Condos Hammered by Slow Market

LAS VEGAS, NV - One sector of the Las Vegas real estate market hit harder that just about any other is high rise luxury condominiums. At one point during the economic peak, more than 100,000 new units were on the drawing board. But only a fraction of those were ever built.

Of those 100,000 announced units, a local research group says only about 10,000 have actually been built. For those units that are on the market, sales are stagnant.

John Eisele is sales manager at one of the local condo projects that did come to fruition - Juhl in Downtown Las Vegas. Eisele also represents the trade group of luxury condominiums. He says despite the recession, condos are still attracting a certain group of buyers.

"We are really seeing an influx of empty nesters - the kids are in college, in a 6,000 square foot home in the burbs and they are saying, 'You know what, it is time for us to enjoy a lifestyle,'" he said.

A map put together by the local research firm Applied Analysis shows all of the condo projects that were on the drawing board at the peak of the market at the end of 2006. Most were never built. Current sales are also at a virtual standstill.

Applied Analysis says only 43 high-end condo units sold in the month of March, with nearly 900 units on the market.

"There's very little sales activity taking place today. There just isn't a lot of product moving. There's not a lot of demand in the luxury segment today when we talk about condominiums and what is happening in the resort corridor," said Brian Gordon with Applied Analysis.

But Gordon also believes the high end segment does have a future. "Longer run, is it a viable product type? Yes, I think it does. Is it this year? Probably not - it is going to take a long time for the market to recover, generally speaking, but also specifically in this product type. So we are looking at a much longer time horizon before buyers start to come back to this type of product," he said.

And just like the single-family real estate market, prices are dropping for high-end condos. The high rise association says that is brining in cash buyers and also investors who are looking to snap up bargains that are currently on the market.