Las Vegas has been synonymous with excess for as long as the hotel-casino concept has existed. But its reputation as “Sin City” doesn’t adequately capture the Vegas of today.
Since the debut of Bilbao-inspired CityCenter in 2009, Las Vegas has continued to evolve beyond its glitzy and kitschy image as an adult playground. Today it’s a cultural metropolis brimming with world-class art, architecture, and five-star entertainment.
The city has a changing skyline to prove it. Every time you turn around, it seems like there is another new something opening its doors or breaking ground. There’s the Fontainebleau, the famous Miami Beach luxury hotel, set to open in 2023. The Las Vegas Arts District is also being revived in the image of Miami’s white-hot Wynwood District. New professional sports teams, from NHL’s Vegas Golden Knights to the NFL’s Las Vegas Raiders have also entered the scene in the last few years, filling up the city’s stadium space – and making the $1.9 billion Allegiant Stadium all the more necessary. (Rumors are swirling that an NBA team and MLB team could be in the works as well.) Seemingly on cue, Tim Leiweke’s Oak View Group recently announced plans to build a $3 billion sports and entertainment district, which will include an arena, hotel, and casino. Formula One has also announced a Las Vegas race for November 2023, which will undoubtedly raise the city’s global status yet again.
The city’s population growth matches the development side. During the pandemic, the metro area’s population grew to 2.839 million people, according to U.S. Census Bureau data. UNLV’s Center for Business and Economic Research team expects the population to surge by 42% – to 3.383 million people – by 2060.
Bob Hamrick is the least bit surprised. As Chairman and CEO of Coldwell Banker Premier Realty and a Vegas real estate veteran of 42 years, he’s seen his fair share of booms. (And busts.) He and his wife Molly Hamrick, also a seasoned agent with over 32 years of experience, acquired the Vegas franchise of Coldwell Banker in 1998. The couple quickly took it from a $7 million business to a $35 million powerhouse with 300 agents in three offices in Southern Nevada. Their company’s 2021 sales volume blew past those numbers. They ended the year with nearly $1.5 billion in closed sales.
To get their team’s pulse on all things Vegas, we recently sat down with Bob, Molly, and their Vice President of Research, John McClelland.
Coldwell Banker Global Luxury In one word, how would you describe the Vegas luxury real estate market today?
Coldwell Banker Global Luxury Can you expand on ‘expanding’? [laughing]
Bob The city is expanding in the sense of who is moving to the city when you consider the in-migration of the luxury masses. We have new luxury buyers coming from California, New York, and Illinois who view our housing stock as relatively affordable compared to their home markets. Professional sports players and executives have also been a huge addition to the global luxury real estate marketplace here in Las Vegas over the last few years. Homebuilders have expanded into the luxury market sector as well, like Toll Brothers and others. Their prices have now reached into and beyond the $1 million price range.
John Our prices in the top 10% of the market have risen 18% from January to April 2021 and 57% from 2019 in the same period.
Coldwell Banker Global Luxury What’s been the most surprising change to happen to the Vegas real estate market in the last two years?
Bob The biggest surprise has been the enormous interest in luxury real estate and the growth of the sports side of our community. It has taken off beyond what we expected. When the NHL’s Vegas Golden Knights were the first team to come to Las Vegas in 2017, there were all these questions about the challenge of having gambling in the same space as sporting events – but now we have the Las Vegas Raiders playing at Allegiant Stadium and soon, the Oakland A’s are likely going to be moving here.
Molly Demand for Las Vegas continues to increase every year, attracting luxury developers and causing local developers to think differently about luxury real estate. We are seeing pockets of urbanization offering mixed-use residential and commercial real estate. Corporations, sports teams, and wealthy executives all have their eyes on Las Vegas. As Bob mentioned, our city has attracted various professional sports teams such as the Aces, one of the nation’s leading professional women’s basketball teams, a major league soccer expansion team, and Formula 1 coming to the city next year. It’s exciting, to say the least!
Bob I’ve also been surprised at the return of the gaming industry. For the last 13 months, our gaming revenue was $1 billion. The last month alone was $1.34 billion. And international travel and conventions have not even come back in their entirety yet.
Molly Las Vegas has a tremendous platform for conferences with world-class facilities. It’s one of the only places in the world where you can attend a conference, then head to a five-star restaurant and see a show or attend a sports event at night. The Strip has been transformed in the last few months, with $22 billion worth of projects set to be built. We have the T-Mobile Arena, the new Allegiant Stadium where the Raiders play, the newly completed one-of-its-kind MSG Sphere, The Smith Center for Performing Arts, and new arenas for performances and attractions coming soon.
Coldwell Banker Global Luxury Which trends are dominating 2022 so far?
Bob From a design perspective, I would say the warmer side of modernism. Today’s modern is not the cold, sterile modern of the early 2000s. Homes are also much more tech-influenced today. Indoor/outdoor living has become hugely important to Vegas luxury buyers. Being able to slide open a large glass door and hide it away is regarded as a great feature. Sustainable design has also gained interest among both buyers and builders.
Molly Buyers like the idea of bringing nature into their indoor environment, causing it to have a more outdoor feeling. Vegas is very warm for many months during the year, so it’s nice to be able to take advantage of our climate and celebrate the connection to the outdoors. We’ve also seen a desire to leverage flex spaces within the home for our luxury buyers who are executives working remotely, those who are looking for a better work-life balance, or those who have chosen to call Las Vegas home while their firm is located elsewhere.
John We saw a lot more interest in pools during the pandemic. A lot of extremely wealthy people were thinking about their living situations, and they wanted bigger outdoor settings with pools and smoother transitions between indoors and outdoors.
Bob Velocity of price is another trend. The amount of sales is increasing and the average sales price is significantly increasing. We are very high on the list for appreciation across the country.
Coldwell Banker Global Luxury That brings me to my next question. Realtor.com®’s April housing data release just came out and it found that Las Vegas was among the metro areas that (+32.6) posted the highest year-over-year median list price growth in April. Can you speak to what’s happening with prices and why they are rising at such a pace?
Bob Out of all of the migration coming to our market, Californians make up 40% of it. The Las Vegas area is attractive to Californians because our home prices are significantly less than typical California home prices. So, Californian migration has been partly to blame for our price appreciation. The locals aren’t happy about it, but at the same time, this has also been a huge opportunity for our marketplace. Last year, we saw a 23% price appreciation. In March of this year alone, it was a 3% appreciation! So far this year, we’ve experienced over 10% price appreciation.
John And these are not isolated years. It was similar in 2020 too. This market is beginning to adjust a little bit, as we’re starting to see the effects of inflation, wars, and rising interest rates.
Bob I believe we must tell our clients who are considering the idea of selling that right now is the best time to put your home on the market. The impact has not yet hit our market. There is still a huge demand for properties and there is still a relatively low amount of homes for sale. We don’t believe prices are going to go down. But we believe that the market is going to be more balanced.
Molly Especially from a competition standpoint because sellers want to be competing for the buyers of today rather than the buyers of tomorrow as inventory increases.
John We consider ourselves to be fairly undersupplied. Three to four months of inventory is normal. Right now, we are at 18 days.
Coldwell Banker Global Luxury Besides inventory, what other factors are driving prices up?
John We talked about in-migration from California and other high-cost regions, and low-interest rates played a role in that since two-thirds of buyers in our market are rate sensitive. The lack of supply and the inability to deliver supply – thanks to our supply constrictions, land availability and construction delays have all contributed to Vegas price appreciation.
Bob Builders have also not responded to buyer demand over years. Remember, Las Vegas was the epicenter of the Great Recession. We were building 30,000 homes a year at the peak in 2008-2009 and we dropped down to 2,500 homes a year. We have slowly paced up to around 10,000 homes a year. We are still well below demand.
Molly We are also seeing prices rise because of the sheer increases in labor and products Inflation and supply chain play significant roles in pricing.
Coldwell Banker Global Luxury Switching gears, how do you see climate change – especially droughts –impacting the property market in your desert region?
Bob There is no doubt that we have a water problem. However, city officials have been preparing for this for more than a decade and have worked very diligently on the conservation side. We have removed a lot of turf and planted more desert-friendly landscaping. Since about 90% of water consumption within Las Vegas comes from outside landscaping, that’s the biggest opportunity for conservation. At the same time, the visual of drought-starved Lake Mead, which is our water source, has a lot of people scared. We are ahead of that. The city invested $1 billion to build a third “straw” deeper into Lake Mead and a low-level pumping station to ensure it could continue to draw water from the reservoir if water levels get low. Should Lake Mead water no longer pass through the Hoover Dam, this will have more of an impact on other states like Arizona and California – because they can’t pull water when the lake gets below a certain level. But the water authority has a 50-year plan that contemplates all of the challenges ahead and can serve the valley’s water needs far into the future.
John Water reclamation has been dealt with really well in Southern Nevada. Las Vegas is the closest major city to the actual dam, so it’s a focal point and a regional issue.
Bob What sometimes gets exaggerated in the media is that we are building so much and growing so much that we are going to run out of water. But the reality is, we are using less water now than we were using 10-plus years ago. Our water conservation as a community has been significant.
Molly And we are building better, more efficient homes too. The footprint of a new home as it pertains to water usage is significantly lower including new landscaping laws restricting front lawns and water features.
Coldwell Banker Global Luxury Speaking of new construction, is anything exciting happening on the development front?
Bob We are seeing the return of high-rise construction in Vegas and that’s a surprise coming off of the last two years. A $600 million two-tower luxury resort-style condominium project was recently announced for MacDonald Highlands in Henderson. If approved by the city, it would be the first high-rise built since the Great Recession. The project is called the Pinnacle Residences at MacDonald Highlands. Already, the interest list far exceeds the units that it has available. Prices are expected to start at $1.5 million and go up to $13 million for penthouses, which have their own private pool on their terraces. We believe the high-rise market is not going to be as euphoric as pre-recession, but demand is there.
Molly There’s also a mid-rise development in The Summit, the most expensive land in Las Vegas. The Summit is a newer 555-acre guard-gated development in Summerlin with a golf course designed by Tom Fazio. It’s built by Discovery Land Company, which is known for these types of developments. They cater to an affluent clientele that often buys in multiple markets and price is largely irrelevant to them.
John The assumption in the high-end market is if people like it, they want to live there and will pay the prices. In regards to The Summit, some of the sales got up to $8 million for custom homesites alone in 2022 and $15 to $16 million for custom homes. We may not see the newest custom homes trade for a while. And if we do, we could likely breach that $15 million mark. I don’t think it would be out of the realm of possibility to reach $30 million at some point.
Molly There is another new development – a very exclusive and secluded 63-acre guard-gated luxury community called The Ranch at Red Rock. There are 20 homesites in the community, ranging from 2 to 4 acres, and are selling for about $3 million to $6.5 million. That’s just for the land.
John It’s been interesting to watch the resurgence of Lake Las Vegas, especially during the pandemic. Lake Las Vegas was in very big trouble in 2008 and 2009. The developers let the golf courses go brown and partial lots were not being completed. Now it’s a hotspot for the luxury market today as people went in search of more open space and amenitized communities. Public builders are now delivering at the $900,000 mark, which would have been unheard of just two years ago. Taylor Morrison just announced that it will open three new communities with 435 home sites in late 2022 and early 2023.
Molly Blue Heron in Lake Las Vegas also just sold out its first phase, and that was a luxury attached product. How they built that product was thoughtful since there was only one common wall, with backyards and it brought down the net cost. I could see it being a blueprint for future luxury-attached communities. That kind of product is very appealing to second homeowners. To John’s point, there is a market in Las Vegas for a luxury property that is not on a large lot yet still has all of that privacy and is accentuated by access to a golf course, resort, and social amenities.
John There is a desire for attached product that has interesting design with great amenities and efficient use of land. It matters to Vegas buyers.
Coldwell Banker Global Luxury Final prediction for Vegas real estate as we head into the mid-year?
Bob Our confidence in the continued growth of the Southern Nevada housing market is unblemished. We believe in our community and it’s going to continue to expand. This is our long-term view. What it is going to look like over the next 18 months is a little harder to predict. We don’t yet know the impact of the forced increase of interest rates to control inflation. We don’t yet know what’s that going to look like. So there are some concerns for the short-term, but we are extremely confident in the long-term strength of our market.
Molly Nevada’s tax structure continues to be attractive to the wealthy as well. You can’t get that in New York or California. Recently, a client from California who was buying here told me he was saving $800,000 on taxes!
John Las Vegas is evolving into a luxury home market like Scottsdale and some of the Colorado markets. It’s now on the radar of the uber-wealthy.