Mike McGee remembers when he could see all the way downtown from the Eldorado neighborhood in North Las Vegas and the land between them was mostly barren.
That was 1989, when Pardee Homes started building North Las Vegas’ first master-planned community.
The market potential in the north end of the valley was largely unrecognized at that time, said McGee, who is president and chief executive officer of the Los Angeles-based home builder.
Within a couple of years, there were about 30 builders scrambling for lots out there.
“We always went into areas where we saw potential for build-out,” McGee said.
Today, that would be in the southwest Las Vegas Valley, where Pardee has 320 acres for development in its Nevada Trails community, and at Eldorado, north of Ann Road, where another 2,000 homes are planned for the 300 remaining acres.
Pardee has already committed to taking 31 acres of Bureau of Land Management land in North Las Vegas to be developed by a partnership between Del Webb and American Nevada corporations.
McGee was in town recently for Pardee’s 50-year anniversary celebration of doing business in Southern Nevada. Over that span, Pardee has built more than 25,000 homes here, including 910 last year, making it the No. 4 home builder locally.
Klif Andrews, vice president of community development for Pardee in Las Vegas, said the company expects no slowdown in the housing industry this year.
He said Pardee has increased production by about 50 percent since 1997, and projects it will build a record 1,100 new homes this year.
With 16 neighborhoods currently selling Pardee homes in Las Vegas, the company is riding the crest of strong new-home sales in Las Vegas, which set a record last year at 22,940.
While most Americans still view home ownership as their best investment, the housing industry’s bubble is about to burst, said Paul Kasriel, an economist for Chicago-based Northern Trust Co.
He noted that home prices nationwide increased by 8.1 percent last year, the largest appreciation rate since 1987. Not since the late 1970s has residential real estate been such an attractive asset to own.
“Has the public caught on to this? You bet it has,” he said. Owner-occupied housing is now more highly leveraged than at any other time in the post-World War II period.
“So long as the Fed aids and abets the creation of credit, which it is doing mightily now, the housing asset bubble can continue to inflate,” Kasriel said.
“But when, not if, the day comes that the Fed no longer has the policy latitude to create more and more credit … a chart of housing prices will start to look like a recent Nasdaq price chart.”
McGee said it’s true interest rates are at historic lows, but he doesn’t see the bubble bursting.
“Think about sitting around and hearing our parents say they’re paying 6 percent interest and thinking, `I’ll never see that.’ People are still saying that now,” he said.
“Whether or not they’ll see appreciation at the same levels they are today in Las Vegas, they’re still looking at low 6 [percent] to 7 percent rates and saying, `This is where we want to be in the long term with our family.’ “
As utility rates skyrocket, McGee said the trend in housing construction is to make homes more energy efficient. Pardee says it is ahead of the curve in that respect with its ComfortWise Energy Star homes that create energy savings of at least 30 percent.
The company that was founded in California by George, Hoyt and Doug Pardee in the 1930s is Southern Nevada’s longest established home builder, starting with duplexes in the Francisco Park area of Sahara Avenue (then San Francisco Street) and Maryland Parkway.
The $10,500 structures were called “forever houses” because they featured cinder block construction, steel doors and rock roofs.
Pardee then was able to get the first no money-down, VA financing and sold $11,000 homes in the 80-acre College Park site in North Las Vegas, where land was purchased for about $1,500 an acre.
The median price of a new home in Las Vegas has climbed to about $179,000. Prices for Eldorado’s 12 model homes range from $139,000 to the mid-$230,000s.
