Back in the Las Vegas boom days, the belief was there wasn’t enough land. The Bureau of Land Management (BLM) controlled nearly 90 percent of the land in Nevada and all the land surrounding the Las Vegas Valley. Desperate builders were gonna run out of terra firma.

So, developers went verticle (called the Manhattanization of Las Vegas) and skipped to nearby communities like Pahrump. The ensuing crash was especially cruel to high-rise and satellite community developers.

“Pahrump, a rural, unincorporated town 60 miles west of Las Vegas in Nye County, bears little outward resemblance to its famous neighbor,” writes Eli Segall for the Las Vegas Review Journal. “But last decade, its housing market inflated to record, bloated levels until it burst and got wiped out with the economy, just like the one in Las Vegas.”

High-rise units, with that view of the world famous Las Vegas Strip, reported at the time to be as good as the view of any ocean or the bright lights of any city in the world, were fetching $1,000 or more a square foot.

Then, ka-boom. Nobody cared much about the neon view and the endless entertainment opportunities within walking distance. Developers were desperate and, for instance, as Buck Wargo writes for the Las Vegas Business Press, “In December 2012, MGM sold 427 of the 670 units in the two towers to New York-based Ladder Capital Finance Holdings. The cut-rate sale was for $119 million or about $278,000 per unit — about $300 per square foot reported at the time.”

Current Prices on popular forms of Silver Bullion

However, memories are short when money is cheap and, “People who want a second home in San Diego can pay $1.3 million for a one-bedroom versus $400,000 in Las Vegas. Which one would you buy? I would take three here, and that’s why we’re starting to see demand pick up,” says Bruce Hiatt, the owner of Luxury Realty Group. “I saw this coming trend and wanted to be back in the forefront again like we were on the rise before,” Hiatt said. “We’re bullish on condos becoming of interest to buyers wanting a second home.”

Perhaps locals like this writer are too skeptical. “People in Las Vegas aren’t seeing it, but people on the outside are,” Uri Vaknin says. “Tourism is increasing and the Lucky Dragon was the first new casino to open. What I like to say is Las Vegas is to the condo market what Neiman Marcus calls their last call sale.”

Meanwhile, over the hump in Pahrump, housing prices have doubled. There were only 22 permits pulled to build homes in 2011 after a thousand were permitted in 2005. Builders are looking again to gear up in the community of 36,000 people, home of Sheri’s Ranch and the world famous, historic Chicken Ranch.

The demand for new houses is rising in Las Vegas, “but the inventory of available land is shrinking, and higher land prices have ‘made it all but impossible’ to offer affordably priced houses,” American West founder Larry Canarelli told the R-J’s, Mr. Segall.

With new homes in Las Vegas commanding median sales prices of $337,060, very near boom time prices, Pahrump, with its cheap land, allows builders to peddle dwellings with more land at low prices, albeit with a long commute and few local amenities.

Canarelli said he’ll start models a year from now and plans to construct 4,400 homes on 1,100 acres.

The real head scratching real estate action in Vegas is the ongoing apartment construction boom, fueled by eager lenders charging low-interest rates. Developers opened roughly 1,700 apartment units in the Las Vegas Valley in 2014, another 3,000 in 2015 and 3,500 in 2016, CBRE Group broker Spencer Ballif tells Segall. Ballif expects more than 5,000 to open this year.

A 295-unit project, appropriately called Lotus, is under construction a mile west of the Strip near Chinatown. Tenants will have a short walk to the Adult Superstore. A block or so in the opposite direction is strip club Play It Again Sam’s. To live in this, shall we say, eclectic neighborhood, Lotus will offer units ranging from 667-square-foot studios for $1,000 per month ($1.50/sf) to three-bedroom, 1,400-square-foot units at around $2,500 per month ($1.61/sf).

The high rents reflect the high price of the land. Jonathan Fore, of Fore Property Company, told the Review Journal he paid $1.1 million per acre for the site, more than double what developers pay for similarly zoned land in more suburban areas of Las Vegas.

The Mises Institute’s Mark Thornton explained in an RT interview that malinvestments are all around us again, despite, less than a decade ago, the cleansing of previous malinvestments being swift and brutal. “The crisis and the ensuing period of depression are the culmination of the period of unjustified investment brought about by the extension of credit,” wrote Ludwig von Mises.

It’s a lesson Las Vegas will have to learn once more. And the supply of land will again be adequate.

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