Home Sweet Custom HomesGrowing Nevada’s Custom Home Market

 

The luxury home market in Nevada faced a slowdown in 2022 as the Fed raised interest rates seven times during the year and the word “recession” was used too often for some buyer’s comfort. Some developers didn’t even want to call it a slowdown–it was more of a pause. Because even with an uncertain market, Nevada continues to grow, and Nevada’s custom home market continued to thrive.

“I’d say Ascaya has been thriving,” said Melissa Tomastik, director of sales, Ascaya, a custom home development in Henderson. “We’ve seen a substantial uptick in business levels this past year and we’re seeing more market certainty than we did. We saw a little bit of a slowdown this last fall. I think a lot of buyers had concerns on where the market was going, but people are getting more comfortable in the market certainty. There seems to be more stability in the global sense, such as interest rates remaining steady. And we’re not hearing the word recession like we were where people were saying the world could be headed to a different place. Now they’re saying, ‘Okay, things are pretty set in stone and standard, and I’m okay to be moving forward on my custom build.'”

Now, mid-2023, the market is stabilizing, and interest rate hikes have slowed, even if they haven’t stopped. In Q4 2022, there were 37 home closings for properties selling for more than $3 million, despite the activity in interest rates.

There were some changes in those sales, however. Buyers are more apt to want to remain more liquid, said Tomastik, and were acquiring loans. “But that doesn’t seem to be an issue with this kind of clientele.”

Southern Nevada saw more than 72,000 new residents in 2022. Buyers come from around the world, but a majority of them seem to be migrating Californians. “There are some East Coast snowbirds that I get at my desk as well,” said Elle Gaensslen, senior sales and marketing manager, Summerlin. “We also get adventure seekers who love the outdoors, the desert and the nearby Red Rock Canyon Natural Conservation Area; that’s a huge draw.”

Summerlin also draws celebrities and professional athletes who choose to build custom homes in The Ridges or The Summit, currently the two most active Summerlin communities.

“The perception of Nevada has evolved, making it a preferred destination for numerous affluent individuals across the nation and even from around the world,” said Philippe Ziade, CEO, Growth Luxury Homes. “Many people are choosing to make Las Vegas their home due to the diverse range of lifestyles and amenities available. We are witnessing an influx of residents from the West Coast, including California, Oregon, and Seattle.” Prominent business executives are moving their businesses and their families to southern Nevada.

Many buyers are dawn to Nevada by the business-friendly tax environment. “We’re finding a high percentage of buyers are from California, and I believe a lot are seeking the tax haven of our state, because we don’t have any state income tax,” said Daniel Coletti, owner, Sun West Custom Homes. “We’re getting some buyers from other places around the country, like Chicago, but around 70 percent are from California. We do occasionally have locals, but it’s a low percentage. Mostly buyers are from out of state.” Sun West is an architectural and general contractor design-build firm that works in many of the premier custom home communities in Southern Nevada, including Ascaya, Summerlin’s The Summit and The Ridges, and MacDonald Highlands. “Currently in my portfolio are mostly business owners, entrepreneurs from California or the Midwest.”

Construction of custom homes in Nevada isn’t just good for builders and architects, and the home buyers themselves. According to Associated General Contractors of America, construction and related activity contributed $51.3 billion in economic impact in Nevada in 2021, or 7.4 percent of Nevada’s gross domestic product. Construction employment in Nevada in August 2022 totaled 103,100. Building custom homes is good business with a good economic impact.

The Who and What of Custom Homes

Trends in architecture come and go. A current trend that will probably stick around is the indoor-outdoor lifestyle Nevada can take advantage of. Homes are being designed with large glass sliders or pocket doors that allow living rooms to essentially merge with the outdoors so owners can feel their living room extends into their back yard or into a courtyard. Especially for buyers from the Midwest, the ability to enjoy mild weather with beautiful views during the winter is a draw to southern Nevada.

“My design style has been to create an atmosphere that you’re inside when you’re really outside so you can enjoy our great weather,” said Coletti. Sun West uses multiple sliding glass panel doors to allow homes to expand into the outdoors but to close up when it’s a little too hot or a little too cold, or when storms blow in.

Another trend in custom homes is home electronics. Buyers are including wall-sized screens built directly into the walls. Home movie theaters are gaining popularity.

Home automation through WiFi continues to increase, giving homeowners the ability to remotely control systems in their homes. “They want to see through cameras and so on. It’s a very user-friendly way to check on your home and yet not be there,” said Coletti.

In some cases, the relationship of the occupants has changed in the last few years. “We’re seeing multigenerational family living,” said Tomastik. “COVID really changed a number of lifestyles out here. Having your family on the same property but also feeling like you have your own segregated areas [became important]. We’ve seen some buyers come in with those kinds of requests.”

Other pandemic-created trends are Zoom rooms and larger home offices because of the number of people still working from home.

There’s also a move to preserve the views. Custom home developments build in scenic desert locations, with views of the Valley or the Strip, and sometimes the entire community is right next door to a nature preserve. “For those properties with views, they really want to preserve those views,” said Tomastik. “So, a lot of the primary rooms and bedrooms are toward the rear of the property so everyone is able to maximize the view.”

The most popular architecture styles at Summerlin are desert contemporary and midcentury modern. “Indoor-outdoor living is especially true in Summerlin because we have such beautiful natural surroundings and views, because the community is at a higher elevation overlooking the Valley to the east, and the proximity to Red Rock Canyon nearby,” said Gaensslen.

In such a beautiful area, sustainable green building design and features are a huge part of the build now, as new residents move away from plants that require a lot of water. “People are just going back and appreciating the native landscape and either replanting those native plants that are here or leaving things untouched, which is quite nice,” said Gaensslen.

Many buyers are choosing custom homes that are downsized from their larger properties. They’re looking for more compact residences, said Ziade. That doesn’t mean they’re not still inclined to maintain a high level of materials, from finishes to amenities, despite the smaller homes. Along with design materials, today’s buyers are looking for efficiency.

“Efficiency is a priority for new buyers, who increasingly request elements ensuring it such as solar power,” said Ziade. “It is vital for us to stay abreast of evolving technology, because homeowners strive to incorporate the latest in low-voltage systems and cutting-edge technologies to ensure a seamless living experience.”

Price Point

Custom homesites at Ascaya start at $1 million for just under half an acre and go up from there. The $1 million price point is for the actual homesite. The homes themselves depend on what exactly is being built and where in the development. Larger properties with views could easily start at $10 million. Smaller properties located on interior sites in a community, those with no view of the Valley, the canyon or the Las Vegas Strip could run $5 or $6 million.

“So there is a range, but as far as price point, what we’re seeing at Ascaya is the bar keeps raising every single year,” said Tomastik. Recently one home in the community sold for $14 million; another was recorded in June for more than $20 million. “We’re seeing these numbers consistently rise over the years.”

“Our price range is pretty high,” said Coletti. “Most homes we’re building are around $6 million and up. There’s amazingly quite a few people that can afford to buy in that price range.”

Once the buyer finds the perfect site, they move forward building their custom home. For independent builds, the buyer chooses their own architect and builder in Summerlin. Howard Hughes Corporation, which owns Summerlin, doesn’t specify builder or architect preferences to lot buyers. “We allow buyers to choose their own builders,” said Gaensslen.

There are strict design and building standards in custom home communities, however, which all buyers and builders must adhere to, including height restrictions. The price point for Summerlin communities obviously varies by project, but for The Ridges or The Summit, the median price is currently $2.7 million and the most recent max sale for a custom home was $11 million. “We’re pushing up past $800 per square-foot in the custom home market, which is significant,” said Gaensslen.

Currently, the majority of custom homes Ziade has seen sell are within a price range of $2.5 to $6 million and above. “However, there is also a significant number of buyers constructing homes exceeding $20 million, with some even surpassing the $50 million mark,” said Ziade. Growth Luxury Homes has projects that can cater to even these high-end buyers, and the company is currently building in every community in the area.

“The market is very strong in the sort of medium to high range,” said Coletti. By high-end range, he means around the $6 to $15 million mark. “The market is relatively strong, and it’s been that way for a while. It didn’t just uptick in the last six months, it’s been kind of strong in that range for the last year and a half or so, maybe even two years.”

The majority of custom homes being built in Nevada are built for owners, to their design specifications and dreams. But the high demand for these homes has led some builders to build spec homes. “With a shortage of available custom homes, there is a significant opportunity for spec home builders to meet the needs of potential buyers,” said Ziade.

The developer at Ascaya has a spec program, homes they feel confident will go under contract before they’re built. “The majority of the time, though, when people are purchasing in Ascaya, it is for a custom build,” said Tomastik. “Typically, they’ll come in, they’ll choose their ideal home site that fits all their needs, whether it’s a certain square footage, a view preference, a height capability because a number of our homesites are deemed height restricted to single story or height restricted to 2-story.” Homesites start at just under half an acre, though buyers can combine lots if they want a larger site. Ascaya purchased its 670 acres in Henderson in 1989, and once they’re filled, that’s it–the developer has no intention of spreading out farther. The development has 300 home sites in total and is roughly halfway through sales with a number of sites not released yet. For developer-based spec, Ascaya has worked with a variety of builders, including Sun West and Luxus Design Build.

“We build 100 percent for owners, but probably 90 percent of what we’re working on is for our customers, but we like to have one spec home under construction. That’s one out of 10 that’s spec, and usually only one at a time. We’ll build one, and sell it, and start another and built it and sell it. We just mix spec in with all of our custom homes that we’re building,” said Coletti.

Not every community includes spec homes. All custom homes at Summerlin are being built by buyers as primary and secondary residences. “We don’t allow spec in our communities in Summerlin because we really strongly believe that custom homes are so personal they really should be designed for true customization,” said Gaensslen. “They’re so unique when you walk through, with so many details and gorgeous finishes that are very specific to families.” There’s enough demand in Summerlin without spec building that while there’s no specific information released yet, the next custom home neighborhood is in the very early stages of creation.

Custom homes are thriving in Nevada. With the market becoming more stable and the population continuing to increase, the future looks bright for builders, developers, and homeowners.

“We don’t feel like things have slowed at all,” said Coletti. “Even with inflation we’re still seeing an increase or steady volume of workload. It’s kind of like at the moment it doesn’t seem like there’s an end in sight. Of course there always is, but the forecast is pretty good for some time to come.”