Land Fever—Life in the Real-Estate Rush

I've got a handful of land. A fistful. From a weed-covered, litter-strewn piece of desert. I'm standing on a blank piece of earth, wind chapping my ears, horizons spinning around, blue dirtyish sky above. A mighty feeling is moving through me, a pulse, a beat, a growing urgency. It could be the nature-is-awesome feeling. It might be the solitude-is-nirvana feeling. But it's neither. The force growing in my head right now is: real estate. When I say it out aloud, "real estate," it makes my eyes squint, the corners of my mouth turn up, my sweaty little palms itch.

Suddenly empty land isn't so precious to me anymore. There is barbed wire. There are ants on the 7-Eleven cup stuck in the creosote. I see the frames of cheap houses in the distance. I feel the beat of money. I feel the hustle of the market. I think I can actually feel, first in the soles of my feet and then in my calves, my knees, the tremor of oncoming earth-moving machines, big yellow monsters that will turn this slab of beef into cutlets. Expensive cutlets. I'm standing here churning land back and forth between my hands, pouring it, letting it slip between my fingers. It's making me greedy. I'm thinking, we'll cut it up, flatten it flatter, pitch some lean-tos and shop it to the nomads. It's not mine exactly, but then it's not really anyone's, is it? Hand me a Century 21 jacket, I want to sell Earth.

Were I to do so, I'd be joining more than 10,000 real estate agents in the Vegas area. That's more than the population of Laughlin. It's also 40 percent more agents than there were three years ago. You've seen them. You may be one of them. They've developed into a subspecies, more than just people who share an occupation. Like the media, we think they're possibly morally suspect, but they're better groomed and drive slicker cars.

Of course, the general population growth goes some distance towards accommodating them—with more than 5,000 people a month swarming into the Valley, it seems there's a horn of plenty for buyers' agents.

But we're running out of houses. Hard to believe, I know, with a new subdivision going up on every corner—but they're not going up fast enough. There are so many people buying, it's tough to find a good home that's available to move into right away. Prices are rising faster than ever. It is, as real-estate analyst Steve Bottfeld, VP at Marketing Solutions, told me, "not just the single hottest real-estate market in the U.S., but the single hottest real-estate market in history. Hotter than California in the mid-'80s."

Homes that went for about $215,000 in December are going for $305,000 right now. Between January 2003 and July 2003, 28,116 units were sold at an average sales price of $210,738—and it's still rising: Between July and October, that average was $230,400, according to the Greater Las Vegas Association of Realtors. As of September, the average days a house stayed on the market in Vegas before being bought was 36. Nationwide, a hot market is considered anything less than 60 days.

So somewhere in the course of chatting up real-estate agents for this story, I fell for real estate. I was sold by the agents, by the land, the construction, the houses, the frenetic pace of a snake-oil market. It's not hard to do, to fall for real estate. I think it was right about the time Bottfeld said, "It's a fascinating time in Las Vegas history, fascinating," that I lost my I'm-gonna-hate-this objectivity. Or I traded it in for a different objectivity. The rest of the story, as they say, got in the way. The numbers, the dollars, the greed; the thrill, the rapid-fire history going on around me—real estate got in the way.

I'm prowling in a 4-year-old Summerlin neighborhood, driving slowly, eyeballing houses like I'm casing. I'm looking for a not-so-pervasive–in-this-neighborhood For Sale sign, and I find one right about the time agent Steve Howell rings my cell phone. He wants to clarify something about the pumpkins.

He's a farmer. His farm is a suburb, a set of houses he's decided is his marketing target, the soil he's got to till.

Like most agents in a competitive market, Howell, of Realty Executives, does what it takes to maintain his resale inventory. Sometimes, what it takes is toting hundreds of pumpkins around the "farm"—his chosen neighborhood of potential customers—and placing them with business cards on doorsteps. (The Glamour Shots image of real-estate agents stops here.)

"It's a very competitive market," says Howell, who's been at this for five years. "I've done the pumpkin thing in the past. The key is to keep them small, so they're not unwieldy …

"I've done flags for the 4th of July—it worked well. It doesn't hurt. It took five hours. I did it at night—I just put them out. I got a pretty good response. It wasn't like people called the next day and said 'Can you sell our house?' but I got compliments. They said, 'Thanks for making our neighborhood look so good!' and they'll remember that."

Agent Phillip Lacey decided to farm bikers. He paid to have biker-ish things, like T-shirts and visors—?!—branded with his niche name, High Roller Homes, and then went to a Harley festival and solicited clients.

"I gave out T-shirts and bumper stickers that said, 'I'm a high roller guy.' I try to think outside of the box …

"I gave out martini glasses that say highrollerhomes.com, visors with a martini glass on them…

"I had to sit there for awhile and think this up. So I thought of that niche, high rollers, although it's not all high-roller homes. Still, people from out-of-state will eat it up; they'll think 'I want to be a high roller so I'll visit your site.' I'm just trying to have fun.'"

Right now, Howell says, his inventory of listings numbers fewer than ever. "You sell them as fast as you get them. Actually, I've only got three or four that are not sold right now. I sold a townhouse the other day in three days. It was a two-bed, two-and-a-half bath, listed at $159,900. It sold for over list.

"It's all driven by the new home market. They can't keep up with demand. If you see a house you can afford, get it now. By the time a new one is built, it could be more expensive," Howell said. "There's nothing under $400,000 standing (new homes). KB Homes had a sale the other day, and 450 people showed up for three home sites."

So as people pile up for new homes, farmers vie for farmland. "There's really no territory a person can claim, so we definitely do cross over. There's not many listings out there."

Lacey—who's only been in real estate for three years—said the key to farming is the amount you dole out. "You spend huge amounts on marketing. Maybe 25 percent of your income. It's not easy busting into real estate. People get into it and say, 'Where are all my clients?' You're constantly marketing, meeting and greeting, striking up conversations with people. You can't be shy.

"People think real-estate agents make a lot of money, but most make $30,000 to $40,000 a year," Lacey says. "Usually, they have a spouse who's supporting them.

"I've knocked on doors—I was out there in the rain. I've never had anybody exactly slam a door in my face, because usually they want to know what their house is worth. The neighbors want to know what their neighbor's house is going for or (in the case of an open house) what it looks like on the inside."

The payoff? "I just sold one for $1.1 million," he said. "It's like hitting a little jackpot.

"And that's infectious."

Driving east from I-15 on the 215, every billboard is for a new-home development, every truck running you off the road is carrying A-frames or sod or cement, every third Lincoln SUV contains a smiling agent and a license plate that says something like ISEL2U or RELST8.

It looks, to the naked or less-than-avaricious eye, horrendous. Something like Pahrump crossed with a stretch of tornado-torn rural Oklahoma—a mixed bag of giant signs, crappy, unfinished roads and half-built structures next to giant lots covered with piles of dumped gravel or dirt or garbage.

But to my new I-love-real-estate eye, it looks like a gold mine. The closer I get to the Monopoly houses, lined up fresh and redundant on a brand spankin' new street called Arby Street—have they started naming them after fast-food chains?—the happier I get. No longer am I upset about the ruin of the earth, the water shortage, the plight of the struggling agent, the quality of the paper-thin houses, all of those foibles. Who cares. I'm witnessing history, as Bottfeld told me, the hottest market in America, the big gamble in the biggest gambling city in the U.S. As I get out to the edge, where the final development meets unspoken-for desert, right under a butte and next to a discarded mattress and something that looks like a large exhaust pipe, I face the test of a true real-estate aficionado: Is it pretty, this view of the butte, or is it troubling, because it's going to be difficult to build on?

"You're going to see buildings start going vertical—mid-rises, high-rises—soon, because it's getting tight," Bottfeld said. He recalled a recent sale of mid-rise condominiums in Summerlin near Rampart casino in which people camped out the night before sales began so that they could be the first to put a hold on property.

"They had people sleeping there the night before, and the staff serving sandwiches. They sold $50 million in real estate in three hours in the morning," Bottfeld said.

"The problem isn't selling. The demand is that strong," Bottfeld said. "The problem is, we're running out of product. We're blowing through land at 4,500 to 5,000 acres per year. How much land do you have left? Not that much. And how rapidly will it be absorbed?

"PDQ," he says. "Do you know what that means? That's pretty darn quick."

Not surprisingly, my newfound obsession with real estate leads me to a casino. Because all things begin and end in casinos.

At 10 a.m. one Thursday morning at Sam's Town, men in suits and ties and women with leather briefcases and pumps stroll in from the parking garage, through the slots and slackers, into a music hall. Inside, the stadium seating is packed. Employees are putting out extra chairs. The Price is Right theme song is playing. People are standing in the back. There's going to be a land auction.

Everybody's got a Bureau of Land Management folder that says, "For Sale: Land in the Las Vegas Valley." They're poring over them like gamblers at the sports book. They've also got blue placards with their bidder numbers on them, and they're whispering into their cell phones at panic speed. Some have been here since 8:30 a.m. just be sure they got a seat.

The auctioneer, a self-described "5-gallon auctioneer in a 10-gallon cowboy hat," starts the countdown. "We're just a few minutes away from getting this party started … Get your wallets ready …

"Ladies and gentlemen, five minutes to show time …"

The guy next to me says his friend from Alaska came down for this because he's pretty confident he can turn around a hundred grand in less than six months.

"Two minutes," the auctioneer says. "Two minutes."

People are rambling through their paperwork, doing the math, talking about the 20 percent deposit they'll need by 4 p.m. if they win a bid.

Finally, the auctioneer rolls out the show.

"We appreciate your attendance, we appreciate your smiles, we also appreciate your big wads of cash," he says. "… and the last thing we want to do is leave some money out there! "

The sale begins. The ringleader is a real, live, fast-talking auctioneer, and the bidding starts at $1 million for 10 acres; the parcel sells for $3 million. The next is a 3.75-acre lot that starts at $890,000 and sells for $1.3 mil. The third is 2.5 acres, that starts at $275,000 and goes for $430,000. There are a lot of these 2.5-acre parcels; most of them start at "fair market value" of around $235,000 and sell for nearly double every time.

In the end, the BLM auctioned off about 750 acres for about $139 million—an average of about $174,000 per acre. One 480-acre parcel went to Pulte-Del Webb for $66.5 million.

But the biggest chunk of all didn't sell—1,940 acres in Henderson. It'll sell, eventually, just not today, not for the base sticker price of $250 million. But the nonsale doesn't sit well with me. A market can't last forever. Can it?

Great Real Estate Crashes in history, according to the American Real Estate Society and Money magazine:

• In 1920, areas in Florida—not entirely unlike Las Vegas—became the ultimate destination for snowbirds in search of warm weather. Steady population ensued, house prices doubled and everybody became a real-estate investor. Eventually, property became overvalued, nobody could find a buyer at higher prices and the bottom fell out. Within a couple of years, real estate that had been bought for as much as $4 million couldn't be sold for more than $800,000.

• In Los Angeles, the average home lost 20 percent of its value between 1989 and 1996—from $214,800 in 1989 to $172,900 in 1996, after enjoying a 77 percent increase in years prior.

• In Houston, between 1985 and 1988, average home prices plummeted from $78,600 to $61,800, after the oil market began failing.

"Prices fell so much that people owed more on than their mortgages than their homes were worth," David Weil, an economics professor at Brown University, told Money. "They'd drive to the bank and drop off their keys to their homes and just leave."

• In Hartford, Connecticut, the typical home price increased 92 percent to $167,600 from $87,400 from 1984 to 1988. They started falling after the insurance industry began moving out, and didn't regain 1988 value until after 2000.

• In Honolulu, Hawaii, in 1995, the average tab for a house peaked at $360,000—and then began to sink. By 1999, a $360,000 Honolulu house sold for $290,000, a 19 percent loss.

So is the Vegas home value real? Or is it hype? On a Friday afternoon, I'm lollygagging through model homes, pretending to be a buyer, making comments about how the fourth bedroom will make excellent space for my two competitive show poodles. There' s an optional studio, optional third bath, an alcove—just the kind of thing I need. I'm listening to piped-in clarinets and the sound of a fountain in the courtyard. There is beautiful leather furniture, swags over the windows, marble tile, fake booze in decanters on the dining room table (I took a whiff), fake strawberries dipped in fake chocolate next to fake candy on the kitchen counter, a fake berry tort on a crystal serving dish on the table, a fake computer screen on a desk in the alcove next to pictures of real people—who knows who they are, but they're getting married in one photo, then holding a baby in the next ... it's all very tempting, this lifestyle Pardee Homes is selling for a mere $297,000.

I suddenly and desperately wish I lived here. And I wish I looked like the agent, spit-shine clean, capped teeth, convertible Thunderbird parked on the street, indefatigable smile. "Hellllooo, how are you this afternoon?" she asks me on my way out of the model I cannot afford. She asked me that on my way in, too. It's hard to tell whether we're coming or going, whether this is the beginning or the end.

And that seems to be the big question in this boom market, this historical market that Bottfeld described. I ask him: Are we starting or ending? How long is it going to last?

"A few years ago, they said we'd be out of land in nine years. Then two years later, they said we'd be out of land in nine years. Right now, I'd say, we'll be out of land in nine years," Bottfeld said.

I ask Howell the same question: How long will it last?

"Well, for eight or nine years, people have been saying 'two more years.' But I think there's no slowing down. Five or six thousand (people) a month are moving here. Even at the beginning of this year houses weren't this hot. … So I'd say, 'two more years.'

"And I'd say if you haven't bought, grab something. Buy today. Buy yesterday. Grab something."

But what should I grab? Land, or my wallet? Who can say? It's like sitting in the casino, trying to predict the next card, wondering how much to bet.

I take a drive up a hill in Anthem, park, and look down on everyone. It's nice up here. In nine years, I can see it littered with tilting For Sale signs. Or I can see happily married couples with two Lincolns and three kids and clarinet music echoing through their optional alcoves.

I should buy.

It is, after all, a gambler's town.