Las Vegas Updates

A simple image depicting the rapid growth in Las Vegas

The Las Vegas housing market has hit another high! In October, the median price for a resale single family home hit $340,200 (according to Las Vegas Realtors)! What is causing prices to rise, especially now amidst a pandemic and suffering economy? And can these high prices be maintained?

Limited Inventory

One factor affecting prices is a limited inventory of resale homes available. However, certain aspects of the real estate market changed last month. For example, showings on tenant occupied homes are now permissible with certain restrictions. And late notices and eviction proceedings are now allowed (effective October 15, 2020). How this will impact homeowners who have been thinking of selling is yet to be seen. Homeowners may take the opportunity to list homes for sale that have tenants in place which may increase available inventory. Or homeowners who have experienced lost rent and now in the process of eviction may decide to cash in on their investments.

The real estate market is based on supply and demand. Typically, should supply increase considerably in a rising market, prices may get softer and there may be more room for negotiation between buyers and sellers. However, we also have an unbelievably low interest rate to take into consideration – one of the lowest ever! How does that play a role?

Low Interest Rates

Well, interest rates play a huge role in affordability. It can dramatically affect a house payment. So, even though home prices are rising, the current interest rate is providing for a very attractive payment. Granted, down payments go up when prices go up. However, in many cases, the increase is not so dramatic that it pushes buyers away. And with today’s low interest rate, the prospect of a lower payment, even with higher resale values, is hard to bypass.

Take for example a home currently listed for $350,000. A couple of years ago when that house was $325,000 the down payment would only have been $2500 less. However, consider this difference. 2-3 years ago, the average interest rate was higher than today.

2-3 Years Ago:

$325,000 – 10% down payment ($32,500) = $292,500 at 4% (approximately) interest is $1396 principal and interest only.

Today:

$350,000 – 10% down payment (35,000) = $315,000 at 3.25% (approximately) interest is $1371 principal and interest only.

Notice the difference! Even with a higher loan of approximately $25,000, the lower interest rate can actually result in a lower payment than two or 3 years ago!
When you look at the big picture, it really is not surprising that demand is strong for real estate. As long as supply stays below average and interest rates remain at record lows, the perfect combination will exist for a rising market.

Modern street of typical middle class desert homes near Las Vegas Nevada.

With a shortage of inventory in the Las Vegas real estate market, more and more owners are turning to brand new properties to invest in. Of course, the difference is price. On average, brand new homes in Las Vegas have a median sales price of nearly $100K over existing inventory. So, is it worth the investment?

Here are the pros of brand new:

1. A brand new home means everything is brand new! Electrical, Plumbing, HVAC and Appliances should be in prime condition to last a number of years. Maintenance costs are reduced typically the first few years of ownership.

2. Rents for brand new properties tend to average higher compared to an existing home with comparable size and amenities – on average by 5-10%.

The cons of brand new:

1. Initial investment is typically higher since brand new properties tend to cost more than a comparable resale property.

2. Construction in a neighborhood can be a negative aspect to a potential tenant.

However, many homeowners have been able to purchase a brand new home and generate handsome rent to cover their monthly expenses. Planning is needed to research brand new communities and calculate potential rental income. Another big factor is financing. If you plan on carrying a mortgage, how much will you put as a down payment? The less of a down payment, the higher the monthly payment. And a down payment of less than 20% means Private Mortgage Insurance, which adds to the total payment due each month. And don’t forget the vacancy factor. Periodically, a vacancy will occur with no rent generated. Will you be able to satisfy the necessary mortgage payment.

Of course, if purchasing cash, monthly expenses will be limited to insurance, property taxes and HOA dues. While the return on investment calculation may be less than desired in certain cases, will owning a brand new property give you peace of mind, knowing that major maintenance should not be an issue for a while?

So, when all is said and done, a brand new property can mean less maintenance expenses and more peace of mind in that regard. However, it also means a higher investment. A resale property may be priced lower but also harder to come by. Repairs and other maintenance costs may need to be factored in as well.

So, the decision is ultimately yours. Take time to research and talk to the experts to help you make the best decision possible.

Panorama view of Las Vegas at sunset in Nevada, United States of America

As the economy has slowly re-opened in Las Vegas, due to certain restrictions lifted, so has the interest of buyers in the local market. This was clearly evident in June, as the median price of a home sold through the MLS was $325,000, a year over year increase of about 7%. This was an increase of $6,000 from the prior median sold price in March of $319,000.

These figures go to show a couple of things. First, as people returned to work, this ignited a demand for housing. It really shows how crucial the local hospitality and service industry is to the housing market. Even though real estate prices did not see a noticeable decrease between March and June, the slow down in activity was a clear indicator.

Second, with real estate values holding during an economic shut down, it really showed the stability of the Las Vegas housing market to be able to absorb a significant event, such as this. With prices appreciating at a modest rate, this prevents a bubble from forming and significant fluctuations from occurring when an economy shifts. No doubt, current low interest rates also play a role in keeping prospective buyers motivated and ready to buy.

As the economy continues to recover, with more tourists coming for a visit, we can expect the real estate market to keep thriving.

As the entertainment capital of the world, Las Vegas has many concerts and residencies by popular musicians and groups, such as Celine Dion, Rod Stewart, Elton John and even the Backstreet Boys! However, did you know that a number of popular singers and groups had their start right here in Las Vegas? Consider just a few:

The Killers: Formed in 2001 here in Las Vegas and one of the most popular rock bands in the world have headlined major venues all around the world and have albums that have advanced to the top of the charts.  Brandon Flowers, lead singer, is from Henderson NV and continues to reside in the city.

Imagine Dragons: Having its start in 2008 and rising to fame within a couple years after, the band had its breaks in Las Vegas, hometown of lead singer Dan Reynolds. The band recorded their first songs in Las Vegas and quickly rose to popularity with many hits, currently being an international sensation and winning a couple of Grammy awards.

Panic! at the Disco: Formed in 2004 in Las Vegas, the band went on to fame with a number of popular hits, winning an American Music Award, Billboard Music Award, nominated for a Grammy Award and winning iheart Music Awards.

Ne-Yo: Also known as Shaffer Chimere Smith, began his musical career right here in Las Vegas. He is a singer, songwriter and record producer. He is a Grammy Award winner and reached the top of the Billboard 200.

Other notable musicians who had significant success here in Las Vegas include Wayne Newton and the band “The Cab.”

Perhaps you have seen some of these notable performers walking the streets of the city.  Yes, while Las Vegas attracts many aspiring musicians, a number have had great success and are proud to call Las Vegas home.

las vegas home rental

“A beautiful luxury home in a suburb of Las Vegas, Nevada.”

As the economy shut down in March, many feared what would happen to the real estate market. With each extension to keep the economy closed, many feared a complete economic collapse and drastic changes in resale and rental values.

Fortunately, the drastic changes many feared never came. Granted, the real estate and rental market did experience change. For example, tenant occupied properties cannot be readily shown due to government imposed restrictions to limit the spread of COVID-19. Additionally, with many being furloughed or laid off due to business closures, demand for real estate dropped off significantly, especially when it comes to home buying.

Even as home prices dipped slightly, they appear to be showing signs of appreciation again as the economy re-opens and people get back to work. Additionally, tourist activity in Las Vegas appears to be drumming up as more hotels and casinos have decided to open up to accommodate the demand. All of these are excellent signs. Real Estate rental values have remained relatively steady as well, with some fluctuation but overall consistent.

What will the future hold for Las Vegas real estate and rental values? For the remainder of this summer, it appears that values should hold stable, with relatively minor fluctuation. We can expect the market to attract more buyers but also more sellers. Of course, much will depend on the big picture. How will the economy throughout the country hold? How will the spread of COVID-19 affect business growth? At what rate will tourism increase to allow even more people to return to work? Fortunately, even after 2.5 months of closures and a high unemployment rate, Las Vegas continues to maintain its real estate value, a trend we look forward to seeing into the future.

As the state of Nevada looks to re-open after weeks of closure to contain the COVID-19 virus, this will not be an automatic green light to resume life as normal. There is still much work to be done and social distancing to be followed. Many Realtors have been proactive to keep their clients and customers safe, adhering to safety guidelines.  This includes Nicklin Property Management.  Here are some updates as far as re-opening guidelines as pertain to the real estate and rental industry:

1. Showings and open houses of single family residences occupied by renters is prohibited until May 30, 2020.

2. Social Distancing will still need to be practiced when interacting with the public and face masks should be worn. Employees / Agents must wear face masks when interacting with others.

3. A COVID-19 addendum is available for sales transactions that has been approved by the Nevada Real Estate Division. It gives provisions to prospective buyers who may have a sudden change in employment / income due to the Coronavirus pandemic while purchasing a home.

4. Eviction postponement is tied to Nevada’s declaration of emergency, which is set to expire May 15. Any changes to this should be announced by the Governor’s office in the very near future.

As we have seen, the situation we have seen has been very fluid and subject to change. While it is encouraging to see that certain restrictions have been lowered, we must all still show vigilance in protecting the health of others and take necessary precautions.  We look forward to business as normal in the future, however, realize that this will not happen for some time.

It almost feels like summer in mid spring. Temperatures are soaring and everyone is feeling the effect! What should you know as we deal with an early heat pattern?

1. Drink plenty of water! Since we just recently came out of a cool season, we may not be accustomed to drinking a lot. However, this is important now more than ever before. Dehydration and heat stroke can result without having plenty of fluids inside. Carry water with you. Cars often times get much hotter than the temperatures outside, so perhaps keep a cooler handy with ice packs and bottled water.

2. Take care of your pets! If your pets tend to stay outside a lot, make sure they also have plenty of water and shelter. Keep a covered area or dog house available for them to take shelter. In extreme temperatures it would also be advisable to limit your pets outdoor activity. Pets can also get dehydrated and succumb to heat.

3. Ensure your landscaping is getting adequate water. During spring, watering restriction only allow you to water your plants 3 times a week. Make sure that your sprinkler system is set up to water during your assigned days. Additionally, ensure that all of your drippers and sprinklers are working property. Replace any that are not. If you notice some plants or grass still struggling, hand watering is best to stay compliant with watering restrictions.

Stay safe and stay cool!