A generation or two ago, only the Rockefellers, the DuPonts and other members of the financial upper crust could afford $1 million-plus homes. But what was once attainable by only an affluent few is now becoming more and more the norm in Nevada, as tax-savvy entrepreneurs, California homeowners with built-up equity, and empty nesters with viable investment portfolios discover a bonanza in Las Vegas, Reno and Lake Tahoe luxury home markets.
Supply and Demand
Two factors are responsible for creating a recent abundant supply of luxury homes. An assumption during the last few years that the stock market would continue on its lofty climb resulted in a building frenzy based on anticipated investment growth. In addition, demand has decreased because of the dot-com crash, the after-effects of Sept. 11, a soft economy and consumer hesitancy during the Iraqi War.
“We have an oversupply and an underdemand, which means we’re overbuilt,” said Robin Yates, branch manager of Dyson & Dyson’s Green Valley office in Henderson. “But that means there’s lots of inventory, lots of choices and lots of bargains for those buyers looking for high-end real estate.”
Gary Canepa, president-broker-owner of RE/MAX Realty Professionals in Reno, expressed similar reasoning for the northern metro market. “High-end sales flattened out drastically after Sept. 11,” said Canepa, who has been selling Truckee Meadows real estate for the past 27 years. “Now that the stock market is picking up, high-end sales are starting to turn around again. It’s definitely picking up.”
In the Tahoe area, the same holds true. “Since Sept. 11, a lot of people have been tentative,” reported Dickson Realty President Nancy Fennell, who has an office in Incline Village, as well as in Reno. “A lot of these people have been sitting on the fence, holding off, but we’re beginning to see people take money out to diversify their portfolios with real estate.”
Dennis Smith, president of Home Builders Research in Las Vegas, also said the stock market crash a few years back is responsible for market forces being out-of-kilter, but said developers have responded with more caution. “In the future, it’ll be primarily a matter of natural forces at work in the housing market,” he stated. “As long as there’s a golf course to build on, they’ll keep building them, but there will be more of a controlled supply.”
According to Southern Nevada’s Multiple Listing Exchange, today there are more than 430 $1-million-plus homes for sale compared to only a handful 20 years ago and even less 30 years ago.
“We didn’t have any [million-dollar homes] 30 years ago, but shortly after that, it suddenly exploded,” recalled Florence Shapiro of Prudential Americana Group Realtors, who sold 42 homes last year, 24 of them for $1 million or more. “There were a few in Rancho Circle, Sierra Vista and at the Las Vegas Country Club, but when Spanish Trail opened, then, too, came Green Valley, Tournament Players, Queensridge, the Fountains, and now The Ridges and Southern Highlands. The thing is, the demand has always been there.”
Elegant high-rise condos, such as Turnberry Place and Park Towers just off the Las Vegas Strip, have been successfully added to the million-dollar mix in recent years, but as Yates said, “Those places are for the type of people, usually from the East Coast, who are looking for the luxury high-rise lifestyle.”
With a glut of new single-family product and resale listings pouring in daily, real estate agents now are faced with an unparalleled marketing challenge – creating, selling and closing the deal.
Almost all agencies and agents use a variety of traditional methods – newspapers, magazines, TV, brochures and signs – in varying degrees at the local, regional, national and even the international level, but the one thing they all agree is that the Internet has revolutionized real estate selling.
“The Internet really opened up the real estate industry by giving out a lot of information, which is good,” Fennell said. “By going on the Internet, buyers and sellers, in general, are becoming more sophisticated. They come to us much better informed or with specific questions.”
Mark Stark, president-broker-owner of Prudential Americana Group Realtors, agreed, noting the importance of personal communication. “E-mail between a prospective buyer and an agent goes a long way,” he said. “Customers appreciate it when the agent gets back to them with an answer. That makes the Internet a powerful tool.”
Calling it “fabulous” and a “wave of the future,” broker Victor Lockhart of Chase International, with five Lake Tahoe offices, said his 20-year-old company gets 20 percent of its leads from the Internet, which is complemented by a toll-free telephone number.
An additional component to Internet marketing has been the ability to take an electronic tour – a virtual tour – of offered properties inside and out.
But one of the most important marketing tools in an agent’s selling kit remains the interactivity through agents – both locally and nationally – and referrals. “RE/MAX is known all over, so our reputation is important,” Canepa said. “I’d say 70 percent to 75 percent of our Reno business is by way of referrals or previous clients.”
Stark said being part of one of the largest national real estate companies has its own marketing advantages. “About 30 percent of our buyers are from California. Our partner over there, Prudential of California, is made up of 3,700 Southern California sales executives who did $16 billion to $18 billion worth of sales last year,” he noted. “That helps in two ways. We get referrals, and we piggyback on their marketing dollars. It opens our market to an advertising segment we couldn’t afford.”
And then there are people like Shapiro who, by herself, sold more than 100 luxury homes over the past four years and brought in more than $150 million in real estate sales since 2000 because, as she said, “I’m known for selling high-end homes – that’s all I do.”
The Southern Nevada Experience
“We have no problem getting the listing – the challenge is selling it,” Yates said. “The sellers with the best success will have a quality property that has one of three things – an extraordinary view, a good location on a golf course overlooking a green or tee box, or a nice-sized piece of land like over half an acre. Those who have one or a combination of these factors priced at the market rate or below have the best chances of selling their property.”
Whether it’s out-of-state visitors or homebuyers, California remains Nevada’s meal ticket to prosperity. “More than 35 percent of our purchasers are from California, because when they sell their property in California they have plenty of cash to buy a comparable or better property here and still have cash left over,” Stark explained. “California keeps making all these decisions that deter business, which gives us a better chance to capture those who are fleeing.”
The Northern Nevada Experience
Northern Nevada’s housing sales this year, according to Canepa, again is dependent on the fortunes made and the misfortunes suffered in the state to the west. “People relocating out of California, especially from the Bay Area, are getting good prices for their homes there,” he said. “At one time, a year or so ago, a comparable home selling for $500,000 in Northern California was selling for $250,000 here.”
The Lake Tahoe Experience
With four submarkets – North Shore, South Shore, Glenbrook and Zephyr Cove – prices vary widely, according to Lockhart. A lakefront property near Stateline on the South Shore may sell for $2 million to $4 million, while a similar North Shore residence at Incline Village would sell for $7 million and up because it’s in a planned community. Sales have been abnormally slow, he said, and may be even slower in the future because of recent growth restrictions placed on existing and undeveloped lakefront properties by the Tahoe Regional Planning Agency.
For existing homes being offered, “As long as the homes are priced right,” Lockhart said, “they’ll sell, but the owners have to be flexible in their pricing.”