Any town known as “Sin City” is bound to have an image problem.
This may be a fun place to visit, but you wouldn’t want to live here. Right?
That may have been true at one time, but not now.
Everyone knows Las Vegas is No. 1 in gambling and glitz. Surprisingly, it also is the fastest-growing home building market in the nation.
“Home building volume in the country’s hottest housing market-Las Vegas-continued to soar (in the first quarter of 1994),” said David Stewart, executive vice president of Lomas Mortgage USA of Dallas.
Las Vegas topped the Lomas Market Hotness scale last year and seems assured to repeat this year. (Market Hotness measures the rate of home building, not total volume.)
U.S. Housing Markets, a Lomas research publication, reported that new home sales in Las Vegas hit a record 14,000 units in 1993. In the first quarter of 1994, single-family permits jumped more than 40 percent from the same period a year ago.
Over the last four quarters (through March), Las Vegas builders pulled 22 permits per 1,000 residents, by far the hottest pace in the country, according to U.S. Housing Markets.
“This city is the fastest-growing metro area in America,” claims the Las Vegas News Bureau, noting that while the population in 1960 was barely 100,000, it is expected to top 1 million well before the end of the century.
Almost 50,000 new residents arrived in Las Vegas last year, many of them from California, which has been hard hit in recent years by both natural and financial disasters.
But why the boom in Las Vegas?
It’s all a matter of luck-the luck that millions of visitors a year come to test in the gambling capital.
Experts agree that residential growth is casino driven. The foundation for the recent home building spurt was laid in 1989, with the construction of the Mirage, the first new casino/hotel built in on the Strip since 1973.
“Anything that increases job growth brings new housing,” said Dennis Stein, president and chief executive officer of the Nevada Development Authority.
Las Vegas led the nation with a job growth rate of 9 percent in 1993, according to U.S. Housing Markets.
Stein estimates that each new hotel room results in a multiplier effect of 1 1/2 jobs.
Last year, a nearly $2 billion investment resulted in 10,430 additional hotel rooms in three new casino/hotels-Treasure Island, Luxor and MGM Grand-increasing the town’s total to more than 86,000 rooms.
The continuance of a healthy real estate climate seems assured by the recent announcement of two new projects on the Strip-a $750 million, 3,500-room ITT Sheraton casino/hotel to be called the Desert Kingdom; and a $250 million, 3,000-room casino/hotel to be built by Mirage Resorts Inc. and Gold Strike Resorts.
The new casino/hotels, relying on exotic themes to attract a broader range of vacationers, are helping to maintain the popularity of Las Vegas in the face of growing competition, spurred by the spread of legalized gambling, across the country.
In 1993, Las Vegas welcomed more than 23.5 million visitors, who spent $15.1 billion, including gaming revenues. More than 25 million visitors are expected this year.
Robert Lewis, president of Lewis Homes, Nevada’s largest home builder, agrees that the steady gaming growth has helped his business. “Las Vegas also does a good job of booking conventions during the tourist off-season in order to keep employment high,” he said.
He described the local home market as price sensitive. “Most casino workers are not in high-income categories. We focus on entry-level homes to meet the needs of new people coming to town.”
Lewis said buyers can find new single-family homes of 1,200 to 2,000 square feet at prices from $90,000 to $140,000.
Lewis Homes sold a record 1,400 homes in 13 subdivisions last year in the Las Vegas area. Lewis also builds in Reno.
Another major player in Las Vegas real estate development is Summa Corp., the Howard Hughes company.
In the early 1950s, billionaire industrialist Hughes acquired 25,000 acres in the desert northwest of Las Vegas. In 1988, Summa Corp. began developing 22,000 acres of the property into a master-planned, mixed-use community called Summerlin.
At its projected 25-year build-out, Summerlin will be home to 180,000 residents in 30 distinct villages. In the first phase, 12,000 residents have moved into three of the villages.
More than $110 million was spent on the infrastructure of Summerlin, which, in addition to residences, will have office parks, shopping centers and educational, civic, and cultural facilities.
“Few projects in the U.S. equal the scope of Summerlin,” said Richard Oglesby, the project’s vice president of community development.
Summerlin, which sold 1,200 homes last year, received the Best New Town Land Plan award from the Pacific Coast Builders Conference last year.
Oglesby noted that many of the buyers are retirees and empty-nesters.
One of Summerlin’s largest neighborhoods is Del Webb’s Sun City Las Vegas, an age-restricted (55 and older), active retirement community planned for 14,000 residents when complete.
After opening in November 1988, it already has 7,500 residents and has sold more than 4,000 homes. Offered are 14 floor plans ranging in size from 1,003 to 2,564 square feet and in price from $91,500 to $239,900.
Recreational facilities include two 18-hole golf courses, and two recreation centers (a third one is slated to open this fall). The centers offer tennis, racquetball, shuffleboard, horseshoes, aerobics, miniature golf, and social events.
Don Payne, a longtime resident and former chief of the Las Vegas News Bureau, said he rarely goes near the Strip unless it is with visitors from out of town.
He stressed that the view of Las Vegas as Sin City and the adult Disneyland has been steadily waning, and praised the town for its many benefits-the convenience of 24-hour shopping, the benign climate (with sunshine 85 percent of the time), the low-cost dining (subsidized by casinos), the big-name entertainment, and the recreational options-almost two dozen golf courses, water sports at nearby Lake Mead, and even snow skiing on Mt. Charleston within an hour’s drive in winter.
“But there’s a downside to the explosive growth,” Payne said. “It’s getting overcrowded. The streets are lagging behind home development, and there’s constant congestion at McCarran International Airport (15th busiest in the nation).”
On the plus side, Nevada is luring new residents because of its favorable tax structure. There is no state income tax, no inheritance tax and no sales tax on food for home consumption and prescription medicine.
This is also a college town. Nearly 20,000 students are enrolled at the University of Nevada Las Vegas.
“Because new home prices are much lower here, buyers from Southern California feel they’re getting a good deal,” Lewis said. He added that fees for developing a typical California lot may run from $20,000 to $30,000, compared to $3,000 to $4,000 in Las Vegas.
How long will the boom last?
“Some builders fear the market could get overheated,” Lewis said. “It’s a bad sign when speculators come in and create artificial price increases.
“We’ve been flooded with builders from other areas. There are 150 different builders doing over 200 active subdivisions. We’re conscious of the possibility of overbuilding.”
However, that time hasn’t arrived yet.
Oglesby said there is only a two- to three-week inventory of homes, and the vacancy rate in Class A commercial buildings is low.
“Everybody is planning for when the real estate market returns to normal, but now the signs are positive. A lot of new businesses are coming from California.”
Among them are Kloehn Co. Inc., which has signed a $3.6 million deal to build a medical research product manufacturing facility, and Household Credit Services, which will build a 127,960-square-foot credit card processing facility. Both projects will be at Summerlin’s Crossing Business Center, an 80-acre business park.
Oglesby pointed out that there is a physical limit to growth because the Las Vegas valley in ringed by mountains.
On the horizon, though, is continued casino-driven prosperity, as yet another new resort on the Strip is planned. Steve Wynn, chairman of Mirage Resorts Inc., said a luxury property will be built at the Flamingo Avenue end of the old Dunes site.
“We hope to unveil specific plans later this year,” Wynn said.
