Las Vegas, NV Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Wed, Aug 4 2021

Jump To Another Year In The Las Vegas Real Estate Market:


The Las Vegas real estate market entered into 2021 firing on all cylinders. Even as uncertainty continues to spread in the wake of the Coronavirus, the median home value in Las Vegas tests new highs each month. Perhaps even more importantly, demand remains intact thanks to increasing optimism, lower interest rates, and savings accounts that were padded with government stimuli and more than a year of being locked indoors. It is worth noting, however, that demand is greatly outpacing supply in the Las Vegas real estate market. Several months behind on inventory, local prices will continue to appreciate for the foreseeable future. As a result, local real estate investors have shifted their exit strategies from short-term flips to long-term holds that can take advantage of new market indicators.

Las Vegas Real Estate Market 2021 Overview

  • Median Home Value: $343,836

  • Median List Price: $415,967

  • 1-Year Appreciation Rate: +17.5%

  • Median Home Value (1-Year Forecast): +19.5%

  • Weeks Of Supply: 6.8 (-5.5 year over year)

  • New Listings: 1,132 (+18.3% year over year)

  • Active Listings: 6,687 (-34.5% year over year)

  • Homes Sold: 1,021 (+22.3% year over year)

  • Median Days On Market: 16 (-29.7 year over year)

  • Median Rent: $1,572 (+17.3% year over year)

  • Rental Vacancy Rate: 2.8% (-3.4% year over year)

  • Price-To-Rent Ratio: 18.22

  • Delinquency Rate: 6.0% (-2.0% year over year)

  • Unemployment Rate: 9.6% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 651,319 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $56,354 (latest estimate by the U.S. Census Bureau)


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Las Vegas housing market trends

2021 Las Vegas Real Estate Investing

Las Vegas real estate investing may have taken a step back when COVID-19 was first declared a global emergency, but the retraction was short-lived. The median home value declined only a few thousand dollars on the heels of fear and uncertainty before it started appreciating and never looked back. The moment the Fed announced it would lower interest rates to spur buying activity, prospective homeowners took the money they saved in quarantine and started shopping, so much so that competition has driven prices up ever since. In the last year alone, supply and demand constraints have increased local home values by as much as 17.5%.

Prices have increased so much, in fact, that Las Vegas real estate investors have found deals with attractive profit margins harder to come by. According to Attom Data Solutions’ second-quarter 2021 U.S. Home Sales Report, only San Jose, CA saw profit margins on home sales decrease more than Las Vegas.

“Profit margins dropped, year over year, in just 37 of the 195 metro areas analyzed (19 percent) but declined quarterly in 86 (44 percent). The biggest annual decreases were in San Jose, CA (margin down from 85.6 percent in the second quarter of 2020 to 67.4 percent in the second quarter of 2021); Las Vegas, NV (down from 45.8 percent to 30.5 percent); Kansas City, MO (down from 41.4 percent to 26.5 percent); Myrtle Beach, SC (down from 26.6 percent to 11.7 percent) and Los Angeles, CA (down from 55.7 percent to 41.3 percent),” according to the report.

Simply put, homes have appreciated so much over the last 10 years that great flip deals are growing harder to find. That’s not to say rehabbing isn’t a viable exit strategy (it very much still is), but rather that other investing methods look more attractive under today’s market conditions. Therefore, in addition to rehabbing, Las Vegas real estate investors need to prioritize the following exit strategies:

Those interested in the Las Vegas real estate investing industry should pay special consideration to building a rental portfolio. While acquisition costs are historically high at the moment, the cost of borrowing is historically low. In an attempt to stimulate the housing market in every city across the country, the Federal Reserve has dropped interest rates to near all-time lows.

As of July, the average rate on a 30-year fixed-rate loan was 2.87%, according to Freddie Mac. While interest rates are up year-to-date, they still represent historic lows. Therefore, passive income investors have more incentive to use traditional financing to buy a home in Las Vegas sooner rather than later. Not only are borrowing costs lower, but lower monthly mortgage obligations suggest landlords may increase cash flow from properties placed in operation. The less borrowers are expected to pay on their mortgage each month, the more they can pocket from renters. Several years of cash flow can easily warrant an acquisition at today’s high prices. With a median rent price of $1,572, many long-term investors should be able to pay down their mortgage using someone else’s money.

Besides low mortgage rates and the city’s cash flow potential, Las Vegas has a price-to-rent ratio that favors rental property owners. At 18.22, the price-to-rent ratio in the Las Vegas housing market suggests investors are currently the beneficiaries of good rental demand. Due, in large part, to the city’s relatively high home prices, fewer people can afford to buy, which simultaneously drives up rental demand and the amount landlords can charge.

The stars are starting to align for rental property owners, which begs the question: Is buying a condo in Vegas a good investment? Provided the cash flow warrants the acquisition cost, now may be a great time to invest in a condo or single-family home to rent out. Not only may investors capitalize on cash flow, but there’s a good chance they’ll benefit from appreciation over the long run.

Outside of the immediate opportunities awarded to rental property owners, real estate investors in Las Vegas may want to wait and see what the future holds for tax lien investing strategies. The wake of the Coronavirus is expected to result in financial hardships for millions of Americans. If many homeowners cannot keep up with their taxable obligations, there may be an influx of opportunities later in the year to acquire tax lines from local municipalities. Local investors who can familiarize themselves with the process today may find themselves with ample opportunities to capitalize on the market’s new landscape in the future.

However, investors who are slightly more risk-averse may want to consider the buying opportunities created by the Coronavirus in the stock market. Real estate investment trusts are almost all selling at a discount at the moment and offer some exposure to the real estate industry without buying physical assets. With the lingering impact of the Coronavirus still unknown, investing in REITs may be a great way to get into the market at a relatively low price and with substantially less exposure to risk.

2021 Foreclosure Statistics In Las Vegas

According to Attom Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, a total of 65,082 U.S. properties received a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first six months of the year. “That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago,” according to the report.

The Las Vegas real estate market is no exception. Las Vegas Realtors reported that short sales and foreclosures both accounted for a mere 0.7% of all existing local property sales as recently as June. Exactly a year ago, short sales and foreclosures accounted for 2.2% of all sales.

While foreclosures are down, it’s important to note that the last year was the exception (and not the rule). It’s true: Foreclosures are down, but there’s a good chance foreclosures will increase sooner rather than later. If for nothing else, fewer states are protecting renters with foreclosure moratoriums brought about by the Coronavirus.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

All things considered, foreclosures in Las Vegas are expected to increase over the course of 2021. That, combined with a higher-than-average unemployment rate, suggests the Las Vegas real estate market is on the verge of an influx of foreclosures. While it’s too soon to tell just how many to expect, local investors can start positioning themselves well today to help distressed homeowners in the near future.

2021 Median Home Prices In Las Vegas

The median home value in Las Vegas had increased every year since 2012 when the country was first starting to remove itself from the depths of the last recession. The presence of the Coronavirus threatened to interrupt the long-running trend, but the threat was short-lived, and prices continued to march higher.

At $343,836, the median home value in Las Vegas is historically high. No more than nine years ago (May 2012), the city’s median home value was approximately $124,000. In that time (from May 2012 to July 2021), the median home value in Las Vegas appreciated by as much as 177.2%. Real estate in Las Vegas has appreciated much faster than the national average by drafting off a strengthening economy, increased consumer sentiment, low interest rates, more savings, and a lack of inventory.

Moving forward, the Las Vegas real estate market is expected to appreciate faster than the national average. With a mere 6.8 weeks of inventory, competition will continue to drive prices upwards, to the tune of 19.5% over the next 12 months.

Las Vegas Housing Market: 2020 Summary

  • Median Home Value: $296,730

  • 1-Year Appreciation Rate: +3.8%

  • Median Home Value (1-Year Forecast): +4.4%

  • Average Days On Market (Zillow): 88

  • Median Rent Price: $1,500

  • Price-To-Rent Ratio: 16.48

  • Unemployment Rate: 16.4% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 651,319 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $54,694 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 13.03%

  • Foreclosure Rate: 1 in every 21,581 (0.4%)

Las Vegas Real Estate Investing 2020

Las Vegas real estate market trends supported local investors for the better part of 2020. As a result, the entire Las Vegas real estate investing community could continue nearly a decade’s worth of momentum. In particular, investors took part in the simultaneous rise of both home values and demand. Historic appreciation rates couldn’t turn away prospective buyers, which resulted in a level of demand Las Vegas rarely ever sees.

Demand was fueled by several tailwinds created in the pandemic. For starters, the Fed dropped interest rates to a very attractive level to stimulate the entire market. Low borrowing costs catalyzed buyers across the country, and Las Vegas was no exception. Buyers came out in droves and put a significant amount of strain on already low inventory levels. Competition increased in the face of lacking inventory levels, causing home values to increase more than anyone expected. The rising home values made it difficult for investors to realize higher profit margins, so they turned their attention to another strategy in 2020: rental properties.

Thanks to many of the indicators which emerged from the pandemic, rental properties became the preferred medium of investment in 2020. Not only was it cheaper than ever to borrow institutional money, but prospective landlords could capitalize on loans to simultaneously reduce mortgage obligations and increase monthly cash flow. Las Vegas real estate market trends gave rental properties more upside in a market where rehabs had reigned supreme for decades.

Las Vegas Housing Market: 2018 Summary

Few housing markets experienced a boom in sound fundamentals on the same level as the Las Vegas real estate market in 2018. Consequently, Sin City has become the beneficiary of some rather impressive appreciation rates, the likes of which many homeowners thought were impossible at the time. Median home values in Las Vegas increased at a rate of more than two times the national average from 2017 to 2018, and the gains have continued to today. There is no doubt about it: the Las Vegas real estate market was firing on all cylinders just a few years ago, and the market hasn’t taken its foot off the gas.

Las Vegas Real Estate Investing 2018

According to Las Vegas real estate news at the time, few housing markets across the country benefited greater from sound fundamentals than Sin City. Of those fundamentals, few were more pronounced in 2018 than the appreciation of home values. According to Zillow, median home prices in Las Vegas shot up 16.6% in one year and landed somewhere in the neighborhood of $247,700. To put Las Vegas’ numbers into perspective, the median home value in the United States went up 7.6% in one year. Real estate in Las Vegas was about as hot as Las Vegas Boulevard on a summer day.

In 2018, Las Vegas saw a 34.0% decline in homes that received a foreclosure filing. According to RealtyTrac, there were about 3,270 homes in some stage of foreclosure (default, auction, or bank-owned) about two years ago. More specifically, however, there were about 3,270 opportunities for investors in tune with the local market. If for nothing else, distressed properties, otherwise known as foreclosures, represented a great opportunity for those interested in Las Vegas real estate investing.

The median sales price of a non-distressed home was $230,000. According to RealtyTrac, the median sales price of a foreclosure home was $192,000, or 17.0% lower than non-distressed home sales. For those of you keeping track, distressed homes could be acquired for an average of $38,000 less than their non-distressed counterparts at the time.

Las Vegas Housing Market: 2016 Summary

  • Median Home Price: $242,300

  • 1-Year Appreciation Rate: 12.0%

  • 3-Year Appreciation Rate: 41.0%

  • Unemployment Rate: 6.9%

  • 1-Year Job Growth Rate: 2.7%

  • Population: 603,488

  • Median Household Income: $51,214

Las Vegas Real Estate Investing 2016

The Las Vegas real estate market was booming in 2016, as home prices, appreciation rates, and home affordability were higher than the national average. The median home price was $242,300 during the second quarter, compared to the national average of $239,167. Gains in the previous three years have extended the trend of positive price growth since the recession.

As of July 2016, there were 8,501 properties in the Las Vegas area in some stage of foreclosure. According to RealtyTrac, the number of Las Vegas foreclosures in July was 14.0% higher than the previous month and 24.0% lower than the same period in 2015. Additionally, the number of REO properties in Las Vegas jumped 81.3% from the previous month but only 1.8% from one year earlier.

Las Vegas housing statistics

Las Vegas Housing Market: 2015 Summary

  • Current Median Home Price: $220,500

  • 1-Year Appreciation Rate: 9%

  • Unemployment Rate: 6.2%

  • 1-Year Job Growth Rate: 2%

  • Population: 603,488

  • Median Income: $51,057

Las Vegas Real Estate Investing 2015

News suggested Las Vegas was closer to long-term stability than it had been in the last five years. Over those five years, the region saw significant improvements. Trends in the area indicated no significant fluctuations, suggesting true normalcy was just around the corner. The city’s stimulation was due, in large part, to a heavy presence of foreign and domestic investors looking to capitalize on the buy and hold market. Subsequently, the luxury home market realized significant increases in activity over a similar period but began to temper from 2014. By the fourth quarter of 2014, cash purchases were at a five-year low. Such a development was shocking to see in a city where cash purchases were once so prominent.

The market boasted a median home price of $203,000, nearly $14,000 less than the national average at the time. However, in getting there, Las Vegas had to make significant strides over a year. Homes appreciated 11.6% in one year. That said, just three short years prior, Las Vegas homes appreciated 65.4%. Despite the appreciation, Zillow named Las Vegas one of the country’s best markets for homebuyers.

Most of the demand came from Millennials, who were largely neglected for the better part of a decade because of several economic factors. That said, millennials got their homebuying feet wet, as rents exceeded record highs and home prices stabilized. The economy’s expansion made it more reasonable to own a home than in previous years, and millennials took advantage of Vegas’ affordable marketplace.

Were it not for a poor job sector, the Las Vegas real estate market could have served as a prominent leader in the economic recovery. However, Las Vegas’ unemployment rate lagged behind the national average. The city’s unemployment rate was 7.1% or 1.2% above the national average. Despite 2015s high unemployment rate, it was still a marked improvement over the previous year.

Las Vegas Real Estate Market Summary

The Las Vegas real estate market has made up a lot of ground since the Great Recession. As one of the hardest-hit markets in the country, Sin City saw its foreclosure rate spike. However, after years of economic growth and the placement of sound fundamentals, Vegas is positioned to help everyone: investors, buyers, and sellers. Nonetheless, the Coronavirus will provide a temporary obstacle. Housing activity will drop for the foreseeable future, but pent-up demand could stimulate a very active market as the economy begins to open back up. Las Vegas real estate investors who position themselves to take advantage of the new landscape could find the next few years to be a great time to invest.


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Sources

https://www.zillow.com/las-vegas-nv/home-values/
https://www.zillow.com/research/data/
https://www.redfin.com/news/data-center/
https://theenergylogic.com/housing-tides/housing-tides-interface/
https://www.bls.gov/regions/west/nv_lasvegas_msa.htm
https://www.census.gov/quickfacts/lasvegascitynevada
https://www.attomdata.com/news/most-recent/attom-q2-2021-u-s-home-sales-report/
https://www.attomdata.com/news/most-recent/attom-mid-year-2021-u-s-foreclosure-market-report/
http://www.freddiemac.com/pmms/pmms30.html

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