Las Vegas Housing Market Update - March 2023
Dwindling Inventory and a Spike in Leasing Activity
At the end of March, rental market inventory was at 2,913 rental properties. This is the third month showing a continuous decrease in rental inventory, and marks the first time since September of 2022 that market inventory was under 3,000 properties. While this kind of continuous decline has not been seen since February-May of 2021, it does match similar annual market patterns from before the pandemic. The return of a continual decrease in inventory during Q1 and early Q2 of the year could be a sign of a return to form for the rental industry in the upcoming busy season of rentals (spring-summer). In March of 2023, 2,537 rental properties were leased across the Las Vegas Valley. This is an 17.6% increase from March of 2022 (2,157 properties). The number of rental properties listed in March of 2023 was 1,769. This is a 40.3% increase from March of 2022 (1,261 properties). The median price of rental properties across the valley in March of 2023 was $1,900/mo. The median price has remained unchanged at $1,900/mo. since December of 2022, and is a 2.8% decrease from March 2022. The average price of rental properties in March of 2023 was $2,107/mo. This is a 3.2% decrease from March of 2022 ($2,177).
Here are the key takeaways for any real estate investor in the current market:
A) Market-wide vacancy rates may decline significantly, with the most notable effect being on the DOM, due to decreased inventory and significant increases in leasing/listing activity. Over the last two months, the DOM average for the entire Las Vegas Metropolitan Area has declined by nearly a week from 43 to 38 days. While still a far cry from the DOM we were seeing at the peak of the market (between 3 and 4 weeks), this decrease should allow investors and property owners to breathe slightly easier as their properties will not be vacant for nearly as long, increasing their annual rental income and ROI.
B) Although rent amounts have plateaued over the last couple months, rental income may be able to be increased during the next quarter due to the bottoming out of the rental inventory and a significant increase in the demand for rental properties. As demand increases and supply slowly dwindles, it provides the opportunity for rental amounts to increase. This being said, stagnant rental amounts are not necessarily a bad thing either. The last couple of years saw unprecedented increases for both rental listing prices and lease renewal prices. This stagnation may just be the market catching up with itself before returning to a typical growth pattern.
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 have questions about where your property fits into the current rental market, please reach out to us.
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