As always, lots of great opinions and predictions on this thread. However, I always question the reliability of any prediction. I believe Peter Drucker said it very well:
"Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window."
Or, my own opinion:
"Predicting anything beyond yesterday is guessing"
So I will leave the predictions to others and instead I will present the current condition of the Las Vegas market.
Below are charts from our latest trailing 13 month market report, which includes August data. Remember that this data is only for the property profile that we target, not for the entire metro area and all property types. Our property profile was selected to have the highest probability of attracting our target tenant pool. In general, the property profile is as follows:
- Single family
- 1 or 2 stories
- Price range: $250,000 to $400,000
- 3+ bedrooms
- 2+ car garage
- In very specific areas
- Built after 1985
There is a lot more detail but the above will give you a general idea of the properties we target. What this also means is that we do not include in our data: apartments, condos, multi-family, single family homes priced above or below our target price range or configurations that do not conform to our property profile.
So, with all that said, here is the data for the prior 13 months ending 8/31/2020.
Rental Statistics
Rental rates posted another significant increase in August, now at the highest level for the last 13 months. Both property managers that we work with are reporting extremely low inventory and multiple applications for most properties.
Rentals - Median $/SF by Month
There was a significant month-to-month increase in rental rates, which reflects low inventory and increasing demand.
Rentals - Median List to Contract Days by Month
The time from list to contract is below 10 days, an amazingly short period of time. There are usually multiple applicants for each property. In some cases, renters are offering to pay more than the asking rent or pay one year's rent upfront just to secure a place to live.
Rentals - Availability by Month
This chart shows the average daily number of properties that were for rent by month. As you can see, rental inventory continues to fall. We are at less than half of the level a year ago, a dramatic decrease.
Sales Statistics
Year-to-year prices increased by about 4%.
Sales - Median $/SF by Month
Sales - Median List to Contract Days by Month
Median days on market remains amazingly low for the property profile we target. Properly priced properties go under contract in in 1-3 days and usually with multiple offers.
Sales - Availability by Month
This chart shows the average daily number of properties that were for sale by month. Inventory continues to fall and is significantly lower than the same time last year.
Sales - Months of Supply
Months of supply are just barely over one month! Six months is considered balanced.
Based on the above market statistics, what conclusions would you draw about this market? Do you see any indication of a crash or do you see a consistent trend of rising prices and rents?
The Big Eviction
There are "news" articles about the coming "eviction wave". As usual, the "experts" got it wrong. Their first mistake is that they grouped all tenants together into one basket and made their "prediction". (I've looked for their source data and cannot find it. If someone can point me to the data, please let me know.) I can tell you as an engineer that their approach is invalid. You cannot combine disparate tenant pools into a single group and produce any meaningful information. They also made another error.
When the eviction restrictions end, it is possible that a number of people in C and B Class properties may be evicted. However, what the "experts" seemed to forget is that all these people will still need a place to live. And, all the owners of the C and B Class properties will need tenants. What I believe will happen is closer to musical chairs than a huge wave of vacancies. Evicted tenants will move to the next C or B Class property down the street. And, the people who were evicted from that unit will move to another recently vacated C or B property. So, in the short term, I see the potential for a lot of people shuffling around but not a lot of vacancies.
About the tenant pool we target; to date out of the 160+ client properties we track (out of a total of > 200 properties), 10 tenants have at some point over the last 6 months had trouble paying the full rent on schedule. A relatively small percentage of the total in my opinion. I expect most of these tenants will catch up on their rent in the near future. For example, one of the 10 tenants just paid close to $9,000 to bring their rent current. Paying $9,000 to catch up on the rent is a lot more expensive than moving. However, moving is not the issue, a bad credit report is this tenant pool's fear. A negative hit on their credit will dog them for years. Plus, even if they wanted to move, it is unlikely any property manager with an A Class property will rent to them. There are too many qualified applicants for the property manager to consider anyone who was evicted or skipped out on their lease. So, we do not expect many of the remaining 9 tenants to be evicted. To put this in perspective, out of a population of over 200 properties, we've had a total of 5 evictions in the last 12 years.
Summary
I believe that increasing demand combined with a shortage of inventory will continue to drive the market in a positive direction for the foreseeable future.
