Spring is in the air and as temperatures rise, all segments of the Las Vegas real estate market continue to heat up!
While numbers have held relatively steady over the last six months, supply is dwindling, further driving up prices in the residential market. Properties priced correctly in Summerlin, Southwest, and Henderson are garnering multiple offers. North Las Vegas properties are selling much faster as well, as a result of the buzz regarding Faraday and other companies moving into Apex. Good luck finding any properties under 200K in good areas!
Having a Mayor that is committed to the recovery and success of the City is also assisting with the strong market.
If you are on the fence about purchasing, now is the time to make a move as interest rates are still well below historic averages and we are still a year or so away from the top of the market.
Single Family Rental market
Currently, there is a 3 week supply of single family rentals on the market, today. This lack of supply is not only driving up rent prices and but also decreasing overall vacancy. We expect these rental rates to peak relatively soon as affordability declines. It will be interesting to see what happens when 6,000 multifamily apartment units hit the market in the southwest part of town. New apartment rents per sq ft are up to $1.60 to $2.00 psf, which is much higher psf than single family dwellings.
There is a 2.77 months supply on all single family homes in Clark County. Homes under 300K have a 1.74 months supply. A normal market is 6 months. The median price excluding new homes for single family is 209K. At the top of the market it was 319K.
Where Are We Now and Where Are We Headed?
Currently, we are still 20% below the top of the market on homes under the FHA limit of 287K. Homes priced over 300K should remain flat, depending on location. These forecasts, however, are dependent on the global market and interest rates.
We are still in expansion mode, until supply rises along with vacancies. While we believe we are a year or so out from the top of the market, there are many factors that could change the current landscape. 2016 is an election year and I don’t anticipate too much of an impact this year but if the new administration raises capital gains taxes, it could have a negative impact on real estate. Interest rate hikes and the global economy are the only other factors that could negatively affect the market.
Commercial Real Estate
Land prices continue to slightly increase as demand grows for residential, multifamily, industrial, and retail. Office zoned land is the only segment that is lagging behind as we are still absorbing existing space and not seeing much new development. The last BLM auction in April netted the highest sales volume in years, with 846 acres sold for a little over 95MM.
Multifamily continues to strive with several notable deals trading in the first quarter; most notable was the Camden portfolio for 630MM for 4,918 units. This was one of the largest transactions for apartments in the history of Las Vegas. Lyric Apartments also traded for 65MM which was $173,803 per unit.
In the first quarter, the industrial market absorbed over 916,804 sq ft of space, while vacancy rates dropped to 6% from 6.5%, last year. In prime areas, industrial land prices have soared to over 500k per acre and several projects are currently under construction.
Similar trends were seen in both the office and retail markets. During the first quarter of 2016, the office segment absorbed 169,000 sq ft and vacancy rates dropped to 18.4% from 19% in late 2015. Retail absorbed 406,173 sq ft, with Q1 2016 vacancy at 8.2%, down from 8.7% in Q4 2015.
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