Las Vegas Homes and Real Estate News
Conversions keep LV apartment market tight Feb. 25, 2006 Condominiums and townhomes now comprise more than half the multifamily housing starts nationally, a trend that's going to drive apartment rents and occupancy rates in hot markets such as Las Vegas, a research analyst said Wednesday. U.S. apartment occupancy is already close to the long-term norm at about 97 percent, rebounding from a low of 93 percent in 2003 and 2004, said Greg Willett, vice president of research and analysis for Carrollton, Texas-based M/PF YieldStar. Occupancy will remain tight in Las Vegas as condo conversions shrink the existing apartment inventory, which dropped from more than 160,000 in early 2004 to about 154,000 at the end of 2005, according to YieldStar. "Condos have certainly gone nuts in this market," Willett said during a presentation sponsored by the Southern Nevada Multifamily Housing Association. "Las Vegas joins some of the Florida markets as a poster child for that happening." That's going to slow a little this year, he predicted. Condo conversions finished strong in 2005 with more than 3,000 sales in Las Vegas during each of the last two quarters. However, the best opportunities for apartment conversions have already been seized. Las Vegas apartment owners enjoyed rent growth above 8 percent in the first two quarters of 2005, easing off to 6 percent at year's end. Those percentages are going to be tough to maintain, said Trey Verbick, director of economics and research for YieldStar. "We think you've peaked there," he said. "Rent growth should slow down to the 3 percent to 4 percent range." John Selindh, national director of community marketing for Camden apartments, said he's not so sure the Las Vegas market is tapped out on rent increases. "We felt we were leaving money on the table in some markets," he said. "We were not aggressive enough in raising rents. We were waiting for the guy down the road to raise his rents so we could raise ours. We've become more aggressive in taking the lead on raising rents." Camden targeted renters who were being pushed out by condo conversions with direct-mail advertising for its Las Vegas properties. Selindh said he's seeing more people looking for apartments to rent, even during the usually slow winter season. Willett said occupancy is strong in every Las Vegas neighborhood, from a low of 95.3 percent in North Las Vegas and Sunset Manor to a high of 97.6 percent in the southwest. The lowest rent growth in 2005 was 5.4 percent in Summerlin and western Las Vegas. Newer properties in southern Las Vegas Valley had the highest growth at 8.1 percent. Availability of rental units will be greater than the minimal ongoing construction would suggest because of investment properties that will be offered for rent by individuals. Willett labeled this market as "rondos," or renters of condos. The bottom line for Las Vegas is economic growth should remain strong, stimulating considerable demand for housing, Verbick said. Las Vegas led the nation with 7 percent job growth in 2005, well ahead of Orlando, Fla., and Phoenix, which were around 4 percent. "We believe Las Vegas' economy will hold its own in 2006, despite what the East Coast forecasters think," Verbick said. Jeremy Aguero, principal of Applied Analysis in Las Vegas, said the No. 1 reason for locating to Las Vegas has been job growth, followed by the low cost of living. However, with wages not keeping pace with housing price increases, the city is losing some of its attraction, he said. Las Vegas has already experienced a slowdown in new residents moving to town. Meanwhile, more people who've gained equity in their homes are "cashing out" of Las Vegas, Aguero said. He gets his best indication of out-migration by comparing the number of students enrolled in the Clark County School District last year who are not there this year with the number of students who were not in the district last year and are there this year. Those numbers are converging, Aguero said. Phoenix is catching a lot of the outflow from Las Vegas, he said, along with Austin, Texas; Boise, Idaho; and inland areas of California such as Bakersfield and Victorville. If you are planning to relocate in the Las Vegas area, contact us for a prompt response to any questions you have about the Las Vegas real estate market. We invite you to visit our website to view updated daily listings of Las Vegas homes at Free Las Vegas Homes MLS Search |
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