May 15, 2021

Las Vegas Real Estate Market | Are We Approaching A 2008 Bubble? The definitive answer is “it depends.”

We view Las Vegas as hundreds of sub-markets and believe City level metrics are too broad to base opinions. For example, the Waldorf Astoria, which has global name recognition and only 225 residences, should not be included in the analysis that includes single-family homes in the suburbs. Factors we evaluate include the following specific to luxury condos:

Positive VariablesSupply & Demand | Condo Inventory | Future InventoryPer Wikipedia:
By January 2005, 122 high-rise condominium buildings with a total of nearly 17,000 units had been announced.”In 2021, I have yet to see a viable project announced as condos still sell below replacement costs in some projects. Availability of condo resale inventory on the MLS trends in the 700 residence range and is now in the 400’s.Related to suburban areas, the CEO of the Southern Nevada Home Builders Association stated there were 10,500 single-family home permits pulled in 2020, which indicates housing inventory levels in 6-9 months (construction timeline); however, this satisfies 1/10 of relocations from CA alone as some estimates are in the 100,000 person range.

Telecommuting may increase demand significantly. Nevada has a favorable cost of living, and all luxury condo projects located in the strip corridor are 3.9 miles or less from McCarran International Airport, making visits to Corporate Headquarters in other states convenient.

Relocation Statistics | Average Home Prices In Markets That People Are Relocating From
California is the primary market for Nevada relocations, and Californians’ average home prices are two-three times Nevada’s, so many see value in the Vegas market. The following depicts what $1-1.5m buys you in Las Vegas vs. Menlo Park, CA. Not only are the housing options more appealing, but the price-to-rent ratios are also more favorable for investors.
Menlo Park $1,098,00 | 2bd | 780sf | Rental Zestimate $3,500/Month
Menlo Park Home
$1,245,000 | 5bd | 3,461sf (Summerlin) | Rental Zestimate $5000/Month
One-Bedroom ~1100sf Residences at Waldorf Astoria starting at $899k
Our Team just leased a high-floor furnished one-bedroom for $5500/m
Waldorf Astoria One Bedroom Residence
Tax | Regulatory
Any discussion about increasing taxes (happening now) at the State or Federal level results in accelerated relocation interest from high-tax States. Per
Ibuyers (Revenue At All Cost Model)
Zillow, Opendoor, Offerpad, and others are now buying homes directly, appearing to have a “revenue at all cost” strategy and count the revenue of the house’s total price. The long-term problem with this model is that they lose money on most transactions when fees/cost of debt is factored; however, these companies and their model will absorb possible increases in inventory discussed in the concern section.
Concerning Variables
Foreclosure | Eviction Moratorium Expiration
Both events will add sale and rental inventory to the MLS, which could put downward pressure on values; however, the influx of residents combined with aggressive iBuyer Brokerages should result in inventory absorption.
Mortgage Rates | Refi’s | Subprime | HELOC
Mortgage approvals require a higher standard than in 2005-2007, especially in the 2nd home and investor segments. We also monitor HELOCs because if a large number of Consumers strip the equity from their homes, it could be a cause for concern. This article provides some comfort. Why Home Equity Loans Are Still So Hard to Come By
Relevant News StoriesLas Vegas Tourism Is Exploding With More And More People Flying To And From The CityTruck Rental Data Shows Las Vegas Is The Top Moving Destination During PandemicShare Of Mortgage Loans In Forbearance Declines AgainLas Vegas Home Prices Skyrocketing As More Californians Arrive
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