Vegasagent’s Weblog

Las Vegas homes have risen dramatically in price over the past few years despite recent modest declines, and many families have been priced out of the market. Worse yet, many were the victims of predatory loans during the subprime bonanza and are struggling to make ends meet. The Las Vegas District Council of the Urban Land Institute has identified Las Vegas home affordability as one of its key target issues. According to the 2005-2009 HUD Consolidated Plan, in Clark County over 122,000 moderate and low-income households are estimated to be paying for housing they cannot really afford.

The National Association of Home Builders issued a report in the third quarter of 2006 indicating that only 14 percent of the homes in Clark County are affordable to households earning the median income (median household income approximately $53,000). Today, the median price of a resale home in Las Vegas is $278,000, more than five times the median income, while the median price of a Las Vegas new home is $326,750, or six times the median income. Traditional lending guidelines suggest buyers should qualify for home loans at about three times their annual incomes.

Two factors, among others, have played a major role in increased costs of housing:

1. There is a limited supply of Las Vegas land available for development in the valley. Rising land development and construction costs also contributed to the incredible increase in the land basis for home builders during 2003-2005.
2. Some of the strongest in-migration in the United States (6,000 - 7,000 per month) has been attracted to Southern Nevada by the robust job growth. This helped spur some of the strongest housing demand in the United States.

An anticipated labor shortage crunch due to hit in mid 2008 is expected to increase migration to the Valley and keep prices relatively strong. Decreases in 2007, while a bit helpful, have not come close to overcoming affordability issues for a majority of residents. This issue has long been crisis in California cities and it remains to be seen what local Las Vegas governments can do about it.

The Mercer is a five-acre, 113-unit residential mid-rise development on Tropicana, just west of the newly constructed 215 exit and south of Summerlin. Providing a secluded living option in Las Vegas that has an urban feel similar to that found in other major cities, the Mercer has a common area located within the center of the buildings, creating a friendly environment for people to gather and meet. The interweaving of the courtyard into the life of the complex’s community is not just another amenity, but a primary element in the life of the complex. The courtyard becomes the central gathering point for the community, with both private and public spaces.

Buyers can choose from one, two or three bedroom loft residences. They’re designed with flair, with upscale materials and features that maximize space and light. Unit amenities, which would be considered upgrades in most developments, include 10-foot ceilings, hardwood flooring throughout and centralized phone, Internet and cable-television controls. The kitchens have stainless-steel appliances, custom wood and glass cabinetry with a choice of finishes, and a selection of one-and-a-quarter-inch granite countertops. The bathrooms offer custom vanities, detailed stone countertops and frameless shower enclosures, as well as a selection of stone flooring.

More than half of the project is sold and the development is fully funded. Move-ins are anticipated in summer of 2008. For more information on the Mercer and Las Vegas real estate in general, call our office at 702-985-7654.

Multi family investors have become very interested lately in the Las Vegas investment market because supply - due to condo conversions and demolition for redevelopment and population growth - has not been keeping up with demand for the last three or four years, creating a ripe market. As a result, occupancies are running in the high 90% range and rents are rising at a 4% annual clip, a trend that is expected to sustain itself given subprime mortgage meltdown and the fact that while supply is catching up with current demand, it is not catching up with the backlog from previous years.

Condo conversions have taken 20,000 to 21,000 rental units off the market and redevelopment has taken another 6,000 to 7,000 units. Major local rental operations are running as high as 96 to 97% occupied.

Historical multi-family construction deliveries for the Vegas Valley average 7,000 to 8,000 units per year, with absorption tracking pretty closely. In 2005, however, new supply was negative by up to 4,000 units. And while 2006 didn’t see negative supply, it also didn’t keep up with demand and the same will be true for 2007, according to local market reports. The inability of many potential first time buyers to purchase homes due to the sharp decline in available mortgage funds, the huge projects being developed that are attracting construction workers to the area and the average price of Las Vegas homes, make the Vegas Valley a prime candidate for multi family development in the foreseeable future.