Nevada Real Estate >> Las Vegas Real Estate Specialist: Nevada: Las Vegas: Citycenter

Southern Nevada condo market still wallows in the Lehman moment, especially the high-rise luxury segment that occupies choice space for the most part on and around the Strip. Units are hard to sell because mortgage financing has dried up, sharp value declines have scared would-be buyers to sit and wait and the glut of vacant inventory gives no one enough confidence to commit to anything. Las Vegas luxury condominium developers had a totally different vision in mind when they started their projects a few years ago, when the thinking was that if you build it they'll come. Well, they did build it, but they aren't coming.

MGM Mirage's CityCenter unveiled its massive multi-use development on the Strip in December, including a high-rise condo component scattered in several buildings. Just like everyone else in Las Vegas, it has found that selling them is no walk in the park.

The condo-hotel Vdara has managed to close on only 78 out of 1,543 units through April, according to SalesTraq, a Las Vegas real estate information boutique. Although it began closings only in March CityCenter had announced earlier in the year the sale of 698 condos. Mandarin Oriental has closed through April on 32 uber-luxury units out of 227 available, while months ago it reported contracts on 205 of them. Veer Towers has 670 condominiums in two distinct leaning structures where closings just kicked off in May, with 480 of them sold according to CityCenter.

To address the major issue of mortgage availability MGM Mirage began offering seller financing to some buyers. It chopped off 30% from the condo prices over the winter to bring them closer to market. Evidently these changes haven't been enough, though, to excite the recession-weary prospects since the sales figures are very weak. On top of a dysfunctional mortgage and real estate markets comes a dispute with Perini Building Company over construction payments that will make some people reconsider their plans. Buying into a condo project under litigation is generally to be avoided.

Metrostudy, a housing industry research shop from Houston, reported recently that Las Vegas has 8,200 empty condominiums, including the ones from CityCenter. Moreover, SalesTraq informs that at this sales pace there is a 20-year supply of them. That is a tough environment where to successfully market condominiums no matter how luxurious they are. And no matter what kind of Las Vegas Strip views they offer. To efficiently move this CityCenter inventory requires further price cuts, down to where the Southern Nevada high-rise condo market is, otherwise the marketing budget currently in use is mostly thrown away.

While we all understand that the "Trustee Sale Flip" is not "new", I have taken note through some simple observations that the Trustee Sale Flip has gained ground over REO.  As I mentioned in my last market trend post, I saw it gaining ground through my extensive work with BPOs (Broker Price Opinions.) 

I now have it validated through several different sources:  My referal partners and I have not written any REO offers in the last week to two weeks for any buyers (all short sale and trustee flips) + looking back at some of my past market reports.

Compare June 2009 Sales to January 2010 Sales (By percentage:)

Just look at how much ground REO closings have lost and short sales have gained.  "Other" has gone up a bit but I expect it to jump up in the spring months as investors are snatching up properties in Trustee Sales.

Unfortunately there is no way to filter out standard sales vs trustee flips.  Some list agents even label them as "REO" in the MLS but not bad enough to skew the numbers.  I would say a very large number of the "other" or standard sales are trustee flips.

At any rate, it is much easier to submit offers for agents working for the "investors" than it is REO.  There aren't as many gatekeepers to bypass, overlays or rules in the game even though the process should be all "net".  (swoosh)

copyright 2006-2011 Renee Burrows, REALTOR®, The Force Realty  702-966-2494

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The real estate market blowup hasn't spared any segments from its fury here in Southern Nevada - including Henderson, Anthem, Mountains Edge, Southern Highlands, Summerlin and North Las Vegas. Condominiums have been spanked as harshly as the single-family houses. Luxury high-rise condos on the Strip and elsewhere in the vast valley, thought by some to be above the tussle, have absorbed the same unhealthy punishment. No project could hide from it.

CityCenter by MGM Mirage, the $8.5 billion upscale mission, also has a large condominium component in it, beside the usual chic casino, convention, hotel and retail offerings. It'll have about 2,400 units in all split between the Veer Towers, Vdara and The Residences at Mandarin Oriental. CityCenter itself will begin opening in stages in December and the condos are scheduled to start closing sales in January.

As the Las Vegas condo market tanked stunningly, CityCenter advance buyers grew quickly uneasy about their purchase agreements and began talking about legal action. Either they wanted their deposits back or then the prices would have to be sliced with a heavy cleaver to reflect the present value setting. With that in mind the project was weighing carefully its options and finally decided on price reductions.

The condominium prices will be adjusted down by 30%, says CityCenter now. It's official. No more rumors about it one way or another.

Is that enough? To most buyers it likely will be, although according to the Las Vegas price grid it may come short of the real market. Anyway, a condo originally costing, let's say, $1.3 mil will now go for $910,000. That will definitely help any size wallet. Those who are still unhappy probably will face a long legal battle that may not be worth it at the end.

Las Vegas mortgage lenders have still to be convinced that the values are there, otherwise underwriting will stall. Currently standard condo financing in Southern Nevada is very tight. To provide funding for their customers CityCenter may have worked out private arrangements with a select few mortgage banks that will solve the problem. Similar to what Palms Place managed to do when it got the financiers of the condo project to also supply the needed mortgage funds for buyers. As a side note, a share of the sales predictably will be cash.

The price adjustments CityCenter has decided to do is a long positive step in making the colossal development more viable in this testing economic environment. 

MGM Mirage's CityCenter project going up right on the Las Vegas Strip received some very good news from the U.S. Green Building Council. The mammoth upscale undertaking won't open until December, but an otherwise tough year for the gaming firm is finally showing a peek of the sunny side of things as finishing touches are being applied there.

LEED, or Leadership in Energy and Environmental Design, gold certification for the development it has sought from the onset has been granted for some of the components, including the non-gaming condominium and hotel tower Vdara. Receiving the same is the 4,000-room hotel Aria and its convention center and theater. CityCenter is also applying for the certificate for the rest of the project, like the Veer Towers condos and the Mandarin Oriental hotel.

Some of the areas where LEED applies there are the use of recycled and sustainable materials and strong energy and water efficiency measures. For instance, CityCenter will churn out its own energy with a reduced-emissions natural gas co-generation plant. That and other energy-trimming features are supposed to save annually what 8,800 households normally consume. That's something to take note of.

Las Vegas valley - with thriving communities like Summerlin, Henderson, Sunrise Manor, Anthem and Whitney - has a few businesses with LEED credentials, but CityCenter is unique due to its size. Palazzo with over 3,000 rooms built by Las Vegas Sands in 2008 is another major resort in town that has achieved LEED, its version being silver. It's encouraging to see that major casino developers here are increasingly putting their arms around the green building concept.

They, Southern Nevada gaming operators, can readily identify with the benefits it brings.Cost savings is a given. No doubt about that. Green building idea is slowly gaining traction as the nation is seeking to wean itself off fossil fuels. Consumers will begin appreciating resorts in Las Vegas, and elsewhere, that are energy efficiency conscious and predictably prefer to patronize them. In essence, it's a novel marketing tool as well. Getting LEED then is a win win model on many fronts.

Rentals:

• 349 Listed 2/15/2008
• 15 Under Contract 2/15/2008
• 55 Leased January 2009 
• 6.3 Months Inventory

Resales:

• 888 Listed 2/15/2008
• 43 Under Contract 2/15/2008
• 12 Closed January 2009
• 74 Months Inventory (=6.2 years)
  

This Market is extremely volatile due to the boutique nature and lack of financing.    Read last month's report here.

This report is compiled by using data from the GLVAR MLS. Data is gathered by the "VERTICAL" field and the "RESIDENTIAL" field using "CON" as subtype and  "HIGHRIS,LOFTLIV,PENTHSE" equals any for building description.  Information is deemed reliable but not guaranteed.

Read the most current market report for the Las Vegas High Rise Sector right here.

If you are thinking about buying or renting a high rise condominimum in the Las Vegas area, please call 702-966-2494.  Press 1 if you are a buyer or press 2 if you are a renter.  For financing options press option 3.  For selling or leasing/property management press option 0.  We will not list condos that have not yet closed with the builder or are not interested in contract reassignments.  Para español presione el cuatro.

copyright 2006-2011 Renee Burrows, REALTOR®, The Force Realty  702-966-2494

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