Las Vegas is the largest city within the greater Mojave Desert. It is known as a major resort city with amenities for shopping, fine dining, entertainment, and nightlife. However, while some sectors in Las Vegas were able to adapt to the effects of the COVID-19 pandemic, industries like leisure and hospitality, construction, and transportation were not in a position to be as flexible. Thus, Las Vegas faced a higher unemployment rate in 2020 compared to other cities. Nevada’s jobs for the construction industry totaled 103,300 in March, which fell to 93,400 in September 2020. This is mostly attributable to the Las Vegas area. Despite that, the residential construction industry was able to increase net sales by 400% in April 2021 from its initial 244 sales in April 2020. The same period also registered 1,457 new home permits.
The Cost of Building a Custom Home in Las Vegas
The starting cost of new home construction in Las Vegas is on the upper end of the national average ($100 to $155 per square foot), at about $145 to $150 per square foot. A mid-range home would be priced at $183 per square foot while luxury homes can start at $244 per square foot. However, homebuilders should be prepared for pricing fluctuations.
New construction will sometimes undergo pricing increases due to supply-related challenges. The higher cost of construction materials and difficulty of procurement has put pressure on project costs. Prices for materials like lumber, diesel fuel, copper, and steel have gone up, which have decreased the profit margin of many firms.
Cost variation is also dependent on other factors, which are divided into hard and soft costs. Hard costs go into the physical aspect of homebuilding such as the home’s materials, framing, foundation, plumbing, roofing, and flooring. Soft costs cover the other aspects of construction, such as architecture and design fees, permits, and additional custom features. Hard and soft costs fluctuate independently.
The expenses that go towards the physical structure of the home are called hard costs. This can include the cost of the foundation, drywall, wall framing, and other materials. For Las Vegas, online realty platform RetireBetterNow.com puts the starting cost at about $150 per square foot or about $300,000 for a 2,000-square-foot home. With special features such as home gyms and swimming pools, building a luxury custom home in the city can cost as high as $1.5 million or about $300 per square foot.
Data from online contractor marketplace BuildZoom (BZ) presents similar ranges for the city: about $145 to $148 per square foot for the low-end of construction costs, $183 for the mid-range, and $244 for the higher end.
For the greater Southern Nevada area, estimates from Las Vegas-based general contracting company Builders United for the low end of ground-up custom home construction are pretty similar, at about $157 per square foot. However, the high-end can go all the way up to $504 per square foot. It also provides estimates for single-family detached houses starting at $76, with the high end at $170 per square foot.
RetireBetterNow.com further explains that it actually usually costs less to build a new two-story home than a new one-story home. This is because two-story homes are usually built on a smaller footprint than a wider one-story house, requiring less foundation and roofing work. Manta estimates roofing costs in Las Vegas to be between $5,161 and $6,643 in 2021.
However, while foundation and framing make up a significant portion of the budget to build a new home, interior finishes actually make up about 25 to 35% of it. This is why the shortage of lumber and its price point hitting $1,700 per thousand board feet in Q2 pushed the cost to build larger homes in South Nevada up by $50,000 to $60,000. Supply chain disruptions and price hikes for copper and steel have also affected profit margins and rendered some projects unviable or prompted builders to raise their prices to offset expenses.
The industry hopes that the reduction of lumber costs in the spot market in recent months will now trickle down to local homebuilders over Q4, and as a result, builder confidence increased in September, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
Unlike hard costs, soft costs cover the non-physical aspects of new construction. The most known soft costs are land, permits, and labor.
Cost of the Land
Land in Las Vegas is mostly made up of hard soil, which is known to be a little harder to develop. However, there are several new home communities that homebuilders can look into for their new-home construction projects. Some of the popular spots for buying land for new-home construction projects are Cadence, Mesa Ridge, Stonebridge, Sky Canyon, and Inspirada. Depending on the site, a project can take between three and six months to build a standard home. Custom homes will generally take longer to complete.
The cost of land is dependent on where it is located. Colliers’ market research report provides the cost per square foot for some Las Vegas neighborhoods:
- Summerlin – $39.71 per square foot
- West Las Vegas – $39.71 per square foot
- Airport – $5.51 per square foot
- Southwest – $7.96 per square foot
- Northeast – $9.72 per square foot
- Northwest – $6.47 per square foot
Homebuilders can find several listings for Las Vegas land on sites like Zillow, Redfin, and Landwatch. Parcels of land on Zillow can go as low as $49,000 for 3,920 square feet and as high as $10 million for 1.34 acres or 58,370 square feet of land. The lower-priced lots are in busy areas with heavy traffic while the more expensive lots overlook the Southern Las Vegas Mountains and golf courses. There are about 308 listings total.
Redfin has lots that are priced a little lower than Zillow’s. One 5,227 square foot lot is selling for $32,000. The lot is an oversized plot in a prime neighborhood close to new developments, community parks, and schools. The site also has Zillow’s 1.34 acre or 58,370 square foot plot of land being sold also at $10 million. Redfin has a total of 350 listings for Las Vegas.
Landwatch has a plot of land that costs more than what can be found on Redfin but less than Zillow. For $39,999, homebuilders can buy a 2.06 acre or 89,734 square foot plot of land. This is likely because the lot is about 40 minutes away from Las Vegas. Landwatch also has a plot of land worth $10 million; it is the same posting found on Zillow and Redfin. A total of 396 Las Vegas listings can be found on the website.
In terms of property tax, Las Vegas benefits from Nevada’s low property tax rates. The average property tax rate is 0.53%, which is far less than the national average of 1.07%. In addition, homebuilders should note that land will be cheaper the further away it is from Las Vegas.
An additional facet to buying land that homebuilders should keep in mind is that most sites in Las Vegas are made up of hard soil. This makes it difficult to dig up space for homes to accommodate a basement. The area also experiences flash flooding between July and September, which makes basements less of a popular feature. Homebuilders are instead advised to build an in-ground swimming pool since it requires less excavation, resources, and skill to build.
Permits and Other Fees
A custom home is expected to take around 10 to 16 months to complete. To ensure a smooth house-building process, homebuilders need to prepare to acquire all the necessary permits mandated by the local government. Failure to do so can result in further delays.
Homebuilders can look at the list of necessary permits and related fees on the building permits page of the Las Vegas local government website. Fees for residential construction can also be estimated through this link to the fee estimator app. The following information is from the local government’s building safety fee schedule table for custom or model type homes:
The next table covers related administrative permit fees from the same document:
Homeowners can also find mechanical, plumbing/gas, and electrical permit fees on the 46th page of the same document. These permits can vary in cost, ranging between $22 and $171 based on what it is for.
Architecture and Design Fees
Compared to builders who will generally ask for a minimum of $50,000, architects are typically paid between $60 and $125 per hour. Engineers will meanwhile charge within the $100 and $150 per hour range. Land surveyors will work for higher rates, starting from $300 and going as high as $700 and up.
Architects can also charge based on percentage, which is typically 10 to 10.50% of the total project cost.
How do the custom home building costs in Las Vegas compare to other nearby cities?
Based on permits from the last five years gathered from online contractor marketplace BuildZoom (BZ), the cost to build a home in the surrounding cities is much cheaper than in Las Vegas.
A couple of minutes away in the city of North Las Vegas, the average cost per square foot is $45, making for an average total construction cost of $142,674. The cost could go as low as $42 per square foot for a 2,242-square-foot one-story single family dwelling with a garage, a porch, and a covered patio, and as high as $67 per square foot for a 4,027-square-foot two-story single family home.
In Summerlin South, the average total construction cost is $299,860 or about $44 per square foot, ranging from $43.51 per square foot for a 6,706-square-foot home to $45.36 per square foot for a 6,787-square foot home.
For Bullhead City in the neighboring state of Arizona, the cost to build a single family home averages at $247,990 or about $75 per square foot. It can go as low as $62 per square foot for a 3,964-square-foot home and as high as $105 per square foot for a 1,975-square-foot home.
Major Custom Home Building Cost Trends Across the Web for Las Vegas
In an interview with VEGAS INC, Southern Nevada Home Builders Association CEO Nat Hodgson addresses some common concerns about the region’s building industry, especially in the face of the pandemic. He notes that the price of lumber has fallen back closer to pre-pandemic levels, but the association is still feeling the effects of the price hikes for other materials and labor costs. The move towards online processing systems has also impacted their timelines, extending what used to take just a couple of hours over the counter to over one to two weeks. Because of these issues, Hodgson thinks it will take some time before builders are able to keep up with the surge in demand for homes.
Hodgson is also seeing an increase in building permits in North Las Vegas. He also dispels concerns about Southern Nevada’s water supply not being able to keep up with population growth and the ensuing homebuilding, saying that the region leads the nation in water conservation and 98% of homes run on city water which ends in re-processing in Lake Mead. He explains that new homebuilding is not the issue, but rather capturing wasted water from older areas.
Responses on a Reddit thread about buying versus building a home in Las Vegas show the same concern on the side of prospective homeowners about the impact the price of lumber is having on building costs. One respondent advises waiting until 2022 to embark on a building project. Another respondent finds new-builds in Las Vegas to be overpriced in general, even when they are not in the best locations, as most of the prime real estate is already taken.
What Leading Custom Home Builders and Architects that Serve the Las Vegas Area Say
Andy Steinborn, vice president of Las Vegas-based residential and commercial remodeling firm Tajo-One, Inc., does express concern about overbuilding in the city in the face of limited water resources. “It seems counterproductive to harass residents over saving water while continuing to build without restraint right up into the mountain sides,” he says, adding, “I suppose all the marketing data supports it but don’t think it’s sound financially long term.”
The firm is currently working on a 910-square-foot two-story addition project with a roof extension over a deck, priced at $384 per square foot. “This is not your typical addition,” he explains. “I estimate all the projects we do since they cover such a wide range of work and then afterwards can come up with a [per square foot] price but there are not typically any square foot models that apply to what we do.” Steinborn notes that the wide range of customer’s choices for fixtures varies the cost heavily, where one job can involve a $300 bathtub then another a $3,500 tub. “On one of our jobs, our client purchased a $5,000 kitchen faucet.”
For remodels, the trends Steinborn is seeing are knocking out walls to create larger gathering spaces, updating bathrooms and kitchens, and modernizing homes that have dated styles, fixtures, and floor plans.
For custom home builder Nick Bugbee of R.W. Bugbee and Associates, it is still difficult to give estimates and forecasts at this time. “Lumber is spiking again, labor prices are going up if you can find people that want to work or show up, plastics like PVC are hard to get and extremely expensive.” Given this, he is seeing mid-range custom homes coming in at around $400 and more per square foot. His firm is currently building some very high-end custom homes at $1,600 per square foot.
Bugbee further elaborates, “We are seeing another spike in material cost, but a lot of people are attributing that to the suppliers raising their prices because they know people will pay for it to receive it right now.” This frenzy has given rise to shipping and port issues further protracting the supply chain, with high-end appliances now at a nine-month lead time and some furniture over a year out.
The cost of drywall, concrete, and other raw materials are due to rise next year, and the cost of steel just went up again. “We had stable conditions, low fuel cost, and near energy independence not long ago but all that has changed and it is hard to forecast what the current leadership will do to fix these issues,” Bugbee concludes.
The Future of Las Vegas’s Residential Construction Industry
Las Vegas’ residential construction industry registered a 400% increase in net sales for April 2021 from the 244 sales of April 2020. Additionally, 1,457 new home permits were registered alongside the net sale increase. By September, builder confidence has improved slightly thanks in part to reduced lumber costs and strong single family home demand.
The new construction of single family homes is expected to grow for the remainder of 2021 despite supply chain disruptions and labor shortages. Market experts are attributing this to the lack of existing homes for sales, leaving new construction as a better option for prospective homebuyers.
Buyers Moving West over the Spring Mountains
With the increasing difficulty in finding a home within Las Vegas, homebuyers are starting to look at other nearby cities where the bidding wars aren’t so competitive. One area that has been gaining their attention is Pahrump. Brokers aren’t calling it a surge just yet, but as of August, sales of houses and mobile homes were already at 628, as compared to 2020’s total sales of 522. Although the median sales price of single family homes is up by 21% from last year at $315,000, the cost of homes in the town is still about $150,000 to $200,000 below a comparable home in Las Vegas.
There are affordable housing development plans for land in the Southwest Las Vegas Valley. More than 100 homes are expected to be put up and priced for low-income families. A local developer plan received the green light from Clark County Commissioners to begin working on the reserved 15 acres of land, and construction can begin in about ten months. Homes for this project will be two and three stories tall, costing between $208,000 to $240,000. It is currently the first affordable housing development in the area, which leaves expectations that surrounding land may undergo a similar development in the future.
Aside from this development, a company headquartered in the city has also patented a new “foldable” modular home innovation that costs $50,000 each. Boxabl builds the entire structure of the home in its factory, which when folded spans just eight feet wide, requiring no special assistance as it is transported to be assembled on-site. The Casita, the name of the first model, includes a kitchen, living room, bedroom, and bathroom, with many fixtures and appliances already built-in, comparable to most accessory dwelling units. The company is making its first order of 156 homes for the Department of Defense and already has a waiting list of over 100,000 potential customers.
Building a Barndominium
The trend of building “barndominiums” has also slowly been catching on in Nevada. A portmanteau of the words barn and condominium, a barndominium is a large steel structure that often has room for both living quarters and a garage area. Traditionally, these usually began as conversions of actual barns into homes, but ground-up constructions of this style of home are increasingly becoming more popular, allowing for a farmhouse design not just in the exterior but in the interior as well. Its metal frame, with minimal use of wood timber found in traditional homes, makes it easier and cheaper to build, and more durable as well. A barndominium can be built in about six months, at an average cost of about $123 per square foot. This allows the homeowner more room to customize the interior of a 2,000-square-foot home with their choice of fixtures and appliances.