Las Vegas Housing Market Update - July 2022
The Market Isn't Crashing, But It Is Slowing Down...
The market is currently experiencing inventory numbers that have not been seen in the last five years that McKenna Property Management has been tracking rental inventory. Although at the end of July, inventory was around 2,500 properties (single-family, townhomes, and condos), in the two weeks since, inventory has increased by at least 10% and is rapidly approaching 3,000 properties. This increased inventory is the result of a wide range of factors, but can be partially attributed to the cooling of the real estate market. Recent investors and property-purchasers in the market were able to secure low interest loans during COVID. As interest rates increase and real estate sales slow, it is in the best interest of these property owners to hold their property until market conditions improve. Instead of letting the property sit vacant, they will rent it out, to continue making passive income. This results in the large influx of properties coming onto the market that we are seeing.
In July of 2022, 2,092 rental properties were leased across the Las Vegas Valley. This is a 1.3% increase in activity from June of 2022 (2,065 properties) and an 11.3% increase from July of 2021 (1,879 properties). The number of rental properties listed in July of 2022 was 1,606. This is a 11.5% decrease in activity from June of 2022 (1,814 properties) and a 117% increase from July of 2021 (740 properties). The median price of rental properties across the valley in July of 2022 was $2,060/mo. This represents a 0.5% increase from June of 2022 ($2,050/mo.) and a 14.4% increase from July of 2021 ($1,793/mo.). The average price of rental properties in July of 2022 was $2,171/mo. This is a 2% decrease from June of 2022 ($2,216/mo.) and a 8.1% increase from July of 2021 ($2,008).
Here are the key takeaways for any real estate investor in the current market:
A) Expect rent prices to stabilize in the coming months. As more inventory enters the market, there is more competition for potential tenants' attention. This means that property managers and landlords will be more focused in getting a property off the market quickly, than trying to price their properties super aggressively for the best ROI. Every day a property is vacant, is money the owner is missing out on, so the property manager's obligation will fall to making sure the property moves quickly.
B) As briefly mentioned above, properties will move slower as inventory increases. During the spring and summer of 2021, when there were less than 1,000 available properties on the market at any given time, it was not uncommon for properties to receive multiple applications in the first 24 hours it was on the market. Now, with inventory more than tripled, it is rare to have a qualified tenant apply within the first 48 hours. With so many options, potential tenants are now much more price sensitive than they were a year ago.
No matter the market conditions, every property is unique and needs a proper market analysis to determine what the current fair market rent would be. If you are a property owner or investor and have questions about where your property fits into the current rental market, please reach out to us in-person, via phone, or email.
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