American West Homes CEO Larry Canarelli has built and sold thousands of homes in his career but he knows what it feels like to be without shelter. After his parents hit hard times when he was a child, the family briefly lived in a tent. Dreaming of solid walls and a roof, he convinced his father to trade equity in the family’s 1950 Plymouth to assume a VA loan on what would be their first real house.
He went to college and graduated with an MBA from USC and landed a job with now-defunct home builder Southwest Development Corp. “I was a highly-paid division president, had an office in Beverly Hills and lived in Manhattan Beach but I came to Las Vegas and decided it was my kind of place,” he says.
When Canarelli arrived in Vegas in 1982 the prime lending rate was bouncing between 13% and 17% and Southwest Development was the largest publicly owned builder in Nevada by virtue of logging 212 housing starts. In 1984 Canarelli struck out on his own by starting American West Homes and still stays busy planning for the future. “I have enough land to do 1,000 houses a year, but we’ll only do about 800 a year for the next five years,” he says. The company is currently number 77 on the Builder 100 List.
Early on in Canarelli’s career the local market in Las Vegas was all about retirees and workers at the mega-resorts that started to pop out of the desert. Las Vegas took an especially hard hit during the crash of 2008 and although things have improved since then, Canarelli believes there’s still a lot of untapped potential.
“I don’t think we’ve scratched the surface on where we should be building,” he says. “Between 1985 and 2004, we averaged 18,000 to 20,000 single-family permits a year. In 2005 and 06 the market went up to 40,000. Last year we did 10,600 closings, so we’re still significantly less that where we were over a 20-year average, but the margins have recovered nicely.”
Rather than put all of his marketing eggs into one basket Canarelli builds what he thinks will sell and lets the buying segments--including entry-level--find him. Las Vegas still has an advantage in affordability compared to its neighbors in Colorado and California. “It’s so affordable and we’re getting the 25- to 35-year-old buyers. With what you get for $350,000 to $400,000 they’re skipping the entry level, with interest rates below 5% they’ll get two workers making $40,000 a year at 27 or 28 years old, they’ll buy a 2,500- to 3,000-square-foot house in the nicest area of town.”
Canarelli also points to international buyers coming into the area from the Pacific Rim who favor properties in the $500,000 to $600,000 range. In addition, retirees still play an active role in town as he estimates them accounting for at 20% of his business.
Canarelli, a self-admitted rebel who often zigs when other builders zag, is offering 5,000-square-foot production homes when the average size is a little over 3,000, which brings down his square foot building costs. He also favors three-level homes, which leaves space in the lot for larger backyards.
The company’s Skyview Terrace community in Summerlin would seem to fly in the face of practicality by placing kitchens on the third level of flat-roofed, modern buildings. “For $400,000 everybody gets a roof deck and a view of the Las Vegas skyline,” says Canarelli. “We’re selling about 100 of these a year with a waiting list.” Although he’s not afraid to try something unusual, the maverick admits he pays a lot of attention to the land situation. He claims to be the largest landholder in the Las Vegas Valley with 5,000 prime location parcels and a back-up supply in other hot neighborhoods.
Canarelli also likes to locate his model homes on main roads--a tactic rooted in common sense. “When people are out driving around looking for other people’s houses they’ve found on the internet they have to drive by my houses,” he says.
At this point in his life Canarelli could slow down or even stop doing what he loves but that doesn’t appear to be in the cards. In 2017 the firm closed 600 houses, in 2018 that number went up to 814. He is predicting more of the same this year. “Building houses is a drive of mine that I still haven’t lost,” he says.
