Builder makes $7.5M bet on Vegas housing recovery

Home builder D.R. Horton has purchased 275 residential lots at Whitney Mesa Estates in Henderson for $7.5 million, another sign that the new-home market in Las Vegas is bouncing back.

The transaction shows home builders are still interested in acquiring land if it’s in the right location, said Rick Hildreth, broker for Land Advisors Organization, which represented D.R. Horton.

“It shows a lot of faith in the Las Vegas market for a builder to step and do that big of a takedown,” he said. “We haven’t seen that in a while. They see value. I think it’s a good play by D.R. Horton.”

The Fort Worth, Texas-based builder did not respond to calls seeking comment Wednesday. It’s unclear when it might build on the land.

Typically, it takes about 18 months from grading and infrastructure work to completion of construction on a home.

The land is northeast of Sunset Road and Arroyo Grande, surrounded by a large employment base and established neighborhoods. It was the only significant in-fill parcel in that area, so the home builder will have limited competition, Hildreth said.

Banks and private equity firms hold most of the vacant residential land in the valley. Builders are actively looking for land, but they’re selective about location, the land broker said. The hot spots are in the southwest and northwest valley.

Land prices are still flat in Las Vegas, about $50,000 to $200,000 per acre for single-family home development, and $150,000 to $250,000 per acre for multifamily development, Hildreth reported.

“The problem is until home prices increase significantly, land prices can’t go up,” he said. “We’re starting to see some appreciation, but there’s a demand issue from foreclosures being held up. There’s still a huge glut of foreclosures to come.”

Bill Lenhart of Sunbelt Development and Realty Partners said first-quarter land sale volume is off to a good start at $40.3 million, up 28 percent from $29.1 million in the year-ago quarter.

The southwest submarket had the highest average of nearly $170,000 an acre, compared with $150,000 a year ago. The lowest average of $77,500 was found in the northwest, down from $112,389 a year ago.

Home builders are buying again as a result of a surge in new home sales and the low inventory of residential lots and land, Lenhart said.

“The circumstances that are driving the market are tenuous and eerily familiar to the 2010 surge that was driven by the federal home buyer tax credit,” he said. After that, the market saw five quarters of declining new home sales, prices and land values.

By Hubble Smith
LAS VEGAS REVIEW-JOURNAL