Big builder comes to LV

Jennifer Shubinski

Monday, Dec. 8, 2003 | 11:03 a.m.

The nation's seventh-largest home builder is entering the Las Vegas market and will begin selling entry-level homes next year.

California-based home builder The Ryland Group Inc. said Friday it owns more than 700 lots in the Las Vegas Valley and will begin selling homes in five local communities in 2004. Ryland will offer mostly first-time and first-move-up homes.

"This expansion exemplifies Ryland's strategy to operate in the largest housing markets and to grow organically rather than by acquisition," R. Chad Dreier, chairman, and chief executive of The Ryland Group Inc., said in a statement. "Currently both the Inland Empire and Las Vegas are strong markets where we believe there is opportunity to continue Ryland's growth."

Ryland has assembled parcels in the southwest part of the Las Vegas Valley, near Blue Diamond Road and near the future master-planned community Mountain's Edge, said Todd Larkin, division president for the Las Vegas operation and former division president of John Laing Homes.

Larkin said the home builder plans to be active in every major submarket in the valley and to build in master-planned communities.

Unlike many home builders that enter the Las Vegas market through acquisition, The Ryland Group did not acquire any builder or builder's parcels during its entry, Larkin said.

Larkin, who has more than 15 years of home building experience including serving as division president for John Laing Homes in Las Vegas, said Ryland did not buy any of John Laing's remaining parcels from an acquisition of the home builder by Richmond American Homes in 2002.

John Laing Homes retained ownership of some land after the sale to Richmond American Homes.

Local analysts were not surprised by The Ryland Group's announcement.

"I've been talking off and on to Ryland for 15 years. They're coming, they're not coming. Am I surprised that they're here? No. I want to know what took them so long," said Dennis Smith, president of Home Builder's Research Inc. "If they'd been here 15 years ago, they'd be a major builder in Vegas."

Ryland, a public company based in Calabasas, Calif., is one of the nation's seventh largest home builder, according to Builder Magazine, and is a leading mortgage company. Ryland operates in 28 markets across the country and has built more than 210,000 homes and financed more than 185,000 mortgages since its founding in 1967.

Larry Murphy, president of research firm SalesTraq, said the trend in Las Vegas is for large home builders to dominate the market.

"I did an informal count of builders that had more than a dozen closings, and we had only 75 (builders) this past year, and the year before we had 90 (builders) and before that we had more than 100 (builders)," Murphy said. "The number of builders is steadily decreasing due to mergers and acquisitions. First KB bought Lewis out, Richmond bought John Laing, Pulte and Del Webb are one."

Murphy said the market does need more entry-level and first move-up homes, but whether Ryland can supply the area with homes actually priced as entry-level homes is to be seen.

Larkin said Ryland will build homes starting at $150,000 and $160,000.

"It is no secret that affordability is an issue in Las Vegas," Larkin said. "It is increasingly difficult to get land at prices so that you can build affordable."

Larkin said the will look at several different ways to keep home prices down, including building neighborhoods at a high density.

"Ryland has a great track record with trying to use land creatively," he said. "I really think (Ryland) will be a great asset in the marketplace."

In Las Vegas, more than 95 percent of all new single-family detached homes are priced above $150,000.

Entry level, which Murphy defines as homes below $150,000 and first-move up, which he said is between $150,000 and $200,000, are in scarce supply in the Las Vegas area.

"Yes we need first-time entry-level (homes) and first-time move-up (homes), but there is demand at virtually every level," Murphy said. "The only semi-soft part of market is in the million-dollar-plus homes. There is always a need for entry level and the definition of entry level has been going up."