August Las Vegas Rental Market Update

[Eric Fernwood]

It’s August and time for another Las Vegas update. For a more in-depth view of the Las Vegas investment market, DM me for a link to our blog site which contains more information on investing in general and investing in Las Vegas in particular.

Before I continue, note that the charts only include properties that match the following profile, unless otherwise noted.

• Type: Single-family
• Configuration: 1,000 SF to 3,000 SF, 2+ bedrooms, 2+ baths, 2+ garage, minimum lot size is 3,000 SF.
• 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.

What we are seeing:

The chart below is from the MLS and includes all property types and price ranges.

We're observing the typical seasonal slowdown in prices and inventory that starts in July because fewer people are buying properties and moving as school resumes in mid-August.

Rental Market Trends

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

Rentals - Median $/SF by Month

Rents had a slight drop MoM ($1.19/SF vs $1.20/SF). YoY is up 2.6%.

Rentals - Availability by Month

The number of homes for rent increased slightly MoM, conforming to the seasonal trend (school starting).

Rentals - Median Time to Rent

Median time to rent increased slightly compared to Q2, but is still at 20 days. YoY is flat.

Rentals - Months of Supply

About one month of supply for our target rental property profile. Demand is greater than supply. This will pressure up the rents.

We saw a similar trend in sales as well. A slight slowdown in terms of prices and days on market but inventory remains very tight (1 month).

Sales - Months of Supply

There is one month of supply for our target property profile. A 6 months supply is considered a balanced market. This will continue to drive up the prices.

Sales - Median $/SF by Month

The $/SF also had a slight drop MoM. YoY is up 6.7%.

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. Depending on the article, there is between $26B and $30B under construction, and the last job fair had over 20,000 open jobs.

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.