March was the best month of real estate sales in Southern Nevada history, as median home prices hit an all-time high of $319,000, according to Las Vegas Realtors.
That height was reached despite coronavirus-related uncertainty toward the end of the month—a testament to the market’s strength at the start of March. But now, amid a pandemic that has brought historic unemployment claims and a struggling stock market, many Las Vegas-area property owners aren’t certain what to expect moving forward.
Uri Vaknin, a partner at KRE Capital, which oversees a portfolio that includes Downtown’s Juhl and One Las Vegas on the south Strip, says his team is still busy selling condos and high-rises. But, after a strong start to the year, real estate, like so many other industries, is optimistically waiting out the crisis.
“March, even more than now, was one of the most uncertain times in our modern American history,” Vaknin said. “We didn’t know what was happening. Now we’re in it. We get it. We sort of see a light potentially at the end of the tunnel.”
Vaknin spoke with Vegas Inc last week about selling condos during a pandemic, the struggles that come with it and his view on life returning to normal.
How have you seen the real estate market change over the past few weeks?
Well, obviously, it’s changed drastically. We’ve had to close down our sale centers. While real estate is still an essential business, the way you function with real estate has got to be completely different. I’m always looking for what could go wrong to always be prepared for creating solutions. I quickly looked at my team and said we need to create 3D virtual reality tours of all of our available inventory, in case we need to shut down our sales centers. Additionally, we also looked at what our marketing campaign would be like, so we looked at our creative agency and our internet marketing company to retool our entire branding, messaging and advertising campaign and social media campaign.
Sales are going to slow down, because people want to be able to see, to be able to touch and feel their potential future home.
What kind of specific challenges come with trying to show and sell properties right now? Is that slowing down enthusiasm, and is it hard to get people to see places before they buy?
The rules of engagement have had to change—and that’s OK; this is a fluid situation. You have to be fluid with it. We’re learning new things. We’re wearing a mask; we’re wearing gloves; we have hand sanitizer. And then, after someone has been in the home, we’re disinfecting every home and anything that anyone has touched. We’re trying to open up all doors and sliding-glass doors, so no one has to actually touch anything. Normally, you want real estate to be a touch-and-feel experience, because that’s how you show quality, but in today’s world you don’t want them to touch anything.
Have you had people reaching out to say they’re interested but prefer to wait until the pandemic is over?
Every day. I think people have realized the world is totally different now. They’ve set their new sense of normalcy, and now they want to get to back to planning their life. We’ve had people say, “I would write a contract today if I could see the place.” These are extraordinary times, so we want to offer extraordinary incentives to help people make a decision right now. At both of our properties, we have increased our incentives, which is the equivalent of [us] prepaying three years of HOA fees, plus we’re giving people a four-year home warranty, because we know this is a crazy time and it’s difficult to make a decision.
There are people who have said, “I want to buy now, but I think if I told my friends and family that I bought real estate right now, they would think I’m crazy.”
You’ve sold some homes since the pandemic started, but how has it been recently? Have you had people starting the home-buying process in April?
Since the beginning of April, we have not had any new contracts. We have sent out contracts, because people have said “I want to buy,” but they’re in a sort of, “I need to figure out what’s happening in the world” [mode]. Part of what we understand and what we know, and what I’ve explained to my team, is right now it’s not necessarily about writing contracts as much as it is about building your strong pipeline. But also, this is a time when we can make people fall in love with our product, and whether that’s through our virtual tours or sending them a box of personalized-logo hand sanitizer, now is a time when we’re connecting with our buyers. The new transactions will come if we do our connections correctly.
Editor’s note: On April 17, Vaknin confirmed that his team wrote a new sales contract on an all-cash deal at Juhl.
You don’t seem too concerned about the lack of contracts.
One of the things we did was hoard cash. You have to do what you have to do. You have to speak to your investors and say, “We’re not doing disbursements, because we have to make sure we can weather this strongly and keep the team in place.” And one of the things I’m extremely proud of is, even before all the government programs were announced, we did not lay off or furlough a single person. We kept every single person employed and fully engaged. No one knows for certain when things will return to normal. A lot of it depends on California, because we get a lot of buyers from California. We actually had a guy drive up from San Diego this week. I think May is going to be a wash. I think June is going to be the month where things pick back up. Although unfortunately, historically, July and August are not great sales months in Las Vegas.
After years of a see-saw market, we were getting to a nice, stable place. The demand was there. The interest from within the market—and especially from outside the market, coming from California, coming from New York, Seattle and Hawaii—was really strong. While those people may put their purchasing decision on hold until this is over … I think COVID-19 is going to trigger more and more people to say, “I want to improve my life and move to Las Vegas.”
So you think what’s happened might spur them into buying a place, particularly in Las Vegas?
One hundred percent, [after] talking to everyone, from wealthy people to the average worker on every level, and especially retirees. Retirees for a long time have been stuck—they want to live in a place like Las Vegas but they’re not sure if they should make the move. We have a woman in Wisconsin. Her elderly mother died and left her some inheritance. She has a home to sell in Wisconsin, and she has a contract with us. She’s definitely going through, but she’s like, “I can’t close until I get there. I can’t move in the middle of a quarantine, but I’m going to be there, and now I want to be there more than ever.”
I think we’re going to see more and more of that. Las Vegas, as we’ve seen the past few years, has been a magnet for people coming from other markets. COVID-19 … is going to push people to make that decision that they were procrastinating making.