Las Vegas Land Market 2011 - Appraisal Perspective

Let me preface this short article with a notice that I have no claim to be an all-knowing, all-seeing land expert.  My statements reflect my limited experience (25 years in land related work and 14 years in Las Vegas), and I am sure there are parties (biased and un-biased) who don’t agree with anything that I write.  Also, I know some individuals personally who could make money buying and selling land even if it was verified that the sky was falling. 

Having given you notice, I have found that most of the sales activity that I have discovered in the Las Vegas market during the last several months has been related to “value added” subdivision sales, high-end lot sales, commercial section corner investment sales and vulture partner acquisitions.

Well documented by brokerage firms is the weak demand for improved retail, office and industrial properties in 2011.  Well documented also is the decrease in new building projects being planned and currently under construction, the absorption of land for commercial/ industrial development purposes has remained relatively stagnant.

While metro Las Vegas unemployment numbers have been reported to be lower than at their peak, there is no real evidence from the trenches that anything has changed significantly in the Las Vegas land market.  In my appraisal world it is my opinion that there has been little evidence of a turnaround over the last year.

Builders with their acquisitions appear to be positioning themselves for a future (or distant future) rebound by taking advantage of the bargains brought about by the lack of demand.  Acquiring sites with improvements at $ 3.50 per square foot that have improvements on them that that in the past cost $ 5.00 per square foot seems to me to be a good business practice for builders.  It has been reported that new homes are being sold at a much higher price per square foot than resale homes, and in fact the price difference may be at a 20 year high.

Owners of foreclosed properties, often banks, have pushed land values down by offering property below the asking price of private owners.  Since real estate owned (REO) properties are often acquired for 50% or less below the last sales price, and since foreclosure owners do not want to hold land, the offerings have been putting downward pressure on market prices.

A Colliers International Las Vegas "Land Market Review" (Quarter 1, 2011) noted "very little activity until you get the price low enough."  Appraisers have been forced into lower and lower market value conclusions based on steeply discounted sales and there has been a lack of data.    

While the downward swing has been steep in 2011 it is typical of the speculative land market.  At the moment, no one wants to own land.  If you have been analyzing the movement in land markets for more than 30 years you know that everything changes. 

The opinions expressed in this article are based on the personal perceptions of the appraiser and they are not meant to be used as a basis for decisions related to any specific property purchase or sale.

Update 2014: Looking back over time 2011 doesn't look as bad as it was described while we were living it.  A small upturn in the land market was noted in 2013 - 2014 but it's a small upward movement when compared to those of the past.  Some articles talk about how land values have doubles.  I wouldn't rely on the Press for the valuation of your real property, their general statements about statistics can have no meaning to your specific case.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/2005-Las-Vegas-Land-Market-2011-Appraisal-Perspective.html