Building Nevada - July 2001

At Home in the Luxury Home Marketplace

Realtors Sell Million Dollar-Plus Residences

by Tom Dye

Nevada’s low taxes, reasonable real estate prices and quality of life continue to lure wealthy buyers who can afford homes in the $1 million-plus range. Whether the home is located on the shore of Lake Tahoe, on a golf course in Reno or on acreage in Las Vegas, a special breed of real estate agents are there to market it, show it and sell it.

Marketing Strategies

Marketing luxury homes and finding buyers takes a lot of work, said Robyn Yates, broker-sales manager for the Green Valley office of Dyson & Dyson, a top firm in the luxury real estate market. "You have to do a lot if you want your property to get attention," she said. The company advertises in newspapers and local and national magazines that feature luxury homes. Dyson & Dyson also features its homes on a Southern Nevada cable program called "Lifestyles of Luxury."

"The Internet is also very important," she said. Dyson & Dyson has Web sites with information on luxury homes, and its agents have personal Web sites as well. Rossum Realty in Las Vegas circulates full-color brochures about its homes in the top hotel chains and resorts throughout the world. It also pays a premium price for a listing in Christie’s Great Estates, which circulates information internationally to wealthy clients.

Selling homes to wealthy buyers is much different than selling mid-range real estate, Yates said. Many upscale buyers pay cash. Those who don’t are usually required to put down large down payments, often as much as 30 percent of the purchase price. Luxury home buyers often have arrangements with private banking departments at financial institutions that assist them in financing homes. They also obtain money from investors, or use their stock portfolios as leverage to obtain capital for a home.

Southern Nevada

The Las Vegas real estate market in particular has grown dramatically in recent years, with business executives, retirees and celebrities often paying cash for expensive homes. Many are custom-built, but elite developments also have multimillion-dollar residences available. Sales of homes valued at $1 million or more in the Las Vegas area soared to 84 in 2000 compared to a mere seven in 1995, according to Yates.

However, there are nagging worries that the boom in high-end homes might begin to slow. The surging stock market in the 1990s was one of the big reasons many buyers had enough money to buy expensive homes. The recent stock market slump, particularly in dot-com stocks, has had a negative affect on real estate. "Growth in the [luxury home] market has slowed down in response to the stock market," Yates said. "A lot of people who lost money in high-tech stocks have been more conservative when it comes to buying homes."

"Sales have leveled off," agreed Dennis Smith, owner of Home Builders Research Inc., which tracks the Las Vegas housing market. "You tell me how the stock market is going to do in the next year and I will tell you how the luxury home market will do." Sales of $1 million-plus homes are still only a small percentage of the overall housing market, Smith pointed out. Escrow closed on 5,126 new single-family homes in Las Vegas in the first quarter of this year. The number of $1 million-plus homes sold in Las Vegas for all of 2001 is expected to be about 100, Yates said.

Real estate experts in Las Vegas say the high profit margins in expensive homes will encourage developers to continue building them. Las Vegas has a large inventory of expensive homes because of speculation that the demand for them will stay strong, Yates said. "We are still selling luxury homes at record rate, but not as many as anticipated."

Ten years ago, wealthy buyers in Las Vegas had few choices in homes. Spanish Trail was one of the first developments to target high-end homebuyers, offering luxury homes with tennis and golf and other amenities, but now expensive homes can be found in developments throughout Southern Nevada. Following the boom in northwest Las Vegas, elite developments such as McDonald Highlands, Anthem Country Club and Southern Highlands have sprung up in the southern area of the valley. Extravagantly-priced houses continue to sell in popular master-planned communities such as Seven Hills and Summerlin. High-rise condominiums for the wealthy are also commanding high prices. The average price for a condo in Park Towers, for example, is $2 million, with Turnberry Place averaging slightly less than $1 million.

"The choices for homes in this area are really amazing," Yates said. "Most of the million-dollar-plus homes sold are in the $1 million to $5 million range, but a few homes run as high as $10 million. There are magnificent homes with 10,000 square feet of living space and six-car garages. They have lots of windows and unique floor plans."

Rising real estate prices in California, combined with its recent energy crisis and growth problems have encouraged buyers to cross the border to Nevada, said Beth Rossum of Rossum Realty. "We have a lot of reasons for people to come here and buy an expensive home," she said. "People come from out-of-town because of our low property taxes and lack of state income tax. And we have a lot of casino executives who can afford to buy expensive properties." Although homebuyers come from all over the world, the interest of foreigners in the Las Vegas real estate market has waned in recent years because of economic problems, Smith said. The Japanese, who once invested heavily in Las Vegas real estate, have backed off in recent years.

Northern Nevada

The Reno-Sparks area also has had a boom in the luxury home market,
although the community is much smaller and has experienced slower growth than Las
Vegas, real estate experts say. Homes valued at more than $1 million are selling in several areas, but the southwest region near the foothills of the Sierra Nevada has been
particularly popular, said Joanne Correira, a Realtor with Prudential Nevada Realty. Three of the top developments in that area are Aaron Creek, Caughlin Ranch and Eagles Nest. The area lacks the supply of ultra-expensive homes found in Las Vegas, but many homes are available in the $1 million to $3 million range, she said. "A lot of businesses are moving to Reno at this time," according to Correira. "The companies bring in top-level executives who need homes."

Californians fleeing the state’s many problems are fueling the Reno market, Correira said. Retirees who have amassed money in 401(k) plans and other pension funds are also choosing Reno as a place to settle down. Prospective buyers of expensive homes are usually easy to deal with, Correira said. "They know what they want. When you sit down with them [to negotiate], they don’t quibble about petty things."

She said having a good view of the mountains or valley is important to buyers of luxury homes in Reno. Correira recently sold a 6,000-square-foot home with an elevator and a good mountain view for $2 million. "Reno offers a quality of life that is not available in the San Francisco Bay area," she said. "People find there is life here above and beyond the casino industry. "We have the mountains, skiing, camping and fishing. Some families just want to go back to the basics and a simpler life."

Tom Dye
Tom Dye is a freelance writer based in Las Vegas.