As we officially enter the final month of Q3, 2015, the Las Vegas real estate market continues to show signs of improvement!
Indicators across all four major segments, including single family residences, investment and rental properties, commercial real estate, and industrial, reflect the continued growth and rebound of our local market.
Residential Real Estate
The residential real estate market is not only strong but also continuing to improve, as prices have increased 9 to 11%, year-over-year, depending on location and price point. Over 50% of listed homes are going into contract within 30 days. This data suggests that if the property is priced correctly, sellers can anticipate offers within an average of 60 days.
Currently, there are 7,595 single family residences (SFR) available, not under contract. The Las Vegas residential market is also averaging 2,440 sales per month, indicating the market is currently at or below a 90 day supply.
Absorption rates, however, vary within each price band. For example, properties priced at each of the following maintain a current supply of:
- Under $300k – 2 month supply
- $301-$500k- 5 month supply
- $501k- $800k -9 month supply
- $800k-$1MM- 10 month supply
- $1MM & Over – 15 month supply
While the price band absorption is subject to location, it offers a strong indication as to the importance of pricing.
Though supply is relatively strong in the high end Luxe market ($1MM & Over), this price band appears to be improving. As of September 1, 2015, Luxe market inventory was 355 available homes (priced above $1MM), while only 270 homes sold in the last 12 months.
The high end market is very sensitive to location with new construction in the Ridges and Macdonald Highlands commanding higher price per sq ft than other mature areas such as Tournament hills and Red Rock Country Club. The Ridges commanded the highest sale in years at 11MM last month.
Across all price bands, the median price of Las Vegas homes is $275k, which is still 15% lower than 2006, supporting continued gradual increased appreciation.
Notice of Defaults have also increased. We anticipate this resulting in more trustee sales, which may affect the average cost of homes sold. Additionally, Heloc’s and adjustable rate mortgages from 2005 and 2006 are still adjusting and, unfortunately, home equity has not rebounded enough to cover refinancing. The Brazill Team is diligently monitoring this situation, to Las Vegas homeowners.
Investment and Rental Real Estate
Similar to the residential real estate marketing, the Las Vegas rental real estate market continues to show signs of improvement.
Currently, there are currently 2,853 rentals on the market in the Las Vegas Valley. On average, 2,661 residences are rented each month, leaving an inventory of less than a 2 month supply of homes (1.07).
The time on market varies, according to price range. As of September 1, 2015, calculations were as follows, based on monthly rent:
- Up to $1000/mo – Less than .75 month supply
- $1100-$1200/mo – 1.02 month supply
- $1201-$1300/mo – .9 month supply
- $1301-$1400/mo – 1.09 month supply
- $1401- $1500/mo – 1.16 month supply
The market has also seen an increase in monthly rental rates.
Commercial Real Estate
Land prices throughout the Valley are still climbing! Though single family dirt remains relatively flat, averaging $375k to $400k per acre in Class A locations, multi-family land is still heavily in demand, with prices ranging from $460k to $600k per acre. Additionally, hard zoned, multi-family has been picked clean in the last 3 years and site selection has been a challenge.
Retail land is trading, when there are AAA credit leases in place, and single tenant development is increasing in good locations. Industrial land is also trading, with tenant driven development.
Office Development – Medical office development on the rise.
Office Market – The office market is still struggling with oversupply and a 18.5% vacancy. New construction near hospitals, in all areas of the valley, is allowing the medical office segment to pick up.
Multi-family – The multi-family segment is still on fire with demand increasing. As the Millennials market is opting to rent, rather than buy, as they want all of the amenities with less maintenance, builders are conceding. Merchant builders are also cashing in as prices on Class A properties are closing near $200k per door.
Cap rates are compressing to low 5’s and in some cases sub 5. There are thousands of units slated to come online in 2016 so we will be watching vacancy next year to see if we are approaching hyper supply.
Retail – The retail segment is bouncing back! The vacancy down to 9.7% and the asking rental rate has increased to 1.28 PSF NNN. The ICSC conference was finally packed this year with a lot of optimistic retailers signing several leases.
Industrial Real Estate
As with the other major segments of the Las Vegas real estate market, industrial real estate is also showing signs of improvement. Overall, industrial vacancy is down to 6.6%, year-over-year. Warehouse distribution is driving the increased demand, and pushing average rental rates to $0.57 PSF NNN.
The Las Vegas real estate market is at the top end of recovery, phasing into expansion in most segments, except office. Multi-family is phasing from expansion to hyper supply with all of the new projects in the pipeline.
For more information about the current state of the Las Vegas real estate market, or to discuss buying or selling your real estate, please contact Stacy or Antone Brazill via phone, 702-278-3886, or visit The Brazill Team online at www.thebrazillteam.com.
This Las Vegas Real Estate Market Report was compiled by Stacy and Antone Brazill, The Brazill Team. This report was developed using data from various industry reports as well as the Brazill’s vast knowledge of the local marketplace. Stacy and Antone Brazill have worked in the Las Vegas real estate market for decades and their agency is deeply experienced in all facets of traditional and investment real estate including Multi-family, Land, Office, Retail, Industrial, Residential and Development.
For questions regarding this report, or to obtain additional information about current Las Vegas real estate opportunities, please contact The Brazill Team at 702-278-3886 or visit their website, www.thebrazillteam.com.