Leaders representing Southern Nevada’s housing, real estate, development and construction industries came together this week to address housing attainability and the need for land to help make that possible for potential homeowners.
More than 600 people of the newly created Southern Nevada Development Coalition attended the luncheon Tuesday at The Orleans, where they also discussed water resources, development policy and economic growth.
The program featured Tina Frias, CEO of the Southern Nevada Home Builders Association, and Brian Gordon, principal at Applied Analysis, giving insights about the region’s housing industry and economy.
There were two panel discussions dealing with the relationship between land and water resources, development regulations, housing attainability, public policy and the importance of collaboration in addressing Southern Nevada’s most pressing growth challenges.
Frias said Southern Nevada’s biggest challenges are interconnected and can’t be resolved in a vacuum or with one organization acting alone.
“This is an exciting day for us because this is the inaugural event for a coalition that was founded on the simple thought that Southern Nevada is stronger when our industries are working together,” Frias said. “Expect this to be just the beginning. Expect future events, more collaboration, advocacy and policy strategy where our interests align. Expect us to show up together. We believe that working together increases our ability to be heard, educate and influence good policy. We want Southern Nevada to remain a place where families can afford, businesses can invest and grow and future generations can thrive.”
Gordon said homebuilder confidence in the industry has been sliding because of the increases in the cost of construction and elevated interest rates for buyers. That has prompted a reduction in new-home sales and builders taking out permits.
“There are a number of folks waiting for home prices to drop or interest rates to drop,” Gordon said. “We have not seen this prevail yet, but at some point these folks are going to get off the sidelines and into the game.”
Land availability and costs, unlike other regions of the country, continues to be a concern for Southern Nevada homebuilders, Gordon said.
“We have seen prices continue to rise and not seen massive reductions because the cost is continuing to escalate,” Gordon said. “That’s why we’ve seen prices continuing to hold so the folks on the sideline don’t have a lot of opportunity. Housing affordability is certainly a challenge across the board.”
Two-thirds of Nevada residents can’t afford the median new-home prices, Gordon said. The state’s numbers show that people are $36,000 short of household income to what it costs to afford a new home, today, he said.
“Builders are responding by giving incentives to lure buyers in and making it financially viable to purchase properties,” Gordon said. “We have all seen the discounted interest rates and mortgage buy-downs. They are forking hundreds of millions of dollars in Southern Nevada to buy down mortgages to get people into the houses. They are building houses to sell them. They are going to find a way to do that.”
One out of four sales in the housing market are new homes with the average age of first-time buyers at 40, Gordon said. People are spending their money in different ways these days, especially younger generations. They are spending it on traveling and experiences, and when they invest, it’s in the stock market rather than homes.
The Las Vegas Valley is burning through 2,300 acres on average a year over the past five years, Gordon said. Some 80 percent of the land in Nevada is owned or controlled by the federal government, which means it can’t be accessed for development.
“We are burning through the available capacity that exists,” Gordon said. “There are 60,000 acres in the Southern Nevada urban area that are vacant today. A lot of these properties are held for other purposes, and when we strip all of that out, it’s maybe 18,000 acres that is vacant and not publicly owned. And people will say not all of these properties are developable (with the slope or cost prohibitive).”
One of the primary missions for the coalition will be to get congressional approval to make more public land available in Southern Nevada, Gordon said.
“Land availability is not just about a pricing issue, but it’s an economic development issue,” Gordon said. “We need to have the capacity to bring in more businesses and have more developable opportunities.”
Frias agreed that the need for more land is critical to increase the housing supply. Builders are looking at land costs between $1 million to $1.8 million an acre, and that contributes to the elevated cost of homes.
The coalition plans to go to Washington, D.C., in the next couple of weeks to meet with their congressional delegation to get a federal land bill that makes more public land available in Las Vegas.
