September Las Vegas Rental Market Update

[Eric Fernwood]

It's time for another Las Vegas update. For a more comprehensive look at the Las Vegas investment market, feel free to DM me for a link to our blog. There, you'll find detailed information on investing—both in general and specifically in Las Vegas.

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.

Rental Market Trends

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

Rentals - Median $/SF by Month

Rents had another slight drop MoM ($1.18/SF vs $1.19/SF). YoY is up 3.5%.

Rentals - Availability by Month

The number of homes for rent remained flat MoM.

Rentals - Median Time to Rent

Median time to rent continued to increase MoM but still at a very reasonable 22 days. This conforms to the traditional seasonal trend.

Rentals - Months of Supply

The supply for our target rental property profile stands at about 1.2 months, remaining flat year-over-year. With demand outpacing supply, we expect rents to continue rising.

In terms of the sales market, we saw a similar slight slowdown in days on market compared to the hot Q2 but prices are held steady. Inventory remains tight (1 month).

Sales - Months of Supply

There is just over one month of supply for our target property profile. Year-over-year, we've seen a slight drop. A six-month supply is typically considered a balanced market. This limited inventory will likely continue to drive prices upward.

Sales - Median $/SF by Month

The $/SF increased MoM. YoY is up 8.5%.

Why invest in Las Vegas?

The goal is to achieve and maintain financial freedom. Financial freedom goes beyond simply replacing your current income—it's about sustaining your lifestyle for life. To accomplish this, you need an income that outpaces inflation. Otherwise, you won't have the extra funds necessary to cover the rising costs of goods and services in the future.

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 $350,000 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 and price and rent increases. Las Vegas's average annual population growth ranges from 2% to 3%. What attracts people to Las Vegas? Jobs. Ongoing construction projects valued between $26 billion and $30 billion fuel employment opportunities. The most recent job fair featured over 20,000 open positions.

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.