March Las Vegas Rental Market Update

[Eric Fernwood]

It’s March, and it's time for another Las Vegas update. For a comprehensive view of the Las Vegas investment market, message me for my blog link. It contains more detailed information on investing insights, analytics, and, particularly, investing in Las Vegas.

Before proceeding, note that the charts only include properties that fit the following criteria unless stated otherwise.

• Type: Single-family
• Configuration: 1,000 SF to 3,000 SF, 2+ bedrooms, 2+ baths, 2+ garages, minimum lot size is 3,000 SF, one or two stories.
• Price range: $320,000 to $475,000
• Location: All zip codes marked in green below have one or more of our client’s investment properties (click to enlarge).

Overall Las Vegas Real Estate Market Inventory

The chart below, provided by the MLS, includes all property types and price ranges.

The inventory level continued its downward trajectory, significantly lower YoY.

Rental Market Trends

The charts below are only relevant to the property profile that we target.

Rentals - Median $/SF by Month

$/SF showed a slight drop MoM, which is surprising considering the decreasing rental inventory and time to rent. YoY is up 4.5%.

Rentals - Availability by Month

The number of homes for rent continued the downward trend. YoY is down 16.7%!

Rentals - Median Time to Rent

Median time to rent showed 24 days, continuing to fall after the holiday season, showing a heating up rental market. YoY is down 4%.

Rentals - Months of Supply

Only one month of supply for our target rental property profile. YoY is down 33%! Demand is greater than supply. This will pressure up the rents.

We saw a similar tight supply in sales as well. Now below one month of supply. This will continue to push up the prices.

Sales - Months of Supply

Sales - Median $/SF by Month

Despite persistently high interest rates, the $/SF continued to climb. It is up 7.1% YoY.

Why invest in Las Vegas?

In short, to achieve and maintain financial freedom. However, financial freedom isn't just about replacing your current income. Financial freedom requires maintaining your lifestyle for life. This requires an income that rises faster than inflation, or you will not have the additional dollars you will need to pay future inflated prices.

What causes rents (and prices) to increase?

Supply & Demand

Unlike financial markets, real estate prices and rents are driven by supply and demand. What is the supply and demand situation in Las Vegas?

Supply

Las Vegas is unique because it is a tiny island of privately owned land in an ocean of federal land. See the 2020 aerial view below.

Very little undeveloped private land is left in the Las Vegas Valley, and desirable areas cost more than $1 million per acre. Consequently, new homes in these locations start at $550,000. Homes that appeal to our target tenant segment range from $320,000 to $475,000, so the supply of housing we target remains almost the same regardless of how many new homes are built.

Demand

Population growth drives housing demand. Las Vegas's average annual population growth is between 2% and 3%. What draws people to Las Vegas? Jobs. Some recent examples of job growth in Las Vegas:

• The last job fair had over 20,000 open positions.
• $1.8B Sony movie studio backed by Mark Wahlberg approved for Summerlin - Projected to create thousands of new jobs.
• How North Las Vegas is becoming an industrial powerhouse
• Depending on which study you read, there is between $26B and $30B in new construction or under development. This will create thousands of future jobs. Each new job will increase the demand for housing.

In Conclusion

While nothing is guaranteed, the combination of population growth and limited land for expansion virtually assures that prices and rents will continue to increase.

Thanks for reading my post. Reach out if you have questions or would like to discuss investing in Las Vegas.