LUXURY SINGLE FAMILY HOMES FIRST QUARTER REPORT
A Coldwell Banker Premier Realty Real Estate Market Report
Posted: May 13, 2015 by Jesse Olive
REVIEWING THE MARKET
LIFESTYLE, BEAUTY & VALUE
The Luxury single family home market in Las Vegas continues to show relative strength. The year is starting off relatively well and should be similar to last year in which the market reflected strong interest in high quality homes in prime locations. 2013 was certainly stronger, but that reflected a very solid year.
Prices continue to trend upwards but we still view the market as having significant value across three key areas, lifestyle, replacement cost and comparative value. Lifestyle is the principal reason most owners purchase their homes. Comfort, entertainment options, security, views and outdoor living options are typically central to the choice. Las Vegas has some fine examples of prime homes that meet even the strictest demands, the result of passionate design and craftsmanship.
In terms of pricing, many homes continue to trade for less than replacement cost, signifying some further embedded upside and contractors are telling us that they are facing higher labor and material costs.
When we view local market transactions versus other prime homes in desirable areas such as Southern California, the picture of value becomes more defined. For similar architectural designs, we see many homes in California (even in noncoastal markets) trading for a multiple of the prices on similar homes in the Las Vegas area.
The Ridges, Anthem, Beleza at Southern Highlands, Foothills at Macdonald Ranch, Red Rock Country Club, Eagle Hills, Lake Las Vegas and Tournament Hills are just a few examples of areas with fine examples of prime residential real estate. So far in 2015 through the multiple listing service, the highest sales price per-square foot took place in The Ridges, a premium southwest area neighborhood. This home achieved a selling price of nearly $646 per-square foot and featured a contemporary design, a massive pool, a theater, spacious living areas and unique finishes. This great example in The Ridges was also the highest sale in terms of absolute price.
While many homes that sell in these price ranges are contemporary, there were also some old world and Tuscan examples. In Las Vegas, you can find a wide array of designs, some of which took years for craftsman to complete. For buyers that want to express their own set of visions, there are a multitude of custom lots available, including those being offered in the Summerlin area by Howard Hughes Corporation or the many privately held options in the Henderson and Northwest areas. The Howard Hughes-Discovery Land Co. project south of The Ridges promises to be one of most exclusive luxury communities in the Southwest U.S, so we look forward to seeing activity there soon.
There is also real estate for buyers that desire semi-custom options with several builders producing excellent choices, including Lennar’s Olympia Ridge in Southern Highlands, when including options. William Lyon Homes has been active
in the Summerlin area and has delivered some impressive designs with excellent finishes that sold very well. There are also several private builders, such as Touchstone Living, that builds estate-sized homes. Emerald Homes, which is DR
Horton’s luxury division, is also building homes near Buffalo and Oakey.
Although some individuals view their home as an investment, luxury homes are emotional real estate. As such, they present unique challenges to both sellers and buyers when examining values. Similarly, we have seen two different
appraisals on the same home that had a very wide disparity because each of the “comparable sales” is so unique. A home is worth what somebody will pay for it and not all individuals view certain home features equally.
SELLERS' MISPERCEPTION OF VALUE
Another challenge that we observe is from the viewpoint of sellers. Many homes that trade in this prime category are custom homes. Custom homes can be a labor of love and certain features may be near and dear to the original owner
but do not necessarily translate into value for other interested parties. These points of discussion can be a major hang-up between buyers and sellers.
There is a certain amount of obsolescence we are seeing in some homes in this category. While lot position, views and the overall structure may be excellent, dated kitchens, chopped up floorplans and un-renovated bathrooms have been a source of major objections by buyers, many of whom desire several modern features, even in homes that generally reflect an old world style or mid-century feel. Several features that many buyers want are open floor plans, automation, pools and energy efficiency. These are just a few considerations for some sellers.
LUXURY HOME PRICE PER SQUARE FOOT
KEY MULTIPLE LISTING SERVICE STATISTICS
LUXURY SINGLE FAMILY HOME MONTHS-OF-SUPPLY IN MULTIPLE LISTING SERVICE
Marketing times tend to be substantially longer for luxury homes than traditional listings (112 vs 74 respectively). In fact, several have taken nearly one year in this sample. Clearly a smaller pool of effective buyers and the unique nature of each home influences days on market.
DISTRIBUTION OF DAYS ON MARKET - QUARTER 1
RELATIVE SALES PRICES FOR SELECTED LUXURY HOME COMMUNITIES - QUARTER 1
Notice that for homes that are greater than 6,000 square feet, prices become highly dispersed. This is due the uniqueness of these homes in terms of area, lot configuration and overall building design and finish. Uniqueness can be a source of pride for the owner but makes it difficult to establish probable selling prices.
NUMBER OF HOMES THAT TRADED FOR AN EXCESS OF $750,000
If we ignore the real estate boom period in which both prices and transaction levels reached absurd levels, 2013 was a relatively strong year. 2014 generally had some of that momentum carried forward, although not with the assertiveness of 2013. Buyer interest remains quite strong this year as well and supply is up slightly from the same time last year so there is a possibility that 2015 may at least meet the 2014 figures.
LUXURY HOME CLOSINGS & EXPIRED LISTINGS - QUARTER 1
While estimating a probable selling price is a particular challenge for luxury listings, one should be continuously aware of nearby listings. We like to inform our clients of new listings, recent closings and importantly, expired listings. Expired listings often give us almost as much information as actual closings. These can often be used to gauge the reasonable domain of likely sales prices.
Expired listings for luxury homes were relatively less frequent in the past two years and 2015 will likely be similar.
We posit several possible reasons for this. One, transaction levels have been high enough to establish comparables, two, the very wealthy have generally done very well in the last couple of years (alleviating issues with impractical sellers) and finally, more stable price trends alleviate any “market chasing.”
SELECTED LUXURY HOME COMMUNITIES
Luxury buyers can expect comparable amenities with other prime real estate areas. Moreover, as an international destination, Las Vegas represents both a trophy aspect as well as a variety of lifestyle and practical options for the affluent. The map above illustrates some key premium areas. In addition, there are many custom estate and equestrian properties not depicted here.
The reasons for having a residence in Las Vegas are manifold, including potential tax benefits in Nevada, proximity to several of Southern Nevada’s key industries, lifestyle options like high-end dining, cycling, auto racing and aviation and many others. In addition, many prime areas include excellent vantage points of the Las Vegas strip, golf courses or mountains. Southern Nevada’s favorable weather means that many of the well conceived pool, spa and exterior living spaces are utilized almost year round.