The Las Vegas housing market is on fire. Sales of single-family homes are up from last year, and prices are reaching new highs. Month after month, inventory is depleting and cannot keep up with demand. People continue to flock to Las Vegas from more expensive areas, particularly Southern California, putting more pressure on housing demand. This trend has accelerated during the pandemic, according to industry experts, with home sales in the area reaching their highest level in 14 years.
In Southern Nevada, homes are being sold at a quick pace, and prices are reaching new highs almost every single month. Buyers have flooded properties with offers, inventory is limited, and builders have raised prices and put buyers on waiting lists regularly. The median sales price of previously owned single-family homes, went from $395,000 in June to $405,000 in July, which is up 2.5% from last month and up 22.7% from the prior year.
Furthermore, 89 percent of homes sold last month had been on the market for 30 days or less, compared to roughly 60 percent of sales in July of last year. Investors believe that Southern Nevada's housing prices are real and that the market is nearing a tipping point. The current price surge cannot be sustained. Las Vegas now ranks among the 10 most overvalued of the nation’s largest housing markets, with homes selling for 41.88 percent above their long-term pricing trend, according to a new analysis by professors at Florida Atlantic University and Florida International University.
The only disadvantage is that buyers and investors buying now in the most overpriced markets are paying near peak prices and risk being stuck for an extended period of time before realising solid returns on their real estate investments.According to Home Builders Research, the median closing price for builders in Southern Nevada reached an all-time high of around $419,950 last month, up 13% from a year earlier.
While first-time buyers face difficulties entering the market, seasoned owners are snapping up second homes. As housing prices rise in double-digits, many homeowners are developing a fear of missing out, believing that there will never be a better time to sell. Due to a lack of existing homes, the Las Vegas housing market is expected to remain hot until the end of the year, based on these trends.
According to Nevada Census data, there will be a 1.51% increase in population between 2020 and 2025, as well as a 1.46 percent increase in median income during the same time period. Even though builders are bringing more homes to market, demand continues to outnumber supply. Builders are still not building at a rate that meets the needs of homebuyers. All these factors will lead to less supply and will help keep the single-family price levels strong.
The housing supply in Southern Nevada is now at 0.9 months, well below what is considered necessary for a balanced real estate market. Months of supply is a good indicator of whether a particular real estate market is favoring buyers or sellers. Typically, a market that favors sellers has less than 6 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favors buyers.
The rental prices in Las Vegas are also increasing. Despite the high unemployment rate, rental vacancies have been trending downward to record-low rates. This shows a growing demand for rentals in the area and a positive sign for real estate investors in the area. The average rental rate for a Las Vegas-area home increased nearly 23 percent year over year in July to $1,662, compared to a roughly 9 percent increase nationally to $1,843, according to Zillow.
The average rent for a 1-bedroom apartment in Las Vegas, NV is currently $1,150, according to Zumper. This is a 14% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Las Vegas decreased by -6% to $1,000. The average rent for a 1-bedroom apartment increased by 8% to $1,150, and the average rent for a 2-bedroom apartment increased by 8% to $1,400.
Although the pandemic is still causing disruptions for businesses (casinos, hotels, restaurants, etc), there is no downturn happening in the Southern Nevada resale housing market. The market has recovered and reached new heights this year. In fact, the Las Vegas housing market is among those cities that are showing the most signs of a positive recovery from the pandemic. Nevada's unemployment rate was at its peak in April of last year (30.0%).
According to the Department of Employment, Training and Rehabilitation’s (DETR) April 2021 economic report, Nevada’s seasonally adjusted unemployment rate was 7.7 percent in July 2021 which decreased by 0.1 percent from June 2021 and was down nearly 9 percentage points from July of 2020. In the three Metropolitan Statistical Areas (MSA), the unemployment rates were 9.4 percent in the Las Vegas area, 4.9 percent in Reno, and 5.3 percent in the Carson area in July 2021.
In Nevada’s counties, the lowest unemployment rate was in Eureka County at 3.2 percent, and Clark County had the highest rate at 9.4 percent. Since May 2020, all 17 counties have decreased their unemployment rates. Within Clark County, the city of North Las Vegas has the highest unemployment rate in the state of 11 percent.
As the local economy rebounds and the unemployment rate reduces further, it will have an indirect impact on the Las Vegas housing market. The unemployment rate is still 9% but apparently, it has got no effect on the housing or rental demand. Low unemployment leads to higher future income which in turn leads to a higher demand for housing. Hence, as businesses in Las Vegas open to their full capacity, its housing market will continue to boom with the increasing demand.
The rollout of the coronavirus vaccination program is the beginning of the end of the pandemic that has caused a lot of health and economic disruptions. The Las Vegas metro area home values are predicted to rise by 10-15% in the next twelve months (check the forecast below). It has already heated up with strong demand and a shrinking supply driving home price peaks. The houses are selling quicker than they were last year at this time despite the coronavirus pandemic's devastating effect on the economy.
The national housing market has already bounced back faster than anticipated from the damage caused by the COVID-19 pandemic. One sector of the Las Vegas housing market that has been doing particularly well is the luxury home market. The housing market in the area continues to rise as new residents arrive daily and bringing millions of dollars in equity from the sale of their homes in more expensive housing markets. Las Vegas luxury homes are setting some records for the values of properties sold. As demand for housing in the city climbs and available inventory becomes a premium, home values surge and will continue to do so in 2021.
Realtor.com's July 2021 data shows that the median list price of homes in Las Vegas, NV $365,000, trending up 17.7% year-over-year. The median listing price per square foot was $208. The West Las Vegas housing market is VERY HOT. It ranks in the top 7% of neighborhoods in the area and top 30% in the U.S, according to Realtor.com Market Hotness Index. The Paseos has a median listing price of $765K, making it the most expensive neighborhood. Pioneer Park is the most affordable neighborhood, with a median listing price of $225K.
- The median list price of homes in North Las Vegas, NV was $340K, trending up 15.3% year-over-year. The median listing price per square foot was $188.
- The median list price of homes in West Las Vegas, NV was $255K, trending up 18.6% year-over-year. The median listing price per square foot was $193.
- The median list price of homes in East Las Vegas, NV was $240K, trending up 14.3% year-over-year and the median listing price per square foot was $176.
Southern Nevada Housing Market Trends 2021 (Describes July)
- A full summary report published by Summerlincommunities.com (Data by LVR) on Las Vegas Real Estate Market Update shows that 3,352 single-family houses sold in July, down 5.4% from June, but up .8% from July 2020.
- The median sales price of previously owned single-family homes, went from $395,000 in June to $405,000 in July, which is up 2.5% from last month and up 22.7% from the prior year.
- In July, there were a total of 4,077 new listings, which was up 5.6% from June and up 10.1% from the prior year.
- There were also a total number of 3,007 (last month that number was 2,454) single-family houses listed without offers at the end of July.
- The number of single-family listings is up 22.5% from June, but down 37.4% from the prior year.
- The housing supply in Southern Nevada is now at 0.9 months, which is up 29.5% from June and down 37.9% from the prior year.
- Months' supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.
- 89.1% of the closings for July were on the market for 30 days or less.
- In June this number was at 88.6% and in July 2020, 59.7% of the homes were on the market 30 days or less.
On a monthly basis, here's how the Las Vegas housing market ended.
Las Vegas Real Estate Market Forecast 2021-2022 (Latest Projections)
What are the Las Vegas real estate market predictions for 2021 & 2022? From 2017 to 2018, the home values in Las Vegas appreciated by nearly 30.4%. In two years, Las Vegas home values rose significantly due to the low availability of homes and very high demand. It was named as the number one real estate market in the USA for 2018 by Realtor.com based on the price and amount of existing homes, new home construction, and local and economic trends.
Las Vegas home values reported the highest year-over-year gains in home values, totaling a 13 percent increase, according to the S&P's Corelogic Case-Shiller Index in 2018 (the leading measure of U.S. home prices). However, in 2019, Southern Nevada’s housing market overall cooled off with slower price growth and slumping sales. It looks almost flat throughout the year in the graph given below. Although overall price appreciation rates were slower in 2019 than in 2018 they greatly varied across different zip codes.
Southern Nevada prices were up 2.6 percent year-over-year in December, compared with 3.8 percent nationwide, according to the S&P CoreLogic Case-Shiller index. The median prices for new homes increased by just 1 percent. Appreciation has been steady and strong in 2020, the Las Vegas metro home values have gone up nearly 21.5% over the last twelve months (Zillow Home Value Index). ZHVI is not the median price of homes that are sold in a month within a geographic region.
It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, applying some adjustments to account for seasonality or errors in individual home estimates. It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month. By this calculation, the current typical home value of homes in Las Vegas-Henderson-Paradise Metro is $360,345.
It indicates that 50 percent of all housing stock in the area is worth more than $360,345 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). NeighborhoodScout.com's data also shows that Las Vegas real estate appreciated by nearly 163% over the last ten years. Its annual appreciation rate has been averaging at 10.16%. This figure puts it in the top 10% nationally for real estate appreciation.
- During the latest twelve months, the Las Vegas appreciation rate was about 5.71%,
- In the latest quarter, the appreciation rate was 1.31%,
- The quarterly rate equates to an annual appreciation rate of 5.34%.
- This figure corroborates Zillow's positive forecast, which also predicts that home prices in this Las Vegas area will increase in the next twelve months.
Short-term real estate investors can make a good fortune if they buy now. The market is riding a hot streak of record prices and rising sales despite the bleak economy. Housing prices have record levels last year despite the pandemic's devastating effect on the economy and this trend will follow in the remainder of 2021.
Here is Zillow's home price forecast for Nevada, Clark County, Las Vegas, Henderson, and Las Vegas Metropolitan Area. The forecast is until July 2022 and you can expect to see very strong home price gains in this region.
- Las Vegas-Henderson-Paradise Metro home values have gone up 21.5% over the past year and the latest forecast is that they will rise 15.2% in the next year.
- Las Vegas home values have gone up 21.4% over the past year and will continue to rise, albeit at a slower rate.
- Henderson home values have gone up 21.4% over the past year and will continue to rise, albeit at a slower rate.
- Clark County home values have gone up 21.5% over the past year. It is expected to continue to rise, although more slowly than before.
- The typical value of homes in Nevada (statewide) is $378,779, up 22.1% over the past year.
All these trends and predictions can be positive or negative depending on which side of the fence you are – Buyer or Seller? It is quite evident that the ongoing pandemic has had a great impact on home sales in the Las Vegas real estate market. Las Vegas' unemployment rate in April of last year was a whopping 33.5 percent, the highest among major American cities. To quantify the unemployment numbers, the Las Vegas area lost more than 200,000 jobs from March to April. Home sales dropped sharply both in April & May from both the previous month and year as the housing market began to feel the full impact of the coronavirus outbreak and the state's stay-at-home order.
At the same time, home prices remained unaffected and continued an upward trend. The report shows it is still a strong seller's real estate market with low and continuously declining inventory. As we move forward the real estate industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. Real estate is also deemed an essential business.
In July of last year, there was a surge in sales because of historically low interest rates coupled with the efforts by the government to keep money flowing in the economy. The unemployment rate was down to 12% in Nevada and an estimated 14.8% of the Las Vegas Valley workforce was unemployed in September, the highest in the nation among large metro areas. Las Vegas has been one of the hottest real estate markets in the country for years. It is also one of the hottest real estate markets for investing in single-family rental properties.
This area is skewed to sellers due to a very low level of inventory that can't meet the demand of the rising population. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, it can become a buyer's real estate market if the supply increases to more than five months of inventory. And that's probably not going to happen anytime soon.
Currently, the housing supply in Southern Nevada is at 0.9 months, which is up 29.5% from June and down 37.9% from the prior year. Therefore, given how hot the local economy was before the pandemic, the Las Vegas real estate market remains strong and skewed to sellers due to a growing population and booming economy – which leads to a persistent imbalance in supply and demand.
For sellers, it is a great time to sell. Motivated buyers are looking for houses for sale, and you are not competing with as many property owners. Many sellers have chosen to back out amid this pandemic. As more and more buyers enter the market the prices are going to increase due to tight supply.
For buyers, the mortgage rates are the lowest ever, so they should take advantage of scooping up more expensive houses by locking in lower monthly payments. Lower rates can help buyers stretch their budgets for higher-end deals that otherwise are taken away by seasoned investors in the bidding wars. Overall, it is a win-win scenario for both sellers and buyers and a great time to enter the market.
Las Vegas' unemployment rate, just 3.9% in February 2020, shot up to 34% in April 2020. By June 2020 it had tumbled to 18% after casinos and other businesses were allowed to reopen, state officials reported. Even though these effects on the Las Vegas housing market are deemed as short-term, it is yet to be predicted as to what the potential long-term impact could be.
As of July 2021, Nevada’s unemployment rate was 7.7 percent, decreasing from 7.8 percent in June 2021, and down from 16.6 percent in July 2020, seasonally adjusted. The number of unemployed individuals decreased by 458 since June 2021 for a current level of 121,664 people, which is -129,375 fewer unemployed people than July 2020. The large increase in employment over the year reflects the significant effects the pandemic had on employment last year.
The labor force in Nevada is currently 1,577,618 people, which is 8,457 more people than June 2021 and is up 65,030 people since July 2020. The labor force in Las Vegas is currently 1,130,526 people, which is 5,685 fewer people than in June 2021 and is up 13,348 people since July 2020. The Las Vegas MSA’s unemployment rate was 9.4 percent in July 2021, decreasing from 9.6 percent in June 2021, and down from 19.6 percent in July 2020, non-seasonally adjusted.
How Did The Las Vegas Housing Market Perform in 2020?
It is no doubt Las Vegas is a strong seller's real estate market. Many experts had predicted it would crash as it did during the Great Recession. On the contrary, by the end of 2020, the Southern Nevada housing market was in the midst of a boom. 2020 was considered to be the year to break the record for median home prices in Las Vegas. Even during those tough times, the Las Vegas properties were selling at record prices. Home prices in Southern Nevada remained at their record level to close out the year.
After slouching in 2019, the Las Vegas housing market forecast kicked off well in 2020. The Las Vegas home prices were trending up to possibly make a new record in 2020 due to the strong demand for housing and persistently tight supply. The month of February was phenomenal as almost after 13 plus years the Las Vegas home price growth surpassed pre-recession levels. Through the first quarter of 2020, local home sales were running ahead of last year's pace in the entire Greater Las Vegas housing market.
The impact of the coronavirus pandemic on the Las Vegas housing market was felt in April when home sales started dropping. The prices were holding relatively steady, though. The median price of existing single-family homes sold in Southern Nevada during April 2020 was $310,000, down by 2.8% from a record price of $319,000 in March.
As compared to April 2019, the median price rose by 3.3%. Due to the COVID-19 crisis, home sales dropped again in May but prices were higher as compared to last year. The supply and demand continued to favor sellers with prices rising steadily in the entire Las Vegas metro area housing market.
The economy of Las Vegas is largely driven by the tourism industry which took a massive hit due to the COVID-19 pandemic. Tourists bring in billions of dollars and support thousand do jobs. Nevada and the city of Las Vegas in particular were predicted to be the most affected, as they rely on the tourism industry more than most states. The city has suffered great financial losses. As was expected, real estate sales also took a dip in this crisis.
On March 29, a statewide moratorium was issued by Nevada Governor Steve Sisolak against evictions during the state of emergency brought on by the pandemic. On April 7, to keep Nevada families in their rental homes and prevent further suffering, Nevada Attorney General Aaron D. Ford announced $2 million in settlement funding for emergency rental assistance transferred to United Way of Southern Nevada and United Way of Northern Nevada and the Sierra.
In March, 208,869 unemployment insurance claims were filed in Nevada, a massive 2,125 percent jump from the same period one year prior. Due to the rising economic uncertainly of the likes of the infamous recession cou0pled with stay-at-home order, the number of home sales in the Las Vegas housing market for April dropped sharply when compared to March. Many construction projects were also canceled or postponed indefinitely.
By the end of December 2020, the Las Vegas Realtors (LVR) reported 3,240 single-family homes and 1,153 condos listed for sale on MLS in Southern Nevada. That was down -41.5 percent for single-family homes and -25.9 percent for condos from one year ago. LVR reported that sales of existing single-family homes in Southern Nevada were up by +26.7% after selling 3,305 units. Condo sales were also up by 30.9%. 792 condos and townhomes were sold in December.
The median price for an existing single-family house in December was $345,000, as reported by the association. Continuing a trend seen during the pandemic, the price increased by 10.2% on a year-over-year basis and marks another all-time price record. The condos & townhomes sold for a median price of $185,000, an increase of 5.8% from last year.
The booming Las Vegas, real estate market, was impacted by the ongoing pandemic. The economic uncertainty and massive job losses directly affected its housing market as well. However, it has managed to avoid total collapse. COVID-19 pandemic caused a short-term decline in the Las Vegas housing market.
For 2020, Las Vegas REALTORS says a total of 41,617 homes, condos, and townhomes were sold, up slightly from the 41,269 sales reported in 2019.
Las Vegas Real Estate Foreclosure Trends
Are you looking for a foreclosure home in Las Vegas? Nevada was at the nexus of the 2007 housing crash. Nevada spiraled to the second-highest foreclosure rates in the nation, after New Jersey, with upwards of a quarter of Nevada mortgages underwater. The number of mortgage delinquencies in Nevada had reached its lowest point in years. Las Vegas Realtors reported that short sales and foreclosures combined accounted for 2.7% of all existing local property sales in January 2020.
That compares to 2.8% of all sales one year ago, 4.3% two years ago, and 11% three years ago. Unfortunately, then the coronavirus came along and set things back once again. Due to the tourism-dependent economy, Nevada has been rocked by record job losses due to the ongoing pandemic, raising the prospect of waves of missed mortgage or rent payments.
Around 271,530 initial unemployment insurance claims were filed in Nevada this year through the week ending April 4 – more than the last two years combined, according to the Nevada Department of Employment, Training, and Rehabilitation. With the rise in job losses, mortgage delinquencies are bound to increase in Nevada, especially in the city of Las Vegas.
Finalized data from the Nevada Department of Employment, Training, and Rehabilitation (DETR) show initial claims for unemployment insurance (UI) totaled 7,941 for the week ending October 3, up 416 claims, or 5.5 percent, compared to last week's total of 7,525 claims.
Through the week ending October 3, there have been 710,347 initial claims filed in 2020, 688,695 of which have been filed since the week ending March 14. Nevada's insured unemployment rate, which is the ratio of continued claims in a week to the total number of jobs covered by the unemployment insurance system (also known as covered employment), fell by 1.25 percentage points to 12.5 percent
In July 2020, with forbearance's in play Las Vegas had the lowest amount of foreclosures and short sales in the history of Las Vegas. These so-called distressed sales accounted for just 1.2 percent of all existing local property sales in July. In August 2020, there were currently 847 properties in Las Vegas, NV that are in some stage of foreclosure (default, auction, or bank-owned) while the number of homes listed for sale on RealtyTrac is 5,791.
In August 2020, the number of properties that received a foreclosure filing in Las Vegas, NV was 150% higher than the previous month and 98% lower than the same time last year. Due to the pandemic, there are moratoriums on single-family foreclosures and real estate-owned (REO) evictions to keep delinquent homeowners in their homes. In Las Vegas, the zip code with one of the highest foreclosure rates is 80128. So, you’d find a lot of distressed sellers in this area and get some discounted off-market deals.
Las Vegas Real Estate Market: Is It A Good Place For Investment?
Now that you know where Las Vegas is, you probably want to know why we're recommending it to real estate investors. Is Las Vegas a Good Place Real Estate Investment? Many real estate investors have asked themselves if buying rental property in Las Vegas is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Las Vegas housing market's historical and current trends for answers on why to put resources into this market.
Las Vegas is a minimally walkable city in Nevada. It is the 32nd most walkable large city in the US with 583,756 residents. Las Vegas has some public transportation and does not have many bike lanes. Downtown Las Vegas, home to the casinos and hotels, is the city's most accessible neighborhood, but housing is sparse there. In 2018, the Las Vegas housing market was so hot that it outperformed the best U.S. housing markets like Seattle. The Las Vegas real estate market is entirely brimming with new businesses.
It isn't just about casinos, medicine is a growing industry as well. The University of Las Vegas and Zappo's, the internet shoe store, is also based in Vegas. Its friendly business environment is propping up the economy and helping towards the positive Las Vegas real estate market trends. The new businesses are propping up at a much faster rate than the national average.
Las Vegas has a mixture of owner-occupied and renter-occupied housing units. It is a big rental property market. According to Neighborhoodscout.com, a real estate data provider, three and four-bedroom single-family detached homes are the most common housing units in Las Vegas. Other types of housing that are prevalent in Las Vegas include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.
Las Vegas is the destination point of millions of visitors, the town is famous for its vibrant nightlife, exciting gaming action, and the natural allure of the beautiful desert that surrounds the greater metropolitan area. Tourists pour billions of dollars in Southern Nevada through which thousands of tourism jobs are supported.
Let's learn more about Las Vegas and find out why one should invest in this sturdy real estate market. These things make the Las Vegas real estate market stand out when it comes to choosing a place to invest in 2020 and beyond. Keeping aside the short-term impact of the ongoing pandemic, let's take a look at the number of positive things going on in the Las Vegas real estate market which can help investors who are keen to buy an investment property in this city.
|Why Is Las Vegas A Good Place For Real Estate Investment?|
THE CITY & ITS DEMOGRAPHICS
THE HOUSING MARKET & PRICES
These are just some of the highlights that make Las Vegas a great place to live and invest in real estate. The list can go on and on. Before the coronavirus pandemic hit the state, the Las Vegas real estate market forecast was as hot as the desert heat in Nevada. Keeping aside this crisis for a moment, the housing market in this region provides an excellent opportunity for investors. They are expressing confidence in the stable housing prices and the number of available housing units on the market.
New businesses are being created at a much faster rate than the national average. Las Vegas is also a strong rental market. Nearly 40% of the population rents in Las Vegas. Rental properties near these new businesses will benefit greatly due to the increasing tenant pool and the general improvement in economic activity that they bring. The first half of the previous year saw a huge increase in the demand for housing in Las Vegas, Nevada.
The inventory of homes has further decreased from last year. The current local housing inventory in Las Vegas is just over a two-month supply of homes available for sale. The high demand is followed by an increase in population, as well as an overall improvement of the economy in the area. All these factors have had a huge impact on the Las Vegas housing market, which is considered one of the hottest markets in the nation. Las Vegas has experienced several booms in its history, and it saw an incredible real estate bust during the Great Recession.
Las Vegas' recovery hasn't made the same headlines as the 50% or greater declines in home values did a decade ago. Yet its recovery shouldn't keep investors away. For savvy investors, the Las Vegas real estate market is both stable and predictable. Let's find out the latest trends and forecasts.
Las Vegas Home Prices Are Low Relative to Recent Highs
There have been articles claiming that Las Vegas is ready for another bust. However, prices are declining somewhat as new housing stock comes onto the market. This explains why the inventory of unsold existing homes doubled at the end of 2018. Yet the demographic trends that keep the Las Vegas housing market so hot aren't stopping.
This means that the Las Vegas real estate market is seeing a lull with a guarantee that the price will start to rise. The Las Vegas housing market is a great place for real estate investment. It remains relatively affordable than the expensive seller markets in the US. When people lose their jobs in great numbers, home prices crash as they did in Las Vegas a decade or so ago.
Homes went from an average price of over $300,000 to less than $150,000. Home prices have recovered, though due to inflation, they remain well below historic peaks. Likewise, Las Vegas foreclosure rates have fallen but they remain high by national standards. Around one in a thousand homes are foreclosed on each month.
Las Vegas Housing Prices Are Rising Slowly but Surely
The wide-open deserts around Las Vegas constrain the Las Vegas real estate market. The federal government owns the vast majority of the state. The Clark County government asked the federal government to allow them to take over 38,000 acres of land and start building housing. Nevada Congressional delegation has to ask the Bureau of Land Management, and they may take years to give their permission if they ever do.
This means that Las Vegas is surrounded by a lot of open lands, but it cannot simply expand to meet demand. This will continue to drive up prices in the Las Vegas housing market. We don't think the Las Vegas housing market is set up for a bust because it isn't overheating. The home values have gone up 1.8% over the past year. That's a healthy growth rate, whereas double-digit price increases are unhealthy. This rate is skewed up by the number of new luxury homes coming onto the market and the constant churn at the high end of the market.
Las Vegas Is Landlord Friendly
Unlike many other Western states, the Las Vegas real estate market is landlord-friendly. It isn't difficult to evict non-paying tenants from Las Vegas investment properties. In general, they have five days from the date rent is due to “cure” the problem or eviction can begin. The same time frame is used to correct issues like lease violations, after which the person can be evicted. After those five days, the case can go to court, and these are landlord-friendly. Rulings typically arrive the same day, after which point the tenant has one day to leave the premises.
Landlords don't have to pay interest on deposits. There are no limits on late fees, though the late fees due must be spelled out in the rental agreement. There is no payment grace period set by state law. All of this adds up to the Las Vegas real estate market being a paradise for landlords.
Update: On July 1st, 2019, a new tenant protection legislation named SB 151 officially went into effect. It provides tenants with more time to deal with the consequences of eviction after they have had an eviction notice posted on their homes. They will now have seven judicial days to pay their rent or quit. The previous time frame was five calendar days.
For landlords, this new housing legislation also enables them to utilize an attorney or agent to prosecute the eviction action on their behalf. They will now need to go find a permitted eviction process server to carry out these tasks. Those who oppose SB 151 claim that giving tenants more time to go through the eviction process, will make it more difficult for owners to get their properties back on the rental market.
Las Vegas Job Market Attracts People
The Las Vegas job rate has ranged from half a point to a full point above the national unemployment rate. However, that's better than the unemployment rate in Arizona, Salinas, or the San Fernando Valley. And it is places like that sending de facto refugees to Las Vegas. The diverse economy of Las Vegas includes low-skill but good-paying jobs in entertainment, hospitality, and services. It draws thousands of new residents each year. This growth, coupled with its unusual economic basis, has made Las Vegas one of the wealthiest cities in the country.
Since the 1990s, Las Vegas has had one of the fastest-growing employment bases in the country, benefiting from a large labor pool and a favorable business climate. These conditions enabled city promoters to entice businesses of all kinds to choose Las Vegas over California. Every job-killing regulation in California drives businesses to Oregon and Nevada, too, taking jobs with them. This explains why future job growth for the next ten years is expected to be nearly 40%, well over the 33% expected for the nation as a whole. A growing supply of jobs will propel the demand for the Las Vegas housing market.
Las Vegas Rent Prices Are On the Rise
During the Great Recession, Las Vegas went from a fifth of its residents renting to nearly two-fifths. As the job market and personal credit improved, the area is back to having around 19% of residents choosing to rent. However, rents are on the rise. While homes are being built, many people are unable to afford them. This is because the developers who survived the Great Recession are maximizing their profits by building luxury homes, not the affordable homes that many want.
Due to an improving local economy and ongoing population growth, the demand for apartments remains strong in Southern Nevada. For those who can afford Las Vegas investment properties, this guarantees a large rental population that isn't going to be able to afford the new upscale properties that are coming onto the market.
As of August 29, 2021, the average rent for a 1-bedroom apartment in Las Vegas, NV is currently $1,150. This is a 14% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Las Vegas decreased by -6% to $1,000. The average rent for a 1-bedroom apartment increased by 8% to $1,150, and the average rent for a 2-bedroom apartment increased by 8% to $1,400.
- Two-bedroom apartment rents average $1,400 (a 12% increase from last year).
- Three-bedroom apartment rents average $1,975 (a 25% increase from last year).
- Four-bedroom apartment rents average $2,350 (a 19% increase from last year).
The Las Vegas real estate market will be a great place to invest in real estate in 2021 based on these trends. There was a short-term decline in the rents but they are rising back. The unemployment rate is also decreasing so it is a great time to snatch up hot real estate deals by selecting the best neighborhoods.
Before the impact of the pandemic, the average apartment rent was around $1,108, a 6% increase compared to the previous year, according to RentCafe. Another report, issued by the Nevada State Apartment Association (NVSAA) based on data provided by CoStar, shows the average asking rent for an apartment in the Las Vegas metro area at the end of 2019 was $1,080 per month.
Average rents are up 4.5 percent from one year ago. That compares to annual rent growth of 7.4 percent during the previous year. At the end of 2019, the apartment vacancy rate in the Las Vegas metro area was 6.5%. That's down from nearly 11% during the depths of the Great Recession, the report found.
Unlike some areas, the Las Vegas housing market isn't going to see a sharp decline in rent due to new construction. Wages in the area, for example, haven't risen in tandem with housing prices, pushing many to rent whatever properties they can find that fits their budget. This may prevent prices in the Las Vegas real estate market from going too high but won't prevent them from rising along with the rate of inflation.
The average size for a Las Vegas apartment is 894 square feet with studio apartments being the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. You can, of course, charge much more for a three or four bedrooms single-family home than an apartment.
The most affordable neighborhoods in Las Vegas are Beverly Green, where the average rent goes for $791/month, Crestwood, where renters pay $791/mo on average, and Francisco Park, where the average rent goes for $791/mo. Other good neighborhoods for affordable rentals include Hillside Heights ($791), Huntridge Park ($791), and John S. Park ($791), where the asking prices are below the average Las Vegas rent of $1,108/mo.
|Las Vegas Neighborhood||Average Rent|
|John S. Park||$791|
California's Loss Is Nevada's Gain
A $300,000 median price may be steep if you're coming from the heartland where a mid-market home costs $150,000 to $200,000. However, tax refugees from California flooding into Nevada find that same house to be an outright bargain compared to the $600,000 price for a comparable property in Los Angeles.
Southern Nevada is one of the cheaper metropolitan areas in the United States, and it is a fraction of the cost of living in California on nearly every front. This explains why you see so many California license plates in Vegas and why it costs $120 to rent a moving truck to go from Vegas to San Francisco but $2000 to come to Las Vegas.
As per the data by Lasvegasrealestate.org, the luxury home market has expanded as 30% of buyers are moving from California to take advantage of Las Vegas' low cost of living. Even the most expensive custom homes from builders such as Blue Heron are found to be a bargain for out-of-state buyers and investors.
Possibly our second-largest market is retiree buyers in 55+ Communities and enjoying the weather, health care, and activities that only Las Vegas can combine in one city at a value not matched in any major city anywhere in the USA.
Nevada Is the Ultimate, Low Tax Locale
While those who own Las Vegas investment properties will need to pay their mortgage if they don't pay cash for the property and ongoing expenses like maintenance and insurance, Nevada offers very low taxes. There is no state income tax.
Nevada's property tax rates are among the lowest in the U.S. The state's average effective property tax rate is just 0.69%, which is well below the national average of 1.08%. Homeowners in Nevada are protected from steep increases in property tax bills by Nevada's property tax abatement law, which limits annual increases in property tax bills to a maximum of 3% for homeowners.
Thus, even if home values increase by 10%, property taxes will increase by no more than 3%. The taxable value of a property is calculated as the cash value of the land (the amount the land alone would sell for on the market), and the replacement cost of all buildings minus depreciation of 1.5% per year since construction.
The assessed value is equal to 35% of that taxable value. Thus, if your County Assessor determines your home's taxable value is $100,000, your assessed value will be $35,000. Tax rates apply to that amount.
There are numerous tax districts within every Nevada county. Hence, when comparing between counties, it is useful to look at average effective rates. Clark County contains almost 75% of the state's residents and includes Las Vegas. The average effective property tax in the county is 0.70%, slightly higher than the statewide average, but still significantly lower than the national average.
If you're planning to buy in Nevada, the most common type of home loan is a 30-year fixed-rate mortgage. This option gives you plenty of time to pay back the loan and your interest rate remains the same for the duration of the loan's life unless you refinance. You can also consider a 15-year fixed-rate mortgage.
It allows you to pay off your loan quicker and comes with a lower interest rate, but your monthly payments will be higher. As we write this, the average Nevada rate for a fixed 30-year mortgage is 3.46%, and for a fixed 15-year mortgage it is 2.83%.
Nevada Real Estate Investment Markets
Las Vegas is a shining beacon in the desert for those fleeing California or simply hope to make it big. Many others simply come to earn a living serving the many tourists who visit here each year or work at the firms relocating to this tax haven. All of this gives the Las Vegas real estate market a bright future.
According to PwC's annual real estate report, the Las Vegas housing market will enjoy a population growth rate that is well above the national growth rate. This is a continuing trend as data from the US Census Bureau shows a net migration of 6.46% from 2012-2016.
This earned the Las Vegas real estate market a spot among the best places that people were moving to in 2018. The city will hold this title well into 2020 according to the forecast. Good cash flow from Las Vegas investment property means the investment is, needless to say, profitable.
A bad cash flow, on the other hand, means you won't have money on hand to repay your debt. Therefore, finding the best investment property in Las Vegas in a growing neighborhood would be key to your success. If you invest wisely in Las Vegas real estate, you could secure your future. The best investment is now looking for a rental property that will generate good cash flow.
Your best tenants would be the retirees who intend to relocate to Las Vegas and want to purchase property to rent out. The running costs for owning and managing a Las Vegas rental property should not be high. A cheaper neighborhood in Las Vegas might not be the best place to live in.
A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods.
The inventory is low, but opportunities are there. There are 50 neighborhoods in Las Vegas. The Paseos has a median listing price of $666.9K, making it the most expensive neighborhood (Realtor.com). Sunrise is the most affordable neighborhood, with a median listing price of $152K.
Some of the most popular neighborhoods in Las Vegas are Paradise, Enterprise, and Spring Valley. Here you'll find the maximum no. of listings. In Spring Valley, Las Vegas, NV, and the home prices range from $44.9K – $18.5M while rental properties are within a range of $795 – $11K.
Even as Las Vegas home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain. Millennial homebuyers can't outbid real estate investors and hence end up renting.
As with any real estate purchase, act wisely. Evaluate the specifics of the Las Vegas housing market at the time you intend to purchase.
There are many other markets near Vegas, which you can choose for real estate investing. As a result of an influx of companies and jobs in Northern Nevada, strong housing demand continues to put pressure on the available supply. The Reno real estate market is ideal for investors for several reasons. Supply is limited, and demand is growing.
Rental rates are driven by several competing markets that aren't going to slow down any time soon. Forget owning a couple of condos in Las Vegas and invest in a more affordable, stable real estate market like Reno. Good cash flow from Reno investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won't have money on hand to repay your debt.
Nevada Out of State Investment Opportunities
On the east of Nevada lies the state of Utah, where you can consider investing in Salt Lake City. The Salt Lake City real estate market was ranked one of Millennials' toughest real estate markets due to limited supply relative to demand. Salt Lake is a “slightly hot” real estate market at the moment.
The economy is strong and the city achieves the lowest unemployment rate at 2.1%. The median days on market is 30.5 days, with inventory moving 6 percent faster than last year and 30.5 days faster than the U.S. overall. Home prices in Salt Lake City are expected to rise by record levels in 2020. A strong job market and a robust economy have contributed to the rising housing costs over the past seven years.
Ogden is another good and affordable real estate market in the neighboring state of Utah. The Ogden housing market is appreciating because people move here for work as often as they do live. For example, there are many good-paying jobs in the IT, life sciences, aerospace, and outdoor products manufacturing industries. There are civil service jobs with the state tax office and the local hospital. And then there's the college. This is on top of Utah's employment growth rate of roughly 3 percent a year.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Las Vegas.
Not just limited to Las Vegas or Nevada but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We're standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Las Vegas turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
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Loss of California