Updated August 2022: I was driving yesterday and realized some historical information may help investors understand the Vegas residential real estate market better. Back in 2012 our prices hit an all time low after peaking in 2005/2006. An “A” neighborhood house like 53 Desert Rain Henderson 89074 sold for $150k back in 2012 and rented for $1,295.
Ten years later that same house has a market value of $500k and is renting for $2,200. Individual investors swarmed our market from 2012 – 2016 and then started buying again 2019 – 2021.
Institutional investors have always been in Las Vegas but increased their purchases dramatically in 2021. I read a statistic that during the first quarter of 2022 over 1/3 of the houses in Vegas sold to institutional investors (I read the same happened in Texas).
Prices are just too high in Vegas for the numbers to pencil for new investors with a loan (even with increased rent rates). Appreciation has already happened.
Most of the Owners I manage for purchased between 2012 – 2016. Hope this additional information helps with your analysis. -Heidi
Market Value Estimates
Zillow, Realtor.com and Redfin all offer their own estimates of market value. I am noticing the Zillow “zestimate” is inflated by about 10% (August 2022). Realtor.com and Redfin seem to be offering more accurate values. I’m predicting a 10-15% pull back in Las Vegas real estate prices in the next 12-18 months. I believe rent rates will be remain stable as there is still a supply/demand issue (too many renters and not enough rental houses).
The unknown is how the institutional investor purchases will impact our market long-term. What if Wall Street determines owning rental property isn’t as profitable as they thought and/or it becomes a hot button politically (i.e. Wall Street buying up Main Street). We are in unprecedented times with the billions and billions of dollars Wall Street has pumped into the residential real estate market. If your unfamiliar with institutional investors in the sunbelt region just google it and you’ll find some interesting articles.
Some Wall Street investors are even funding purpose built rental neighborhoods (think apartment building but all detached single family residences). Every neighbor is a renter.
Las Vegas Has Strong Rental Demand and Rent Rates Have Stabilized.
The Las Vegas valley has strong rental market demand and we experienced increased rental prices in 2020, 2021 and 2022. The rents have stabilized at a much higher rate (about a 40% increase from 3 years ago). Houses that previously rented for $1,295/mo are renting for $1,995/mo. Houses that previously rented for $1,895/mo are renting for $2,500+/mo.
Our rental market is still very active even with these increased rent rates. Entry level rental homes in the Las Vegas valley begin around $1,895/mo and there is strong demand for rentals upwards of $5,500/mo for guard gated Red Rock Country Club in Summerlin.
“We have a lot of people coming in from other states that are able to work from home,” Susy Vasquez, executive director of the housing association, said in an interview. “That really is what’s pushing rents, is the ability to work from home and the number of people that are coming to Nevada because it is cheaper to live here than in the surrounding states.”
Current Stats: 130 new Nevada residents every day which equates to 5.4 new Nevada residents per hour! Where are these people coming from? 44% are coming from California along with 4.4% from Florida, 4% from Arizona, 4% from Texas and 3.8% from Washington.
Below are four real world examples of houses recently rented across the Las Vegas Valley…from $2,000/mo to $6,000/mo.
Las Vegas Rental Statistics Example # 1
Westwood Village neighborhood: Thurston St. Henderson 89074
- Market rent – $2,000/mo
- Market value – $450k
Las Vegas Rental Statistics # 2
Green Valley Ranch: Thunder Ridge Circle Henderson 89012
- Market rent – $2500/mo
- Market value – $550k
Las Vegas Rental Market Statistics Example # 3
- Market Value – $1,300,000
- Market rent – $6000/mo
5 Key Las Vegas Rental Market Points:
Consider these five key points provided by Brian Gordon, a principal at Applied Analysis, a leading local research and economic analysis firm:
1. Economic and population growth support demand in the housing market. Positive trends in the Southern Nevada economy continue to push the local housing market forward. As population grows, so too does the local housing market. While official population statistics are only released annually, more recent indicators of population confirm growth is continuing in Southern Nevada.
2. Southern Nevada’s development pipeline continues to generate demand. Southern Nevada now has nearly $26 billion worth of notable investments throughout the valley, including $14 billion invested in projects currently under construction. The development pipeline is highlighted by the $1.2 billion MSG Sphere at the Venetian planned to complete in late 2020, as well as the $690 million Palms Casino Resort wrapping up its overhaul. The construction and operations phases of major developments provide employment opportunities for locals and newcomers.
3. Positive employment growth extends its streak. The local economy added 21,600 net new jobs during the past 12 months, bringing the total number of employees to 1.02 million. A larger and more diverse workforce will lead to a more stable housing market in Southern Nevada.
4. Single-family housing market trends suggest stability. Resale home sales data during August 2019 trended positively, increasing on a month-to-month and year-over- year basis. The number of single-family homes sold remained strong, with nearly 3,200 resale closings in the MLS. Importantly, the median price continued to rise, growing 3.4 percent from the prior year to $305,000 as it approaches its prior high watermark of $315,000. It is also worth noting that more than half (52%) of homes sold during that month were on the market for 30 or less days.
5. The balance between home prices and incomes will be important going forward. Housing affordability is becoming an increasingly greater concern for a number of households in Southern Nevada. Finding a balance between growth in home prices and household incomes will be important. August housing data suggests the single-family home price is up 3.4 percent from a year ago. Additionally, the latest wage data for local residents is up nearly 3 percent (2.9 percent) from the prior year. Current conditions suggest the housing market is settling into a more sustainable pace of price appreciation, which should bode well for Southern Nevadans
Low Property Taxes
Low property taxes are one of the main reasons Las Vegas investment properties are so attractive. On average property taxes are about 1/2% (.005%) of the purchase price. For example, a property purchased for $350k would incurred annual property taxes around $1,750 annually ($146 monthly). This public search page can be used to determine current property taxes for any property in Las Vegas and Henderson: Clark County Treasurer.