Recently, a home in MacDonald Highlands in Henderson sold for $5.35 million. While significantly higher than the median sale price, it’s representative of a typical transaction these days, according to real estate brokers and developers in Nevada.
What was unusual about this particular deal was that the 80-year-old retiree in Florida who purchased the home conducted the entire transaction by phone, text and FaceTime, said Darren Melton, a broker with The Melton Group for the Ridges
“He was concerned about the coronavirus,” and didn’t want to travel to Las Vegas, he explained.
“He has also never even lived in Nevada,” Melton said. “My buyer had planned to spend $10 to $15 million on a home because he wasn’t sure what he could get out here.”
Melton said his client came to quickly understand that by spending $5 million in southern Nevada he could purchase the same or even a more luxurious home here than he could in Florida without having to spend three times as much.
Nevada’s luxury home market continues to grow as new residents arrive daily, bringing with them millions of dollars in equity from sales of homes in more expensive housing markets.
It is also being driven, somewhat, by low mortgage rates that have attracted retirees and other buyers with strong financial balance sheets to purchase luxury homes in Nevada.
Melton stressed that buyers can still find a whole lot more home for the money in Nevada than California or Florida.
So far this year, 502 luxury resales with an average price of $1.83 million have sold in southern Nevada, with another 160 pending at an average price of $1.45 million. Sales of new homes priced at $1 million and above have totaled 809.
Despite the continued uncertainty surrounding the coronavirus pandemic, luxury home sales in Nevada continue to be a bright spot in the real estate market.
“Though there is a lot of uncertainty due to COVID-19, Las Vegas is still feeling strong pressure from luxury buyers coming from other states, because Las Vegas offers a great long-term outlook,” said Dan Coletti, president of Sunwest Custom Homes.
Sales and price increase also remain strong due, in large part, to a low inventory of homes.
“The luxury home market is on fire,” said Melton, adding it has been a very good year even with a temporary slowdown when the coronavirus pandemic shut down Nevada’s economy.
“January and February were great months,” he said. “Then the coronavirus hit in March and hardly anything was happening in the real estate market.”
By late April, as Nevada’s largest industry, gaming, remained closed, Melton said consumers were getting back into the market.
“Since May, it has been really strong,” he said. “I have 12 properties in escrow. Vacant land is also in demand.”
Monica Gore, a broker with Dickson Realty, agreed, saying demand for luxury homes is “red hot.” She and her colleagues at the Reno-based real estate firm did $110 million in business last year.
“It’s just been crazy busy,” Gore said. “Then the coronavirus hit, and business slowed for about six to eight weeks. Then it came back stronger than we’ve ever seen.”
Unlike with the traditional housing market, mortgage rates tend to have less of an impact on the luxury market, where instead of taking out 30-year loans, buyers are using profits from a previous sale or investments to make the purchase.
Although some wealthy buyers may take out loans for a variety of reasons, including being able to deduct the interest they pay, with a balance of up to $1 million.
Whether a wealthy buyer or just your average home buyer, consumers continue to take advantage of historically low mortgage rates that continue to hover around 2.83 percent for the average 30-year fixed-rate loan, according to Freddie Mac.
Overall, Melton dismissed the notion that luxury home sales were “driving the market as a whole.”
He said there was a lot of activity throughout the southern Nevada market, with average home prices at $346,200. In northern Nevada, the average home price is $409,375.
A big reason for the booming housing market in Nevada is because so many Californians are continuously migrating to the area. Many off these new residents are retirees or others looking to escape the high cost of living in cities such as San Francisco or Los Angeles.
Other reasons that influence their decision to move to Nevada include job opportunities, leaving heavy traffic and long commutes, as well as high taxes behind. Melton said many of his clients are moving to southern Nevada from California.
“This is a huge driver of the luxury market,” Melton said. “We’ve had a number of $10 million plus properties sold recently. That is all being driven by out of state consumers.”
In September, a Summerlin home in The Ridges sold for $10.5 million. That was only surpassed by the sale of a home in MacDonald Highlands in Henderson, owned by Paragon Gaming CEO and co-founder Diana Bennett, that sold for $11.25 million.
Demand in southern Nevada is for both existing communities and new communities.
Gore concurred, saying demand in the northern part of the state is all coming from California. But Gore noted that’s nothing really new as buyers from neighboring California have been migrating to Nevada over the last few years.
The most recent statistics released by U.S. Census Bureau show more than 50,000 California’s moved to Nevada between July 2017 to July 2018.
Brittany Wegandt, a representative for Parc Foret, a community within Montreux in northern Nevada, said Californians are attracted to Nevada because they are getting something they can’t find in California. Namely, a luxury home from $1.5 million to $5 million, she said.
Coletti has sold plenty of homes to California residents moving to Nevada, but his company, which has built homes at MacDonald Ranch and Ascaya is also designing custom homes for retirees and young families moving to the desert from Chicago, Georgia and New York.
Luxury for Sale
What defines luxury? For some it’s being able to have whatever they want in a home. For others, it comes down to specific features, whether it’s unique materials, design or location.
Melton said location still matters, but where a potential buyer is looking to purchase a property can come down to whether they prefer new communities or more established neighborhoods.
Luxury buyers today are also looking for comfort, convenience, and technology.
Melton said he’s seen demand increase for homes in luxury developments in Henderson, including MacDonald Highlands, Seven Hills, and The Fountains. In Summerlin, homes in Red Rock Country Club are also in high demand.
“They have that feeling some are looking for with lush landscapes and tree lined streets,” he said. “That’s very appealing to a lot of buyers, especially Californians.”
Other buyers are looking for a more modern, contemporary design in a new home, Martin said. Gore said she’s seeing an increase in demand from empty nesters for single story homes. If it’s a two-story home, she said they want a master on the main floor.
“One thing with coronavirus, we are seeing people wanting larger homes because they are spending so much time at home,” Gore said, “They want space for a game room or a home theater. How long that’s going to last, I don’t know.”
Coletti said his clients that come from other states have sold their more traditional style homes in favor of a more “modern, timeless and contemporary” style home.
Materials for a contemporary home traditionally include a mixture of stone, glass, metal and wood. Other features include custom offices, views of the Las Vegas Valley and smart technology. Customers are also requesting larger offices be included in their new homes, as well as exercise rooms due to the demand of working from home during the coronavirus pandemic. Smart homes are also much more prevalent a request in recent times.
Smart homes are typically new or remodeled luxury homes with solar panels or automation throughout the property to regulate lighting or temperature for energy efficiency and low energy bills.
Melton noted that The Summit Club and Ascaya, both located in Henderson, are two upscale custom home communities that have attracted a lot of attention. He said membership at The Summit Club costs about $200,000, with yearly dues around $35,000.
Despite the costs associated with purchasing a lot and then building a custom home, Melton said sales at Ascaya, which borders Sloan Canyon National Conservation Area, have increased in the last 100 days, with many of those buyers coming from California or the midwest.
Gore’s own project at Montreux, near Reno, has 11 homes and 10 lots for sale. Prices for lots are ranging from $279,00 to $515,000, while the lowest home sale price was listed for $1.5 million.
In Reno, homes selling for more than $1 million are considered luxury properties. Around Lake Tahoe, that number starts at $3.5 million for a property to be considered unique.
“We are seeing so much money coming in that homes priced between $3 million to $5 million is not even an issue,” Gore said. “We are listing homes at $4 to $5 million right now, and it’s all Californians at that price point.”
She said they are also seeing a market of move up buyers for their homes.
“We could have 30 homes or more in escrow right now, if we had the inventory,” Gore said. “We are selling homes before they are on the market.”
Despite the listings, Montreux has limited inventory, which concerns Gore as demand for luxury homes in the regions shows no signs of subsiding this year or into 2021. Currently, the planned community has 380 built lots of its 540 total with another 40 under development.
Gore stressed that if a homeowner is considering selling, “they have to have that conversation now or they are going to lose out.”
She noted that one owner has 16 lots in Montreux and that they are trying to get him to sell them. “Everyone is trying to be a bit creative,” Gore said. “If there are lots, we are trying to get them.”
Martin acknowledged that southern Nevada also has a supply shortage of luxury homes. “We don’t have enough supply to keep up with the demand,” he said. “That could change, but I don’t see it changing anytime soon.”
Acquiring land to build single-family or luxury homes has always been a complicated process since 63 percent, or 48 million acres, of Nevada is considered public lands controlled by the federal Bureau of Land Management.
And that doesn’t seem to be changing anytime soon.