Las Vegas Luxury Real Estate - White Paper

INTRODUCTION In an effort to provide clients and agents with the most accurate and up-to-date information, Windermere Real Estate, in conjunction with Lawyers Title, proudly presents its 2014 White Paper on the luxury home market in Las Vegas.

The purpose of this White Paper is to define the luxury market by price segment and geographical location, determine who’s buying luxury homes in Las Vegas and discover the “must-have” features and amenities that luxury buyers have on their list. What types of new trends are appealing to those buyers?

We know Las Vegas is attracting international buyers who recognize value in a market still recovering from the “bursting of the bubble.” Where are they coming from? How many luxury buyers are paying cash? Do they prefer single-family homes in the suburbs or high-rise condos on the Strip?

We also want to explore technological advances in the real estate industry, from virtual tours and digital marketing to applications that make it easier to close the deal. How essential is it for Realtors to be wired to their iPhone, iPad or laptop?

We want to examine every aspect of the luxury home market. Whether you’re buying or selling, knowledge is power. We want to bring everyone to the table with a clear understanding of evolving dynamics in the Las Vegas housing market so that they feel comfortable and assured when they sign on the dotted line.

Luxury agents are relentless in the pursuit of helping clients realize their dreams, so that at the end of the day, buyers can emerge with a house they’re proud to call home and the confidence they made the right decision.

Statistics in this report are based on home closings of $500,000 and above from 2004 through 2013, according to public records from the Clark County Recorder’s Office, provided by Lawyers Title. In gathering in-depth information on the intricacies of the luxury market, Windermere Real Estate contracted an independent third party to conduct telephone and e-mail interviews with top luxury real estate brokers and marketing executives in Las Vegas.

This report remains proprietary to Windermere Real Estate and the contents may be reprinted with attribution to Windermere Real Estate.

EMERGENCE OF THE LUXURY MARKET To believe that Las Vegas’s luxury home prices will return to their peak anytime soon is to dream the impossible dream. Perhaps before the return of Halley’s Comet.

Most real estate experts agree that Las Vegas home appreciation rates during the boom were unsustainable. Las Vegas led the nation with consecutive quarters above 40 percent appreciation during the height of the boom, which began in the 1990s and lasted through 2006.

As a result, luxury home sales in Las Vegas grew simply due to increasing prices in many instances. Homes that originally sold for $250,000 were going for $500,000 plus.

• Moderate luxury ($500,000 to $1.5 million): Sales peaked at 7,326 in 2006, bottomed at 621 in 2011 and rebounded to 1,294 in 2013.

• Mid-range luxury homes ($1.5 million to $3 million): Sales peaked at 224 in 2006, bottomed at 48 in 2012 and rebounded to 98 in 2013.

• Ultra-luxury ($3 million plus): Sales peaked at 50 in 2007, bottomed at 12 in 2011 and rebounded to 27 in 2013.

Las Vegas luxury home sales are driven largely by Nevadans moving up and Californians cashing out and buying the same home in Las Vegas for roughly half the price. Nevadans make up roughly half of luxury home buyers in Las Vegas, while Californians account for about 20 percent.

“Definitely the California entourage. They want to get away from taxes and traffic. I’m one of these myself. A lot of my buyers are Midwesterners sick of the cold weather. It’s just a hop, skip and a jump for them to get here. A lot are coming from the East Coast.

Compared to Palm Springs and Florida, Las Vegas usually wins. People like our accessibility to the airport and our weather.

Las Vegas has so much more to offer.”

– Sharla Scharpnick, Windermere Real Estate

International buyers saw value in Las Vegas’ depressed real estate market, particularly the British. The report found that Brits represented 29.1 percent of international buyers from 2004 to 2013, followed by Hispanics (16.6 percent), Chinese (15.3 percent) and Canadians (8.6 percent). Of the Canadians, nearly 39 percent were from Alberta and 35 percent were from British Columbia.

In the ultra-luxury market, Arabic, Israeli, Persian, Chinese and Korean buyers were most prominent.

Brokers are seeing buyers from all over Europe and Asia, but primarily they see American buyers.

“I think the international buyer is a bit overhyped. We sell to Chinese, English and Canadians, but they’re not the majority. Maybe 10 to 15 percent. What I see is a lot of Californians buying in Nevada. They sold their home to Asians. Asians would rather buy on the coast in Los Angeles or San Francisco than take the next step to Las Vegas.”

– Ken Lowman, Luxury Homes of Las Vegas

Demand for high-end, custom homes in Las Vegas produced exclusive, guard-gated subdivisions such as Red Rock Country Club, The Ridges, Bellacere and Eagle Ridge, all within the master-planned Summerlin community on the elevated western rim of Las Vegas Valley, adjacent to Red Rock National Conservation Area. Summerlin encompasses approximately 26,000 acres and is home to about 100,000 residents.

Other million-dollar neighborhoods include:

The high-rise luxury condo market sprouted with Turnberry Place and Park Towers in the late 1990s, and blossomed with chic and modern projects in the resort corridor and the exquisitely designed One Queensridge Place in the upscale suburbs. High-rise condo sales rose from 217 in 2004 to a high of 1,337 in 2007. They were back down to 281 in 2013.

Other high-rise condos include Metropolis, Sky Las Vegas, Panorama, The Martin, Allure, Trump Tower, Palms Place and Veer Towers in the resort corridor; and SoHo Lofts, Newport Lofts and The Ogden in downtown Las Vegas.

“The wealthy empty-nester is about taking control of what they want to experience in life.

If they want to grab a condo at Queensridge, they have a concierge and all the amenities.

They spoil themselves. They’re just going to do what they basically want to do.”

– Randy Char, Char Luxury Real Estate

Roughly 30 percent of luxury single-family home sales in Las Vegas are second homes and vacation homes. Particularly in the high-rise luxury condo market, the report showed that 82.8 percent of sales were nonowner-occupied. Of those, 70.2 percent were cash transactions.

TRANSFER OF WEALTH Most luxury buyers tend to be baby boomers.

They’re wealthy empty-nesters who’ve worked all of their lives to achieve financial freedom and have now decided to enjoy the comforts they deserve. They’re downsizing not because the children are gone or because of affordability, but to lessen their responsibilities.

“These buyers are planning their transition to retirement. They are enjoying making their decisions about their new lifestyle.”

– Di Redman, Windermere Real Estate Young affluents are savvy from observing the market crash. Generation X is starting to enter the luxury market as they recognize they’ll be in the cat’s seat for the next 20 years, earning maximum income. They occupy key positions in companies and are emerging with wealth and confidence. Generation Y is still fairly young. They watched their parents go through the economic pain of the real estate bust, many of whom lost their homes to foreclosure, and they want nothing to do with it.

According to Luxury Portfolio International, 21 percent of young affluent purchased a primary home in the past three years, compared with 9 percent of those 50 years and older. However, baby boomers definitely outnumber Generations X and Y in buying a home above $500,000.

“For the luxury market, it’s typically the baby boomer that worked their whole life and made it financially. We’ll get the occasional younger athlete or entertainer or dot-com founder that took his company public.” Ken Lowman, Luxury Homes of Las Vegas

CATERING TO YOUR CLIENTS Luxury home buyers and sellers are definitely high-maintenance. They require special attention and expect the highest level of personal service.

Real estate agents and marketing directors cannot be complacent when working with luxury clients. These are sophisticated, successful people who are innovative thinkers. They’re going to look for the same qualities in their Realtor.

“Luxury buyers differ from traditional buyers in that their wants are motivating factors instead of needs. Mostly, they want convenience and to make purchases that fit their lifestyle. They compromise less, but are comfortable paying a high price as long as it’s for something they see value in. Even the wealthiest people consider value and quality before making a purchase.” -- Randy Char, Char Luxury Real Estate In dealing with international buyers, real estate agents must consider:

“Working with luxury home buyers and sellers can be a lot of fun. I get to work with some pretty amazing and talented people. However, it’s not all peaches and cream. One of the biggest challenges of working with high-end sellers is to get them to price their home right.” – Rob Jensen, Jensen Group Two most common statements from sellers: “I don’t have to sell” and “I won’t give it away.”

They’re clarifying that they are not in a financial hardship and they want to get the best price.

This leads to homes being overpriced and sitting on the market for months, even years, before the seller repositions the property by lowering the price.

“I find that most sellers just expect you to get the job done, whatever that takes. It’s common to still see poorly taken photos, bad copy and mistakes in marketing these days.

Personally, we hire professionals for copy, photos, video, graphic design and staging.

We make sure the basics are done at a level 10 and then we take it from there with more strategy with YouTube promoted posts, paid social media campaigns and special events.”

– Rob Jensen, Jensen Group.

In general, Realtors can spend anywhere from $5,000 to $20,000 to market and sell a high-end home.

CAN’T LIVE WITHOUT IT When money is no object, some things are “must have” for luxury home buyers. Most of them are looking to expand and exploit the Las Vegas lifestyle and natural desert beauty. They want to be close to the Strip for world-class entertainment, shopping and dining, and they want to retreat to a comfortable, relaxing home in some of Las Vegas’s more exclusive neighborhoods.

Luxury buyers are looking for:

Buyers are increasingly demanding “smart home” technology. They’re not necessarily interested in the “cool factor,” but they want technology that provides convenience, comfort and security.

Climate control systems heat and cool the home according to the season. Motion sensors turn lights on and off. Surveillance cameras monitor what’s going on inside and outside the home.

Security is paramount. Luxury home residents travel frequently and want to be able to control and see their home from their iPhone or iPad while they’re away.

In today’s competitive market, luxury home builders have to think outside the box.

“Each of our clients is unique, so to our way of thinking, every home that we design and build must include elements that go beyond the ordinary and usual. Some examples would be water features that cascade along entry courtyards and then drop a story or more to tie into a completely different space, or a spacious family room that transforms into a luxury movie theatre with the touch of a smart phone button.”

– Shelly Stewart, sales and marketing, Blue Heron Among the growing trends are rapid charging systems to accommodate the latest models of electric vehicles. An espresso machine in the master suite saves time in the morning. A home in The Ridges featured LED colored “mood” lights in the shower. The master bathroom should be like a spa. Today’s woman wants a luxury bath. One client bought a $9 million home and had to have a life-size chess set with 6-foot pieces.

Some extraordinary elements that can differentiate a million-dollar home from others:

Many luxury buyers want to entertain guests, so audio and video capabilities are important. Also, some people may want a separate kitchen for staff to prepare meals.

“People love home movie theaters. Home gyms are extremely important. People really like nice size, open spaces. It’s now really going away from formal living spaces.”

– Gavin Ernstone, Simply Vegas

APP FOR EVERYTHING Like most everyone in today’s business world, Realtors can’t live without a smart phone. It’s like having a home office on the road. They can search listings on Realtor.com, pull up their own web site to show clients photos of homes and make sure the lights are turned on when they arrive.

Agents were concerned they might be replaced by the Internet. That has not yet happened.

People still want face time, live interaction and personal attention.

However, anything a real estate agent can do to save their client time and money is going to give them a competitive edge. Agents can send videos to clients overseas, often in real time. They utilize valuable applications such as Dropbox, which provides instant access to contracts, files, floor plans and other data. Agents need to be as tech-savvy as their high-tech clients. They’ll be digitally signing with clients who are sometimes traveling around the world.

“One of the most valuable apps we use is our calendar app. It’s much more efficient to be able to look at our phones and see each other’s calendars. If I have one of my agents on the other side of town from me, and a client calls from the other side of town, I can see that my agent is already closer to my client, and he can assist my client sooner, instead of my client waiting on me.” – Gene Northrup, Sotheby’s Blue Heron pushed three-dimensional virtual tours to another level. Potential clients can digitally tour a fully rendered and animated residence set against the actual terrain that will host the home. Several years ago, the luxury home builder began creating compact versions of virtual “fly-throughs” that can be uploaded to the web and accessed by clients via private URL. In addition, professional photographers capture still images of rendered files and produce digital photographs of buildings that only exist on paper.

“There’s an app for staging I really like called Autodesk Homestyler where you can take a photo from a listing and work with a new design. A room could be in bad shape, and you can show clients what it could be like with a new design. It’s a 3D design program.

Another app I use is Videolicious, which helps create videos that clients can view on their smart devices.” – Robyn Yates, Windermere Real Estate

In this age of information empowerment, people are viewing photographs and videos of luxury homes before they even make a call to the listing agent. They’re doing price comparisons and analyses ahead of time. Still, Realtors can add value for their clients.

“Realtors know the dynamics of the property and community that their clients can’t find online. The younger generation has empowered themselves by utilizing online apps. They are searching for homes on their smart phones. Technology has become an empowerment to the buyer. As far as the seller, I now have iPad presentations I show to my clients to show them what they are competing against. This goes well beyond what they can find online. They still need a professional.” – Cynthia Glickman, Windermere Real Estate Luxury sellers will expect Realtors to utilize every technological advantage available to bring the highest possible price.

“We utilize an Internet concierge that uploads all of our listings on hundreds of websites including international websites in different languages. We do post videos and utilize drones to do flyover photography and videos. I utilize zip forms for all of my contracts, DocuSign for digital signatures, SkySlope for transaction coordination. All of these programs I also utilize on my iPhone with apps.”

– Christine McNaught, Windermere Real Estate

CLOSING THOUGHTS • Luxury home sales improved in 2013 and look pretty solid going forward. Realtors that put in hard work during the slow times are reaping what they sowed. The wave of Californians is driving prices up and homes under $2 million are now the meat of the market. Some Realtors reported record dollar sales volume in 2013.

• The U.S. luxury market has incredible overall value for someone whose wealth is increasing and is from a country with strong currency. Las Vegas especially is a tremendous buy because the market remains undervalued.

• Generation X got a taste of the good life in their 30s and 40s and then got hit by the recession and real estate crash. They’re building back their wealth and getting back into buying mode.

• Amenities in the home are important, but so are amenities in the community. It comes down to lifestyle. Some clients want to live in a gated country club with a lot of social activities.

• There’s a movement toward contemporary, modern architectural style and also toward singlefamily homes in the range of 3,000 to 5,000 square feet.

• Technology is essential. However, at the end of the day, it’s the responsibility of the Realtor to provide their clients with guidance and expertise.