the sales office.
Across the street are three more half-finished structures — single-family homes. But these are not abandoned. In fact, every day construction workers add more touches. Soon, families will tour them and perhaps buy one of the dozens of houses planned for the development.
A monument to the overbuilding of the boom sits next door to, well, more building. It’s a puzzling sight.
Why build homes when existing stock is so plentiful and cheap — and empty? In a city wracked by unemployment, foreclosure and out migration, new housing projects are counterintuitive.
Yet new housing developments are slowly springing up across the Las Vegas Valley as abandoned projects fall into disrepair.
Developers, real estate experts and housing analysts say the strategy of building amid the ruins of the boom is a sound one. There’s demand for new homes. And although more building is likely to push underwater homeowners further into the deep, it could help reignite the local economy, they say.
“Not everyone likes a used house,” said Dennis Smith, a real estate analyst and the president of Home Builders Research. “Prices are low enough that a lot of people are looking at new homes. They’re selling for historically low prices.”
In Henderson, KB and Ryland Homes are developing vacant land at Horizon Ridge Parkway and Gibson into plots for more than 200 single-family homes. The planned communities, which will sit side by side, are the second and third single-family developments to break ground in Henderson in three years.
They signal economic renewal, city Planning Manager Michael Tassi said, but are far from the beginning of a resurgence. During the boom, Tassi’s department saw three projects break ground every week.
Still, more housing developments are in the pipeline. At the same intersection where the KB model homes are going up, three more plots have been approved for housing. Most of the developers, including KB and Ryland, plan to build the homes after they are sold.
“These developers and homebuilders, their job is to build houses whether they sell quickly or slowly,” said Chris Thompson of RCI Engineering, the firm working on the KB and Ryland projects. “But I don’t think anybody is just building houses these days” without buyers lined up.
Developers learned that lesson from the bust. Years after the economy crashed, new homes in communities built at the end of the boom remain vacant. Many can be found blocks from KB’s newest models. There’s Mountain Terrace (grand reopening!), Bella Terrace Apartments (check out our specials!) and Village South (pool size lots!).
In that regard, the build-as-they-sell approach makes economic sense. If only 50 homes sell, only 50 are built.
But it also opens the door to the possibility of half-constructed communities. Case in point: Just west of the new Gibson development is the posh La Luz community, with beautiful welcome gates and only four houses. Three are bank-owned and for sale. Signs still advertise the rest of the development — “coming soon” — which has sat as vacant desert for years.
Housing analysts predict such a situation won’t be repeated with the developments being built. Each month, 300 to 400 new homes sell in the Las Vegas Valley, making up about a quarter of all home sales. Although the experts admit they have no crystal ball, many anticipate a stronger market for new housing this year than last.
Homebuilders are trying to anticipate what buyers want: bigger closets, fancier kitchens, office nooks as standard features and no dining rooms. The new houses look markedly different even from homes built five or six years ago.
Smart developers also have positioned themselves against “hard to repair” foreclosures and slow-moving short sales.
“With a foreclosure you don’t know what you are getting,” said Steve Bottfeld, a housing market analyst and the executive vice president of Marketing Solutions. “Most neighborhoods that have one foreclosure have more than one foreclosure, so you have no idea what your neighborhood is going to look like in three or four years. People don’t buy new homes to rent. People buy new homes to live in.”
Remove buyers’ preferences from the equation and Clark County needs less, not more, housing. About 16,000 homes are for sale at any given time in Las Vegas alone. Nevada has had the highest foreclosure rate in the country for 52 months straight. One out of every 97 homes are in foreclosure. And people are leaving the area faster than they are moving in. Patient buyers can snatch up distressed properties for pennies on the dollar.
But many aren’t willing to take the risk. And new houses are often only negligibly more expensive than old ones.
Residents who buy into KB’s Versante or Ryland’s Zephyr Ridge developments could get a deal. The KB houses, from 1,700 to 2,500 square feet, start selling from $180,000. The new neighborhood could be booming in a few years.
Meanwhile, there are still no plans to resume work on the abandoned Vantage Lofts.
The property was supposed to go up for sale at a recent tax auction but was pulled from the block at the last minute. It still sits half finished.