Upscale? So 5 minutes ago
They blow up aging casinos in this town. Now, some are wondering what to do about yesterday’s desert dream homes.
Take the foreclosed million-dollar house realty agent Michael Antos recently showed. Please.
To the untrained eye, the four-bedroom, five-bath retreat may appear top-drawer, shimmering with granite and marble throughout, and with posh touches like a pool with a sandy beach entry.
But Antos pointed out that the house was showing its age. After all, it was built in 2000. In Vegas, that makes it as dated as a coin-operated slot machine.
The chandelier? Plastic. The granite surrounding the upstairs bathtub is tile, not slab. And those polished travertine tiles in the entryway may look luxurious, but at 12 inches by 12 inches, they just won’t cut it today.
“Now you’ve gotta have at least 20 by 20 to sell something at this price,” Antos explained.
The housing slump has fattened the inventory of unsold homes throughout the country, and a staggering 51% of them in Las Vegas are vacant. But there’s another twist to the story here: a glut of glitzy homes.
About 1,000 houses are listed for sale in Las Vegas for $1 million or higher, more than 600 of them built since 2004. But unless they’ve been constructed in the last year or two, the properties are considered out-of-date, making them all that more difficult to sell, real estate agents say.
Just as casinos on the Strip compete fiercely to be the prime destination -- and seldom hold that distinction for more than a couple of years -- houses and entire neighborhoods are quickly eclipsed by flashier newcomers.
In most of the country, prized neighborhoods become even more desirable over time (think Beverly Hills or Greenwich, Conn.). But Las Vegas isn’t about stately trees, old lawns and older money, said Gene Moehring, chairman of the University of Nevada, Las Vegas, history department and a specialist in urban history.
“In Vegas, new is the most important thing,” Moehring said.
And building homes is relatively easy in a city surrounded by desert land available for development, so there’s always room to build a newer, more-opulent golf course community across town from the last hot spot (concern about the region’s water resources has yet to stem the building boom).
The new homes often don’t cost much more than the older ones, at least to buyers at the top end, for whom a couple hundred grand here and there won’t make or break a deal, said veteran Las Vegas real estate broker Michelle Sterling.
“Once you get into the market over $2.5 million, a lot of people just prefer to build their own,” she said.
One developer, Christopher Homes, recently opened a neighborhood of homes in the hills west of the Strip selling for $1.7 million to $3 million. Several houses have sold to residents of adjoining neighborhoods who lived in their houses for less than five years, including homes built by the same developer, said Erika Geiser, the company’s vice president.
“They feel their residence is obsolete,” she said. “They’re looking for something more innovative, more cutting-edge.”
Michael Lemoine, an architect who specializes in custom houses for the wealthy, says he has clients who build houses as often as some people buy cars.
“New neighborhoods pop up that become the place where these people want to live,” he said. “They move from one to another because they want to be with their friends, then in five to seven years’ time they go to another community.”
To be considered a premium home, “8,000 to 10,000 square feet is the new threshold,” Lemoine said. It was 5,000 to 7,000 square feet just five years ago, he added.
Buyers today want two sets of refrigerators and freezers, two game rooms (one for the kids, another for adults) and showers that are at least 7 feet by 7 feet, he said, adding, “Laundry rooms now are better than kitchens were five years ago. They have stainless steel cabinets, glass tiles.”
The high-end home market barely existed when Lemoine moved to Las Vegas from Southern California 21 years ago. Real estate agents say few if any houses sold for more than $1 million before the mid-1990s.
That began to change as Las Vegas evolved into an upmarket destination, which Moehring traces to the opening of the Mirage resort in 1989. That ushered in an era in which gambling shared the stage with golf, spas and shopping. Soon, the Strip was filling up with world-class restaurants, boutiques and hotels.
This helped draw even wealthier visitors who bought second homes in the area, Moehring said, while also expanding the local population of wealthy professionals and casino executives.
In 2000, 176 Las Vegas homes sold for more than $1 million, according to real estate research firm DataQuick Information Systems. By 2006, that number multiplied nearly eightfold -- to 1,385 before ebbing to 1,219 last year.
Along with being out-of-date, developer Tom McCormick says, a lot of the mansions built hastily during the boom were poorly designed.
Some used the wide-open lots in the desert to showcase fine architecture and good taste, McCormick said.
Many more did not.
“Just because you’re a great entrepreneur doesn’t mean you’re a great home designer,” said McCormick, president of mid-market home builder Astoria Homes.
The housing slump has left Las Vegas strewn with empty houses, and at all price points. There are now more than 22,000 homes for sale here, 51% of them vacant, according to Las Vegas real estate research firm SalesTraq.
That compares with perhaps 15% to 20% in Southern California, said John Burns, an Irvine real estate consultant.
Among high-end homes in Las Vegas, the vacancy rate is actually lower than the overall figure -- about 36% for homes in the $1 million-plus category, SalesTraq said. But experts say that’s largely because the lower end of the market is flooded with unsold new tract homes and condos.
The lower end also includes unoccupied houses purchased by flippers, who have let the properties fall into foreclosure because of the soured market.
Some wealthy investors also have an option lesser flippers can’t afford: taking their custom-built mansions off the market and moving in.
William Derentz, who heads the company that runs the annual Harvest Festival in Laguna Hills, bought a 5,400-square-foot home in Las Vegas for $2 million in 2004. He never moved in, since he planned to resell it in a year or two at a hoped-for profit of $1 million.
But after the home languished on the market, Derentz threw in the towel in February and relocated his family from Mission Viejo to the house.
He now hopes to sell it when the market recovers, even if that takes several years. Meanwhile, to make the property more competitive, he’s spending $200,000 to fix up the backyard of the house, outfitting it with a pool and “his-and-her” cabanas.
“It’s going to look like the Bellagio back there,” Derentz said. “You’ve got to make it two cuts above.”