Las Vegas NowHome Builders Adapt to Tough Market

Home Builders Adapt to Tough Market

While many U.S. housing markets are seeing an increase in home sales, Las Vegas is still struggling. That's especially true for new home construction which has stiff competition from the flood of foreclosed homes for sale.

One local builder says the key to selling is adapting to buyer's changing needs.

There appears to be a shift in the consumer culture. Homebuyers concerned about both the economy and the environment are choosing smaller, less expensive and more energy efficient homes.

It's a trend that long-time Las Vegas homebuilder American West also noticed and it says it's Lexington community in Highlands Ranch represents the idea that less can be more.

The Lexington community in the far southwest caters to a new breed of new homebuyer. According to the latest census data, new home sizes are shrinking considerably.

Consumers are becoming more practical in these tough economic times. They want smaller, more affordable, more energy efficient home but with many of the designer features offered in large custom homes.

"They just don't want to deal with all the maintenance and utility costs that go along with a larger home, especially one that was built before all the energy efficient systems were around," said Jimmy Jones with American West.

Three out of the four models at Lexington are 1,600 square feet or less, but prospective homebuyers say you wouldn't know it walking through them.

"They may not think 1,400 square feet is very big, but after they walk it they say, ‘Wow. Look at all you can get in 1,400 square feet,'" said Jones.

Even in a recession and a market still flooded with foreclosures, American West says 40 to 60 prospective buyers a week tour its Lexington community. With prices starting at $188,000, phase one sold out in less than two months.

"We're paying just as much or more for our rent in our condo right now than we would be for a brand new home," said one prospective buyer.

"People are out there comparing, and they learn that for $188,000 they can buy a brand new home and have the security of that new home warranty," said Jones.

And American West isn't the only homebuilder adapting. According to the National Association of Homebuyers, nine out of 10 homebuilders are now planning or building smaller, less expensive homes to meet this new consumer demand.

Right now, it costs most new homebuilders more money to construct a house than they can sell it for. But American West's long track record in Las Vegas is allowing the company to subsidize its own home sale prices, giving it the pricing muscle it needs to go head to head in the foreclosure ridden market.