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High-rise condo units will pull up the median price of new homes in 2006, according to Dennis Smith. president of Home Builders Research.  And, Smith, along with other housing experts, predicts that 2006 will be a normalized market with single-digit housing appreciation in the Las Vegas Valley.

Brian Gordon, principal at Applied Analysis, a local real estate research firm, said the valley's luxury condo market has been extremely active.  "There has been a significant amount of investment thanks to a worldwide audience of potential buyers," Gordon said.

According to real estate consultant John Burns, there are 8 factors driving the real estate high-rise boom:
1.  Home Equity:  The primary driver is home equity since significant high-rise development doesn't make sense in markets where single-family homes cost less than $250 per square foot. As long as housing market equities hold, demand will be strong.

2.  Demographics:  There will be a more than a 25% increase in the population of people over 50 this decade, many of whom prefer not to own a high-maintenance home.  This 'over 50' group will also have far more money than any generation before, thanks to dual incomes, rising home prices, and record levels of inheritance.  Many will choose luxury-high-rise, resort-like living, while others will prefer a more affordable 'move down' alternative.

3.  Government Policy:  Some city government officials want high-rise living to boost the wealth and income levels of their city.  Other city officials see an opportunity to provide more affordable condominiums.

4.  Scarcity of Land Near Job Centers:  Generations X and Y have no intention of wasting their lives in traffic and difficult commutes will result in more baby boomers moving back into town.

5.  Lifestyle Choices:  Empty nesters, singles, young couples and retirees don't have kids to consider.  Throw in an increasing number of professional couples who make great incomes and enjoy urban culture, and you have a recipe for high-rise development success.

6.  Globalization:  In many markets around the world, executives live in high-rises.  The buyers in many towers are international.

7.  Depth of Demand:  High-rise developers are tapping into pent-up demand, as well as a small amount of induced demand from economic growth and second-home buyers.  Once this demand is saturated, which has already occurred in San Diego, economic growth should support no more than two to three high-rises per year.

8.  Speculators:  Speculators buy cash-flow-negative assets that they believe will appreciate significantly.  The key for builders is to have floor plans and amenity packages that are exactly what the buyers want and to avoid building high-rises in markets where speculators are active.  Las Vegas, San Diego, and South Florida are reportedly where the speculative activity has been greatest.
(Sources:  In Business Las Vegas and Las Vegas Business Press)

Smiles and Grins --
SurReal Estate Malaproptionary© Paula Hollins 2000- A dictionary of real estate and legal terms for the burned-out, downtrodden and hoodwinked who have ever been involved in real estate.  Here are just a few:
Acre - Necessary space for a family of six in Utah, a family of four in Eastern Suburbia, and 500,000 people in NYC.
Closing Statement - "Thank God".
Estate - 500,000 acre ranch tract in Texas, 3 acre tract in Westchester County, NY, and 1500 square feet residence in NYC.
Extension - Time elapsed between a bank deposit and the clearance of funds.
I-beam - Long straight stare extending between buyer and engineer when structural needs are discussed.
Realist - One who understands that most showings come to naught.

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