Las Vegas Updates

Aerial view of residential neighborhood in northwest Las Vegas, Nevada.

The Las Vegas real estate market is on fire. There is no doubt about it! A shortage of inventory continues to drive prices up as home buyers wish to take advantage of low interest rates. As a result, March 2021 was another record setter.

Average price of a single family home sold: $363,000 (according to Las Vegas Realtors)

Average price of a condo / town home sold: $194,000 (according to Las Vegas Realtors)

Single family homes are up nearly 14% from last March (2020).

As of right now, appreciation in the market appears to be a sign of things to come. While home builders are adding inventory, it is limited compared to buyer demand and a lack of new resale inventory is keeping supply short. Additionally, as Nevada plans to end COVID restrictions beginning June 1, we expect there to be a strong economic reaction as tourism is expected to increase and further reduce unemployment.

The Las Vegas real estate industry appears to be poised for growth and appreciation over the coming months.

Las Vegas skyline

Though it appears much of 2021 will resemble 2020 due to the COVID pandemic, higher unemployment and limitations on many businesses, certain sectors are actually booming within the valley! Real estate development is one of them. While housing is in demand and supply is low, other sectors of real estate are also moving forward – specifically new development. Here are a few we can look forward to during 2021:

NEW HOUSING DEVELOPMENTS

New home builders have been busy building new communities throughout the prior year and we expect them to continue throughout this year. With resale inventory is way below average and interest rates setting new record lows, many buyers are interested in purchasing a home. Granted, the median price of a new home in the Las Vegas valley is considerably higher than the median resale home. However, this is not deterring prospective buyers. We anticipate more new developments throughout 2021.

RESORTS WORLD

Still under construction, the new Resorts World on the north end of the Las Vegas strip is planned to open during Summer 2021. The 59 story hotel with some 3500 rooms will feature some modern tech, including a 100,000 sqft LED screen.

VIRGIN HOTEL LAS VEGAS

On the site of the former Hard Rock Hotel, Virgin Hotel – part of the Virgin group owned by Richard Branson – was expected to open January 15, 2021 but has since been delayed. Reports indicate that the current COVID situation may be to blame. However, with nearly a full year ahead of us, we anticipate the hotel to open its doors sometime this year.

These main projects do not include the many commercial, industrial and apartment developments currently under construction within Las Vegas. Other large projects were planned, however, due to the ongoing pandemic and disruption in supply chains, many have been put on hold, such as the Drew Las Vegas and MSG Sphere.

As the situation improves in the coming months, we look forward to seeing these unique projects once again move forward.

Spectacular shot of Las Vegas suburbs sprawling across the Mojave desert. Real estate properties fill up the arid terrain leading up to the city of Las Vegas.

The Las Vegas real estate market continued to exhibit resilience amidst COVID restrictions, high unemployment and a re-instituted eviction moratorium (though this one is more specific and different than the previous one). The median price of a single family home was $345,000 according to the Las Vegas Realtors association. Year over year, this was a 10% increase in values, an extraordinary feat considering the type of year 2020 was.

Yet again, limited inventory coupled with record low interest rates motivated investors and first time home buyers to take advantage.

What does 2021 hold in store?

Time will tell. However, the outlook appears to have appreciation in store – at least for now. The market appears to have relative stability, interest rates are projected to remain low and inventory remain tight. As a matter of fact, the Las Vegas Realtors association reported just over 3,000 houses with no offers ending the year. Many buyers are coming from out of state, such as California, and purchasing properties in Las Vegas. Home values are expected to continue to rise throughout the year, which is good news for homeowners and landlords. For folks looking to buy, they will have to be prepared, determined and aggressive to find a home.

Reflecting on 2020 and what it meant for real estate in Las Vegas

As we transition to a new year, we look back on a year that is, by all standards, far from any norm for any of us. While the year started on a “normal” note, it quickly changed to one of mask wearing and economic instability all amidst a rising housing market. Really, it has defied all expectations. And it has made society adjust to a new normal.

At the same time, it has created opportunity. Opportunity for homeownership for many due to a declining interest rate. Buyers are eager to find a property, yet inventory is limited and prices are consistently rising, hitting new records. This in itself has defied logic due to the ongoing pandemic.

As Las Vegas reels from the sudden economic impact of COVID, it is encouraging to see homeowners help tenants who were affected by the fallout of the pandemic by reducing rent and express a genuine concern for their well being. Kindness has been demonstrated by many.  Property management took on a more personal approach for many landlords – something that many never counted on. Yet, the challenges experienced and subsequent reactions by both landlords and tenants have gone a long way in reducing hardships.

What a year it has been. We hope you and your family stayed healthy and safe and continue to do so. Until next year.

View our property management services

 

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.