Buoyed by Californians moving to Las Vegas in greater numbers and a strong economy, the luxury resale and new home market shows no signs of slowing, and brokers and builders are expecting that trend to continue for the rest of the year and into 2019.
Home Builders Research reports there were 238 new home closings of $750,000 and above during the first six months of 2018, up from 130 in the first six months of 2017. That’s a gain of 83 percent.
There were fewer than 100 such sales in 2016.
For the first six months of this year, there were 87 new home closings of more than $1 million, up from 46 during the same period in 2017, a gain of 89 percent.
There have also been strong gains in the existing home market, which has a symbiotic relationship with new homes in the luxury sector. There were 277 resale closings during the first six months of 2018, up from 235 a year ago, a gain of 18 percent, Home Builders Research reported.
When factoring in homes priced at $750,000 and above, there were 553 resale closings in the first six months of 2018, up 31 percent from the 422 in 2017. Unlike the new home numbers, the resale closings include some luxury condos.
Gary Mayo, group president of luxury homebuilder Toll Brothers, said the strong demand is part of the continued recovery from the housing downturn a decade ago, in which people lost equity in their homes, only to have it slowly recover.
“We have passed the previous high point, so the market has matured enough again where the luxury segment comes back, and people now have equity in their homes where they can make the move up to a luxury home,” Mayo said. “They have the equity to do it. That’s the key.”
Builders are seeing a large influx of California buyers coming into the Las Vegas due to changes in federal tax law. The Trump tax plan signed in December limits deductions on property and state taxes to $10,000.
Many Californians coming to Las Vegas aren’t necessarily the uber rich, but they are selling homes priced between $4 million and $10 million and buying homes priced from $1 million to $4 million.
Californians also want to buy in Nevada to claim their primary residence here, save on taxes, relocate their businesses and in the end help them in their retirement. In addition to taxes, regulatory costs and traffic congestion are driving people from California to Nevada.
Her buyers are focusing on master-planned communities such as Summerlin, Anthem, Southern Highlands, Seven Hills and MacDonald Highlands.
Las Vegas remains a strong second-home market for Californians like Howard Perley. He and his wife, Charlotte, bought a 5,000-square-foot home in the past year in MacDonald Highlands. The couple sold their home of 11 years in Indian Wells to buy their new home, but they kept their primary residence in Newport Beach on a hill overlooking the Pacific Ocean.
“We went to Scottsdale and couldn’t find anything and realized we wanted something new with a view and single-level,” Perley said. “We love the ocean, but my wife and I love being in Las Vegas. The draw is Las Vegas is the food capital of the world and entertainment capital of the world and going to be in the future the sports capital of the world.”
Newport Beach will be the family’s primary residence, and any movement full time to Las Vegas will be based on the family, economy and politics, Perley said. He’s 85 and retired and the former owner of a company that manufactured bakery goods.
“If you speak to people in California, the trend is: Can I get out of California, and how can I get out and how can I move to either Las Vegas or Texas,” which don’t have an income tax, he said. “We love California but hate the taxes and are not too happy with the government of California. But you can’t beat the weather. We will maintain both residences, but in the future, who knows? If it wasn’t for the fact we had all of our family here in Southern California, we would consider moving to Las Vegas as a permanent residence.”
And the trend should continue, because the Trump tax cuts just went into effect this year and won’t be felt on taxes until people file in 2019.
Home Builders Research President Andrew Smith said the one concern that could slow the luxury new home closings is the lack of new high-end subdivisions coming online. So far this year, the one newcomer to the luxury segment was Skyline Mesa by Pinnacle Homes in the southwest, and it only had eight lots, he said.
“The number of new projects at those price points aren’t increasing like they were between 2015 and 2017,” Smith said. “It seems builders are moving more toward the middle price range and going for more affordable homes.”
Two new MacDonald Highlands luxury projects are set to have residents move in during 2019 after the success of luxury town homes sold by Christopher Homes since last fall. The luxury builder has sold 71 of 110 town home units priced between $900,000 and more than $1 million.
Christopher is now taking reservations for VuPointe, a collection of 64 single-story homes priced at more than $1 million. It’s also selling Vu Estates, a collection of 19 homes priced in the mid-$1 millions and up. Four have been sold.
There are always options if builders aren’t opening as many luxury subdivisions. The Home Builders Research numbers don’t count luxury custom home construction, which can be partially measured by permits. Home Builders Research reported 133 such permits this year, up from 113 a year earlier. That’s a gain of nearly 18 percent.
People are buying lots and just starting to build homes in such communities as the Summit Club in Summerlin. More than 100 of 146 single-family lots have been sold in the uber-luxury resort-style community, which will be the first of its kind in Las Vegas. People have already started to move in, and when more homes are completed by the end of the year, it will have about a dozen residents in the joint project of the Discovery Land Co. and the Howard Hughes Corp. Lots start at more than $3 million.