Welcome to Las Vegas: sin, sun and suburban sprawl.
When Steve Petruska moved here about a dozen years ago, his home in a community called Sommerlin looked out into raw desert and mountains.
The view has changed a lot since then.
“Houses, houses, houses and some mountains,” said Petruska, who is now Pulte Homes Inc.’s chief operating officer and commutes to Michigan.
With its job and population growth, sun and low taxes, the Las Vegas Valley has become the fastest-growing U.S. market for new homes among areas with more than 1 million people, and it ranks second overall behind Fort Myers, Florida.
From the north to the south of the Valley, the ash-colored desert and mountain slopes are giving way to terra cotta-like roofed homes and highway extensions.
All of the top 10 U.S. residential construction companies are building in the Valley, which includes the cities of Las Vegas, North Las Vegas, Henderson and unincorporated Clark County (where the famous strip is actually located).
“From my prospective, Las Vegas has gone from a gambling town to a metropolis,” said Bruce Karatz, chief executive of KB Home, the area’s largest builder.
The Los Angeles company, which entered the Las Vegas Valley market in 1993, derives about 10 percent of its business from its operations there.
With a waiting list of 12,000 buyers, KB holds lotteries when new blocks of houses become available.
Demand may be high, but builders are working hard to keep up with it.
In the first quarter, they took out 9,149 new-home permits, up 58 percent from a year earlier, according to the Southern Nevada Home Builders Association.
More upscale
Such growth has made houses less and less affordable. The median price of a new home rose 20.4 percent to $225,813 in the first quarter, the association said.
To reduce the cost, builders are putting up townhouses and duplexes. Some developments, such as KB’s Eldorado Springs, offer homes on small lots of about 35-by-100 feet, with virtually no yards.
While it may seem that the metro area suddenly sprouted from the landscape, some say it actually grew slowly over decades. Others, however, point to the 1989 opening of the Mirage, the first of the current generation of super-luxury hotels and casinos that line the strip.
“The whole idea behind Vegas prior to the Mirage opening in 1989 was the 99-cent buffet and a place to go gambling,” Pulte’s Petruska said. “Vegas turned more upscale with the opening of the Mirage.”
The higher-priced resorts led to higher-paying service jobs and an influx of new residents. About 90,000 people moved to the Valley in 2003, up from 78,000 in 1999.
Still, the unemployment rate for the area was 4.4 percent in April, compared with a national average of 5.6 percent.
About one in every three newcomers hails from California, where the job market and the economy have been struggling since the tech bubble burst, said Keith Schwer, an economics professor at the University of Nevada.
For many new residents, the move brings more-affordable housing as well as jobs. KB sells a new home for about $300,000 in Las Vegas, compared with about $420,000 in southern California, Karatz said.
Both the desert climate and the absence of a state income tax have attracted thousands of retirees and people over 55 to the area. In fact, Pulte’s Del Webb, which specializes in age-restricted communities, was the No. 3 builder of new homes in Las Vegas last year.
Increased sprawl
But not everyone is everyone happy with the Valley’s burgeoning population and development.
“We have seen the increase in sprawl,” said Tara Smith, conservation organizer for the Sierra Club of Southern Nevada and herself a Michigan transplant. “We don’t have sufficient public transportation. Our air quality has decreased significant because of the number of cars on the road.”
Just 23 miles from Las Vegas, Boulder City has decided it wants no part of the development of the Valley and has restricted building. That has sent developers sniffing around Mesquite, a community 50 miles away.
Rouse Co., a master planner that develops land and sells it to home builders, bought Sommerlin in 1996 from the estate of billionaire recluse Howard Hughes.
Rouse paid about $540 million for 22,000 acres, of which 9,000 were suited for home development. Over the years, the Columbia, Maryland-based company has sold about 3,000 acres to home builders.
“Land values have increased tremendously,” Chief Financial Officer Tom DeRosa said. In 2003, Rouse sold half the acreage that it did in 1997, but for three times the price.
The Federal Bureau of Land Management owns about 67 percent of the undeveloped land in the Valley and periodically auctions off parcels. In June, it plans to sell 2,532 acres, including 1,900 next to a Del Webb development in Henderson.
“We sit down and try to figure (the housing boom) out,” said Lee Barrett, broker and president of the Greater Las Vegas Association of Realtors as he drove near the base of a mountain.
“I used to shoot here,” he said. “This used to be out in the boonies.”
Soon it will be the site of New Southwest, another housing development.