Home buyers ante up

Think the Southern California real estate market is hot? When’s the last time you were in Vegas?

The desert community, once known exclusively as Sin City for its reputation as a gambling mecca and nightspot rather than as a place to live and raise a family, has been experiencing unprecedented resale and new housing gains and sales since January that make our local market look like nickel slots.

“Last year it was like we were in Kansas,” said Lee Barrett, president of the Greater Las Vegas Assn. of Realtors, “and this year we are in Oz.”

In typical master-planned communities -- where homes are going up by the thousands -- the price increases between phases of development have ranged from 35% to 70% and more in some cases. Buyers are experiencing sticker shock, and sellers are trying to capitalize while they can. And many of those calling Las Vegas home are from Southern California.

“It is the hottest real estate market in U.S. history,” said Stephen Bottfeld, executive vice president of Marketing Solutions, a Las Vegas-based firm specializing in consumer and real estate research. “The only one that was comparable was the 1983-84 market in Southern California.”

One planned development, Silverstone Ranch in northwest Las Vegas, jumped 92% in price from July 2003, when the price for a 1,583-square-foot new home was $197,990. Today, that same home is selling for $379,990. Prices for other larger homes in the development have gone up 86% during the same time period, according to SalesTraq, a residential research company specializing in the Las Vegas, Albuquerque and Palm Springs markets.

The median price for a new Las Vegas home in April was $239,525, up 18.4% from April 2003. The median price for an existing home for the same time period was $215,000, up 32.8%, according to SalesTraq. Both medians were all-time highs.

Stephen Whittlesy, 32, and his wife, Darlene, 33, knew nothing of the market they were walking into when Stephen’s employer -- a wholesale plumbing company -- transferred him from Texas on March 1.

After looking for four days, anxious to get settled and hoping to get in before other offers were made, the Whittlesys, along with their sons, Blake, 5, and Kyle, 2, settled on a 2,400-square-foot “cookie cutter” home for $375,000.

“It was listed Tuesday night, and we bought it Wednesday morning,” Stephen Whittlesy said. “We worry we have bought at the high point.”

Whittlesy said he considers his new home a temporary stop, where he can wait for the market to settle down and then find something he likes better. “You cannot find a house to buy that you really want,” said Whittlesy, whose sentiment echoes those of other buyers desperate to find anything to buy. “We are just not very happy.”

Stacy and Ed Seastrunk were tempted by the gains they could receive from selling their current home, so they decided to buy up.

The couple looked seriously at about 30 homes before buying a 3,700-square-foot, two-story home in nearby Henderson for around $450,000. They sold their previous four-bedroom, two-bath home, also in Henderson, for more than $315,000 -- $9,000 above the asking price -- having paid $162,000 in 2001.

Yet they think they could have done better.

“We had a ‘sold’ sign on our old house, and we still had tons of people calling and coming by,” Stacy Seastrunk said. “It’s crazy out there.”

Active Realtors and agents, who number more than 15,000 in the Las Vegas metropolitan area, report overnight camp-outs by hungry buyers, anxious just to put their names on a list for a chance at buying. Waiting lists, they say, can stretch as long as 3,000 names for a development of 100 or so homes.

Folks from California have long been feeding the frenzy. Between 1995 and 2000, the latest reporting period by the U.S. Census, 199,000, or 43%, of the 466,000 people who moved to Nevada came from California.

The migration is continuing. Last year, 35% of the people who moved to Las Vegas came from California, said Dennis Smith, president of Las-Vegas based Home Builders Research. “I won’t be surprised two years from now if it is 50%.”

Factors driving the market include low interest rates, a booming Nevada economy fueled by a strong job market, no state income tax, Californians who have “cashed out” to buy cheaper in Las Vegas, and a steady influx of retirees from around the nation.

Additionally, the market is playing catch-up, having been undervalued for 15 years. Las Vegas home price appreciation crawled along at 2% annually in the late 1980s and early 1990s, when the median price for a new home was $127,000. Then the resort community was discovered.

“In 1997, we crossed the million-person mark,” researcher Bottfeld said, which attracted new business and retailers. “Enough in-migration happens each year now to more than fill the Rose Bowl.”

About 10,000 move from other states to Las Vegas each month. They include Gen-Xers, middle managers, retirees, construction workers, Latinos and Asians, he said. Single women are also buying homes in droves.

“We are not as diverse as Los Angeles yet,” Bottfeld said. “But I think in 15 years we will be.”

For the moment, experts and real estate professionals report that the market simply has gone nuts. Overwhelmed agents and brokers are receiving multiple offers -- as many as 20 -- within hours of homes being listed on the multiple listing service. In some cases, homes are being sold in a matter of hours. Many are closing tens of thousands of dollars above asking prices.

Like the current Southern California housing market, inventory is tight and sites for new development are scarce. The government owns much of the land surrounding Las Vegas.

The staff of one sign company has reported home shoppers following them by car to see where a new for-sale sign is going up -- anything to get a jump on the competition.

“One agent of mine,” said Sue Naumann, owner of Tsunami Properties, “listed a home on the computer at midnight. By 7 a.m., her phone was ringing to see if the property was still available.”

That particular home drew 25 offers in 24 hours. The winning buyer, according to Naumann, shelled out $25,000 above the asking price and paid cash.

As buyers try to market themselves, pleading for homes with personal letters, real estate agents are additionally feeling the competition.

Some agents are hoarding listings instead of placing them on the multiple listing service, which is the usual practice, in order to represent both sides of the deal.

The recent frenzy is a deja vu of the Southern California market in the 1980s. Even though that seller’s market eventually crashed, analysts and experts don’t foresee that in Las Vegas, provided there are no outside negative influences, such as a natural disaster or major business closures. Still, the rapid growth is worrying others.

“Is this too fast, too quickly?” asked Bob Hamrick, broker with Coldwell Banker Premier Realty in Las Vegas. “I have definite concerns as we are getting close to what happened in California. We know what happens when values go up too quickly.”

Apartment units, by the thousands, are being converted to condos for first-time buyers just trying to get in. Lotteries for homes in new master-planned communities are the norm.

KB Home, the largest builder in the area, reported it has 10,000 names on waiting lists for 1,696 new homes under construction in 45 communities. Some of those names, however, may be duplicated, as shoppers double up to better their chances.

Developers have imposed a one-year residency requirement -- buyers must agree not to sell before that -- to discourage “flipping,” when a speculator buys and resells to make a fast profit.

“We will only sell to primary residents,” said Jim Widner, president of KB Home of Nevada. “If we discover this is not your primary residence, we have the right to cancel that sale.”

With all this unprecedented growth and demand, will Las Vegas start looking like Los Angeles -- complete with urban sprawl and traffic?

Crime, a shortage of water and a lack of affordable housing were all cited as problems facing Las Vegas in a January telephone survey of 400 residents conducted by Elway Research. Residents also fear that Las Vegas housing has become unaffordable for service workers, that many will be forced to live in less desirable areas and that housing prices could eventually hurt the local economy.

More than half of the respondents also said they are spending too much time commuting.

Housing developers, fed up with sky-high land costs, are moving to the outskirts of Las Vegas and to communities 30 minutes to an hour or more away, such as Pahrump and Mesquite.

Las Vegas is experiencing the growing pains -- both positive and negative -- of becoming a major national city. A new monorail system is in the works, as are talks to lure the city’s first major sports franchise.

“As every year goes by, I love the direction of our city,” said broker Hamrick. “But certainly, it may get to the point where this is crazy.”

Home buyers might say that point has already been reached.

Allison B. Cohen can be reached at a.cohen@ix.netcom.com.