Las Vegas #2 best on Case-Shiller Index of 20 largest city metro

152 Replies

Recent article from the LA Times showcased nearby San Diego as the number #3 city for largest year over year price increase at 7.8%. See article link 

http://www.latimes.com/sd-fi-case-shiller-august-2...

Did you know that number #2 was? Yes, Las Vegas. Beating out large metro cities such as Los Angeles, New York, San Francisco, Houston, etc. 

I'm a numbers person, and this is huge for investors who bought Las Vegas in the past few years. The trend can only continue with the Raiders coming and building $1.9B stadium. I could see the sales picking up last Dec'16, when a normally slow month surprisingly increase in sales. This continued from January to now.

Read article and let me know your opinion, as Las Vegas still being good place to invest.

Terry

It might go higer in price, but hig metros have the advantage of higher and bigger buyer pools both primary residence and investment. Normally a 7k increase on a 100k property is easily wiped out during a dip vs 35k on a 500k property.

Unfortunately rents have not kept up with the increase. 

I think rentals are pretty lousy here compared to Midwest, but I'm glad I bought my primary here. 

we closed 2 weeks before the Raider close too. 

I like VEGAS. Popular retirement destination, one of a kind tourist destination, dry sunny weather. I like it long term compared to other western cities. 

The rental price rate return in Las Vegas is still better than San Francisco. 

Example: 

$975 / $140,000 = 0.7%

$3300 / $627,000 = 0.53%

I like Investing in Las Vegas much better than San Francisco.

Better cash flow and much more room to grow the price compare to San Francisco.

I’m bullish on Las Vegas market.

@Mary L.

I have a sister, who has home in Cupertino, and works for Google. I almost convinced her to buy a duplex in Spring Valley area of Las Vegas. The best case for investing in Las Vegas over bay area or southern california, is that a fourplex will cost anywhere from 800-1000k in higher priced areas, but in Las Vegas you can get (4) fourplexs for (1), for roughly the same amount of money. The multiplier of 16 versus 4, will get you better cashflow. 

My other forecast is that Las Vegas, will hit top of market in 2019-2020, just about the time the Raiders $1.9B finish their stadium.

Terry 

Beware small multi family in Las Vegas. They are all in very tough neighborhoods. Little to no small multi family has been built in Las Vegas since the 1980’s. Mostly C class properties in C and D class neighborhoods.

@Mary L.

That chart in article, by Foldvary, looks very similar to below, which was created by Eric Fernwood in Las Vegas. 

No one really knows when cycles turn down. However, I watch certain leading indicators like jobs reports, unemployment, median price of home in Las Vegas from GLVAR, Sales monthly, Sales year over year, and Case-Schiller index.

So far all indicators indicate Las Vegas is still on upward trend. I will keep my 4plexs until there is some indicators price heading down.

Terry

@Terry Lao, I agree with you. 

I am the same like you, have been watching leading indicators like jobs reports, unemployment, median price of home, Sales monthly, Sales year over year, and Case-Schiller index.

All reports show that Las Vegas housing market upward momentum is very strong, it won't hit top in the near future.  

In June 2006, Las Vegas available house was 20026 units, avalable condo was 4630 units.

Today, Sep 2017, Las Vegas available house is only 9662 units, avalable condo was 1657 units.

Today, Sep 2017, Las Vegas house without offer is only 4969 units, avalable condo without offer is only 680 units.

Las Vegas housing market and many other national city housing market inventory have been very tight.  It will take a while (not a short time) to change from seller market to buyer market.  

Due to lack of inventory, the price still have a lot of room to grow.  

@Mary L.

Great minds think alike. I'm in accounting and finance by profession, so it's all about analyzing numbers, forecasting, and actual. You can put all the data in graphs, like the Case Schiller index, and you end up with Las Vegas #3 for year over year sales. 

Your data is inventory from GLVAR, and it's indicating low inventory, and not increasing anytime soon. So when you have the supply factor limited in the DEMAND SUPPLY chain.............you get higher demand.

Below is what I eye each month from GLVAR, median home price. I will be look out in next few days for October 2017 numbers, and I expect to see 268k.

Another blog i look at is the below.

http://www.calculatedriskblog.com/2017/10/las-vega...

Terry

You really think raiders deal going to improve that much out there.... Vegas going to shun the raiders after this season, no demand for a losing team out that way. Also, construction of stadium maybe, but I thought i saw somewhere the stadium won't create that many jobs (off to google...)

@Matt K.

It is not necessarily the Raiders actually having an impact on the Las Vegas economy, and that will not be known until ramping up of stadium being built and will not finish until estimated 2019. It is the THOUGHT of Raiders moving to Las Vegas. I think it is the psychological effect of the move. I could see that happening in the home sales numbers and median price since Jan'17. Also, the NHL hockey team Golden Knights, and the recent announcement of WNBA team being bought by MGM and moving to Las Vegas. I can certainly see in distance future an NBA or MBL team coming to this market.

I am talking a great game to buy Las Vegas, but I also have a exit strategy. When median price reaches xxxx, I will sell. Wait for the downturn, and buy again on the low.

Terry

I'm torn on this... I feel like the benefit around a sports team is that it's a big part of the neighborhood so to speak. So if you get a stadium (like the SF Giants did) in a crappy area you can breathe new life into it. But.... I feel like this gets lost on Vegas because of the strip. I feel like people are going to Vegas to gamble the sports are an after thought or in addition to, not the primary focus. I almost feel like sports team in Vegas is another attraction like an new casino, not a part of the neighborhood if that makes sense.

@Matt K.

The sports team ( Raiders, Golden Knights, WNBA) will generate money, which will be done by jobs and money spent by fans. All that money will be infused into the local economy. The initial infusion of money will be each player from those teams looking probably buy expensive homes of $1M or higher, spend money in the local economy, The sustained infusion of money will come from ticket sales, hotel stays, merchandise sales, and even fans gambling in the casinos. 

Here's the kicker, it is money from outside sources. How else do you think that Nevada has no state tax?

Terry

Originally posted by @Terry Lao :

@Matt K.

The sports team ( Raiders, Golden Knights, WNBA) will generate money, which will be done by jobs and money spent by fans. All that money will be infused into the local economy. The initial infusion of money will be each player from those teams looking probably buy expensive homes of $1M or higher, spend money in the local economy, The sustained infusion of money will come from ticket sales, hotel stays, merchandise sales, and even fans gambling in the casinos. 

Here's the kicker, it is money from outside sources. How else do you think that Nevada has no state tax?

Terry

Terry, I hate to break it to you but an NFL team isn't going to significantly impact Las Vegas' economy. If this were true, everyone in Cleveland would be a millionaire. After all, it is home to the Browns.

To sustain housing growth, we need to see growth in wages and industry, which hasn't been seen. In fact, Las Vegas is still well below the national average for wages, yet housing prices have continued to rise. Additionally, the bulk of the stadium funding is coming from visitors to Las Vegas through room taxes. The fees in Las Vegas are quite high already, I'm not sure increasing them further to raise 750M+ will be beneficial for our market. If there is even a slight softening of the US Economy, we could see a slow down in tourism. At our heart, we're a tourist city which puts us at the mercy of the rest of the world's discretionary spending.

-Christopher

@Christopher Brainard

I know that the Raiders, Golden Knights, etc, will not have a long term significant impact on Las Vegas economy. Perhaps it is only a short term bump. The main driver is tourism. 

Whatever the reason................Las Vegas in #2 on Case-Schiller index. Anyone with interest in Las Vegas real estate should be proud of that.

Hence the title of my post.

Terry

I think future Vegas will be better than average nationally. It just has more growth ahead when compared. 

It also seems Vegas can add inventory pretty easily. I would not think Vegas on average can do as well as major coastal markets that have a much harder time adding inventory. To consider Vegas on average has as more already going for it as San Diego or LA, S.F. long term REI wise might have to partly ignore some basic supply and demand + jobs base fundamentals perhaps.

Still I would think especially for OOS Californians, Vegas should be on your short list. It is drivable 365, decent weather, tons of newer stock, low taxes, low insurance, very pro business, entertaining etc.  Individual results may vary:) 

@Terry Lao,

from the past history, new peak is higher than previous peak, if I have to pick a number on the median home price for my exit strategy, I would pick a number that is higher than the previous median home price peak in year 2006.

I bet the new peak price will be higher than the previous peak in year 2006.

@Mary L.

Based upon historical median home prices, LV highest was $341k in July 2006. Currently, Sep'17 is $265k per GLVAR. 

I'm not greedy, well, not very greedy. My price point to sell is when median price hits $300k, which is probably in next 2-3 years.

Terry

@Terry Lao

My exit strategy do not base on the median home price.  

I do not plan to predict when will the market turn down, nor will sell anything before it actually turn down.  

I will sell it right after the data show that the market is turning down.  

Therefore, I do not have a number when will I sell it.  

In fact, I'm still buying more now.  I currently have 2 pending contracts in escrow closing in December 2017.  

Have you ever gambled any game in casino when you were in Vegas?

Like dice, black-jack, or baccrarat.  

When you are ahead on a winning streak already, don't leave the table too early, just keep betting it until you lose one hand, then grab the chips and leave the table after you lose that one hand. 

On a Blackjack, dice, or baccrarat game, 

(winning hand #1), (winning hand #2), (winning hand #3), (winning hand #4) ... (winning hand #10) , (losing hand - data show price is starting to fall), grab the chip (sell the house) and leave the table now...

If you leave the table after winning the first 5 hands, then you may miss the profit from the (winning hand #6) to (winning hand #9).

Its all about tourism which creates jobs which creates demand Football stadium 7 billion casinos Wynn building huge megapark throw in some very cheap housing low interest rates, low  inventory  no state tax ,and Californians cash rich from home equity and you have the perfect brew  It is cheaper to buy a 200-300 k home then to pay rent   and of course the influx of retirees Vegas is on fire !!!!

Yes, a decent 2300 sq ft house in a decent area in bay area is asking for $1.55 million, with a negative cash flow if it is a rental property.  

To us, Californian, the condo in Las Vegas are considered very good price to us.  Even though paying full price or over listing price, is considered relatively cheap compare to the houses and condo in Bay Area California.  

In addition, the condo in Las Vegas has positive cash flow, which is a big plus. 

Even though during the downturn, I don't need to rush selling it because I have positive cash flow rental income. 

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