April 1, 2009
After holding up well in 2007 and into the first quarter of 2008, luxury homes prices have hit the skids just like the rest of the real estate market in Las Vegas. Kenneth Lowman, Broker/Owner of Luxury Homes of Las Vegas reports that prices for luxury homes have declined 25-45% depending upon the neighborhood, location, quality of construction, age and amenities. He cites several examples: a 13,000sf estate on 1.5 acres inside three gates that can be purchased for $6,500,000 that was originally listed for $14,000,000; a brand new 6,000sf fully furnished model home with sweeping strip, city, mountain & valley views that can be purchased for $1,700,000 that was originally listed for $2,700,000; a new 8,200sf estate on a .70 acre elevated lot in Arrowhead in The Ridges that can be purchased for $4,999,900 that was originally listed for $5,999,900; and a 5600sf golf front home in Canyon Gate Country Club now offered for $899,900 that had appraised three years ago for $1,515,000. “These cases go on and on and are a sign of the times,” Lowman noted, “it is not uncommon to see $1,000,000 price reductions in many of our most luxurious communities.”
What’s causing the fall? For starters many of the would-be buyers are business owners and executives whose own businesses are feeling the pinch in the current recession. The recent stock market declines took away much of their paper wealth and now limits their buying power. Lack of available jumbo financing is another factor. Approximately 80% of these high-end luxury transactions are going to all cash buyers according to Lowman. “It’s just not that easy to get financed anymore, for anybody,” Lowman remarked. Additionally, the move-up buyer or out of state buyer is having trouble selling their current home and therefore staying put. According to the Wall Street Journal, “Migration around the U.S. slowed to a crawl last year, especially for this decade’s boom towns, as a weak housing market and job insecurity forced many Americans to stay put.” After slowing sales, luxury home inventory is at an all time high and that leads to longer marketing times and lower prices. Presently there are nearly 1,000 luxury homes for sale priced at $1,000,000 or more in the Las Vegas valley.
And who is still buying these luxury estates? “Entertainers, athletes, and the independently wealthy are still sitting on piles of money and fearful to invest it in stocks. They are turning to real estate as a safe haven and an asset that they can enjoy owning and use at their leisure,” Lowman mentioned. “Some of the deals out there now were just un-thought of two years ago when we were setting all-time high records for dollar per square foot sales and the volume of high-end luxury sales.”
In the first quarter of 2009 just 27 luxury homes were sold over $1,000,000 compared to 66 in 2008 and 131 in 2007. For ultra-luxury homes over $3,000,000 just 3 were sold in the first quarter of 2009 versus 13 in 2008 and 8 in 2007. “Unfortunately, the statistics don’t lie, they tell the story,” Lowman surmised. “On a positive note, the reduced prices are peaking interest and buyer traffic is coming back into the luxury marketplace. I’m hopeful that we have seen the worst.”
The Broker/Owner of Luxury Homes of Las Vegas, Kenneth Lowman, has specialized in the Las Vegas luxury real estate market for 15 years and is considered one of the experts in the marketplace. He employs a staff of four to assist him in the marketing and sales of luxury homes in and around Las Vegas. He can be reached at 702-216-4663 or firstname.lastname@example.org or on his website at www.luxuryhomesoflasvegas.com