Las Vegas high-rise closings set an all-time record during the first six months of 2022 but the condo market — like in the single-family home segment — has slowed with higher interest rates and concerns about the economy.
High-rise real estate agents hope that changes — with mortgage rates this past week, falling below 5 percent for the first time since April — that any slow down can be attributed to the summer heat and potential buyers traveling.
Data tracked on the Las Vegas Realtors’ Association Multiple Listing Service shows 644 closings in high-rises of five stories and above between January and June; that’s 2.5 percent higher than the 628 closings in the first six months of 2021, according to Forrest Barbee, corporate broker with Berkshire Hathaway HomeServices.
Closings are a lagging indicator and if the 87 June closings are any indications, sales are slowing in the marketplace. There were 129 closings in June 2021.
The high-rise sector has had a strong comeback since 2020 when sales fell sharply because of the COVID-19 pandemic. Buyers didn’t want to live in such tight quarters with elevators and hallways and were turned off by shuttered pools, gyms and other amenities.
In analyzing the 21 high-rises — most of them on the Strip, as tracked by Applied Analysis — there were 618 closings through the first six months of 2022, a 14.2 percent increase over the 541 in 2021. There were 225 in 2020, 204. in 2019 and 432 in 2018, the firm reported.
The average price of units sold in 2022 was $595,508 and a square foot price of $486. In 2021 over 12 months, the average price was $561,252 and price per square foot was $427. That’s a six percent price increase and 13.8 percent increase in price per square foot in 2022, according to Applied Analysis.
MGM Signature, a condo hotel, led the way in the first half of 2022 with 86 closings. Juhl in downtown Las Vegas was second at 70 closing. They were followed by Palms Place, 54; Veer Towers, 53; Trump Las Vegas, 47; Panorama Towers, 46; Turnberry Place, 41; Turnberry Towers, 36; Allure, 32; The Ogden, 31; Waldorf Astoria, 24; One Las Vegas, 21; Platinum, 18; One Queensridge Place, 16; Sky Las Vegas, 11 and others in single digits, according to Applied Analysis.
Park Towers in Hughes Center had one sale for $950,000 or $447 per square foot.
The average price at the Waldorf Astoria was $2.31 million or $1,217 per square foot. One Queensridge Place had an average closing of $1.67 million or price of $590 per square foot.
The Vdara condo hotel at City Center — which had four sales — had an average price of $778,250 or a price of $1,076 per square foot.
Turnberry Place had an average price of $965,888 or $407 per square foot. A penthouse at Turnberry Place profiled in May in Real Estate Millions remains the top sale of the year.
One of the beneficiaries in the strength in the high-rise closings in the first half of 2022 is Juhl in downtown Las Vegas, with its 70 sales through six months. It had 69 closings in 12 months of 2021, 29 in 2020 and 23 in 2019.
Juhl announced July 30 that it closed on its latest remaining penthouse for $880,000 for $611 per square foot, the highest per square foot ever paid in downtown, according to Uri Vaknin, a principal at KRE Capital, the same group of investors that bought One Las. Vegas, along with Juhl.
“We had an amazing beginning of the year and June was a great month for us with 11 closings, but new sales dipped with interest rates going up,” Vaknin said. “June and July, there was talk of recession and higher interest rates that put people on edge, and people needed to recalibrate. What’s interesting is rates just dropped and now we’ve had some good interest from buyers and things have picked back up.”
“The buyers have been from California and out of state because people want to be in Las Vegas,”Vaknin said. “Investors also are interested because of the high rents that can be charged with limited condo inventory. Sales at the Juhl — which had been primarily a rental building — picked up after upgrading rooms,” he added. “Downtown is also coming into its own with restaurants and other amenities.”
“The market is leveling off and slowed down because people had to understand what was going on, but Vegas is still where Californians are moving,” Vaknin said. “We’re seeing buyers from Seattle. People are leaving other states with remote work and see the value in (real estate) in Las Vegas. I don’t think we will have as voracious a number of sales as we had in the beginning part of this year, but sales will continue at a normal pace. We may not have 11 sales a month, but five sales a month.”
Michael Zelina, a Realtor with Corcoran Global Living, has put up a listing in the last week for a $13.9 million penthouse at Panorama Towers, after previously listing it at $15 million. Sellers are recognizing they may have to drop their prices to attract buyers in a slowing market, he said.
Zelina called the high-rise market stagnant with a lot of people still looking but not making offers. He said he remains confident, however, that will change once we get to the fall buying season.
“I think it was a market scare and everyone took a break,” Zelina said about the stagnance, “Interest rates went up, and people were worried about the economy. We have a buyer segment that says we’re not purchasing right now.”
Zelina said the condos that are selling are ones that are upgraded and more desirable.
Anthony Spiegel, a luxury Realtor with the Ivan Sher Group and Berkshire Hathaway HomeServices, said what’s happening in the condo market is the same marketing forces impacting the single-family housing market — there’s a pause.
“We’ve seen a significant pullback in general interest and showing requests,” Spiegel said. “Most of the time luxury is discretionary and discretionary income is evaporating and people are wondering if prices have gone up too much.”
Spiegel also cited the stock market reducing people’s net worth and concerns about the economy and political scene. “It’s the first time they put on the brakes since the start of the pandemic,” he added.
As for one other factor, Spiegel also said this is the first summer many people took vacations and weren’t out in the market buying like the previous two summers. He said he remains optimistic it will rebound soon.
“I still think a large part of the high-rise market and single-family luxury market are undervalued,” Spiegel said.