Found a property in LV but worried about peak

Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes

This house barely cash flows. I worry about it being near the peak especially in LV due to the looming recession. With 85k involved in closing, it isn't an ideal time to buy if the market turns against me and I can buy a house with more cash flow in the greater Seattle area even now, where we aren't a service economy like LV.

Buy or wait?

1 Reply

151 views

Most Popular Reply

Eric FernwoodBusiness Member

Realtor · Las Vegas, NV · Member since 2014 · 993 posts · 1k+ votes

Hello @Jack B.

We just conducted our Q1 Las Vegas Investor Update and below are our findings.

Market Update

Note that the following data comes from the Las Vegas MLS and is only for properties that conform to our target tenant pool.

Median $/SqFt for Single Family Homes - The $/SqFt continues to rise. We expect the rate to increase towards the end of the year, likely driven by Californians looking for a more cost effective place to live. Already 30% of all sales today are to Californians. Also, we are still 20% below the peak prices of 2006. If you take inflation into account we are about 35% below peak 2006 prices.

Months of Supply - The months supply of properties has risen since late 2018, but still below 3 months where 6 months is considered a balanced market. The effect of the increased supply is that we are seeing increasing ROI and facing less competition from buyers.

Median Days on Market - The median days on market has risen from 12 to about 14 days. Not a significant change. There is still high demand for the type, configuration and price range we target.

Available Conforming Rental Units by Month - There has been steady decline in available rental units over time. This is what is driving up rents (6.6% average increase in 2018) in the property profile we target.

In summary, the real estate market is very strong. Demand for rental properties is outpacing supply resulting in rising rents. We expect demand to increase during the rest of 2019.

Other Information Worth Noting

Resident Population Growth - 2017 to 2018

Nevada ranks #1 in the US for population growth.

Source: U.S. Census Bureau

Driver's License Surrenders to Nevada by State for 2018

This shows which states people are moving from.

Source: UNLV CBER

Fastest Job Growth in the Nation

Source: U.S. Bureau of Labor Statistics (December 2018 vs. December 2017)

Fastest Personal Income Growth

This shows that the jobs being created are not low end jobs. They pay well and the wages are increasing with the current jobs.

Source: U.S. Bureau of Economic Analysis (Q2 2018 vs. Q3 2018)

Fastest House Price Appreciation

Source: Federal Housing Finance Agency (Q3 2017 vs. Q3 2018)

New Home Median Price - Median new home price is $410,000 which is well above the sweet spot for renters. The price of new homes is largely driven by the high cost of land, which is in short supply. Resales will still be the pool for investment properties and will not be diluted by new homes.

Major Projects

Major projects are big drivers of the future economy for Las Vegas. In the 2000 to 2010 era, there was a push to add hotel rooms. The problem was that it was effectively a zero sum game since there were no new attractions added to draw more visitors. This has completely changed in the last few years in that new attractions are being added instead of simply hotel rooms. The nature of Las Vegas has changed too. Until only a few years ago Las Vegas was just "Sin City", a great vacation destination. Today it has changed into a great place to live with endless entertainment, affordable housing and low cost of living. Below are some of the major projects currently under construction (not just planning):

Sphere Las Vegas - $75M
Resorts World Las Vegas - $7B
Drew Las Vegas - $3B
Raider's Stadium - $2B
Las Vegas convention center expansion - $750M
Google - $600M data center
Union Village - $1.2B
Project Neon - $900M
Palms Casino Resort Renovation - $690M
Caesars Forum Conference Center - $375M

There are many other projects underway but the above are the largest we know of. Any one of the above projects would be huge for a 2.2M population city. These projects will create a large number of additional well paying jobs which will attract even more people to Las Vegas.

Land Shortage

Not many people realize that Las Vegas is an island surrounded by federal land. Approximately 84% of all land in Nevada and 87% of Clark County (in which Las Vegas is located) is owned by the federal government. See the map below for what has happened between 1984 and 2016. Note that 2017 and 2018 were huge growth years for Las Vegas so even less land is available now.

Since there is limited room for expansion, Las Vegas will not have urban sprawl, the only growth path is redevelopment. This is a huge advantage for investors. In most cities, urban sprawl leaves formerly desirable areas "behind" and they tend to decline with increased crime and falling rents and prices. Not the case for Las Vegas:

Class A properties will stay class A in the future.
Due to the lack of expansion room, increased demand created by people and companies migrating to Las Vegas will almost guarantee price and rent increases.

Summary

The current market is strong and we expect it to get stronger as 2019 progresses. A significant number of Californians are already moving to Las Vegas and the 2018 Tax Act will drive more people to look for a more affordable place to live. The lack of room for expansion almost guarantees prices will continue to rise as more and more people bid for the limited number of available properties. Las Vegas remains an outstanding investment location for the foreseeable future.

[email protected]702-358-8884

FERNWOOD Team, KW VIP Realty520 Reviews

Website View Page

34 Reply

See this reply in the discussion

103 Replies

Jump to latestLatest

Sort by

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
seems like you Answered your own question.. your only in trouble if U choose to sell in the trough.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
5 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
7y
I am still open to investing in Las Vegas. So long as the property is low on maintenance and in a good area. I would not buy if I planned to exit the Vegas market in the near future. But for a long term investment I am all for it.
4 Reply
Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 993 posts · 1k+ votes
7y
Hello @Jack B.
We just conducted our Q1 Las Vegas Investor Update and below are our findings.
Market Update
Note that the following data comes from the Las Vegas MLS and is only for properties that conform to our target tenant pool.
Median $/SqFt for Single Family Homes - The $/SqFt continues to rise. We expect the rate to increase towards the end of the year, likely driven by Californians looking for a more cost effective place to live. Already 30% of all sales today are to Californians. Also, we are still 20% below the peak prices of 2006. If you take inflation into account we are about 35% below peak 2006 prices.
Months of Supply - The months supply of properties has risen since late 2018, but still below 3 months where 6 months is considered a balanced market. The effect of the increased supply is that we are seeing increasing ROI and facing less competition from buyers.
Median Days on Market - The median days on market has risen from 12 to about 14 days. Not a significant change. There is still high demand for the type, configuration and price range we target.
Available Conforming Rental Units by Month - There has been steady decline in available rental units over time. This is what is driving up rents (6.6% average increase in 2018) in the property profile we target.
In summary, the real estate market is very strong. Demand for rental properties is outpacing supply resulting in rising rents. We expect demand to increase during the rest of 2019.
Other Information Worth Noting
Resident Population Growth - 2017 to 2018
Nevada ranks #1 in the US for population growth.
Source: U.S. Census Bureau
Driver's License Surrenders to Nevada by State for 2018
This shows which states people are moving from.
Source: UNLV CBER
Fastest Job Growth in the Nation
Source: U.S. Bureau of Labor Statistics (December 2018 vs. December 2017)
Fastest Personal Income Growth
This shows that the jobs being created are not low end jobs. They pay well and the wages are increasing with the current jobs.
Source: U.S. Bureau of Economic Analysis (Q2 2018 vs. Q3 2018)
Fastest House Price Appreciation
Source: Federal Housing Finance Agency (Q3 2017 vs. Q3 2018)
New Home Median Price - Median new home price is $410,000 which is well above the sweet spot for renters. The price of new homes is largely driven by the high cost of land, which is in short supply. Resales will still be the pool for investment properties and will not be diluted by new homes.
Major Projects
Major projects are big drivers of the future economy for Las Vegas. In the 2000 to 2010 era, there was a push to add hotel rooms. The problem was that it was effectively a zero sum game since there were no new attractions added to draw more visitors. This has completely changed in the last few years in that new attractions are being added instead of simply hotel rooms. The nature of Las Vegas has changed too. Until only a few years ago Las Vegas was just "Sin City", a great vacation destination. Today it has changed into a great place to live with endless entertainment, affordable housing and low cost of living. Below are some of the major projects currently under construction (not just planning):
- Sphere Las Vegas - $75M
- Resorts World Las Vegas - $7B
- Drew Las Vegas - $3B
- Raider's Stadium - $2B
- Las Vegas convention center expansion - $750M
- Google - $600M data center
- Union Village - $1.2B
- Project Neon - $900M
- Palms Casino Resort Renovation - $690M
- Caesars Forum Conference Center - $375M
There are many other projects underway but the above are the largest we know of. Any one of the above projects would be huge for a 2.2M population city. These projects will create a large number of additional well paying jobs which will attract even more people to Las Vegas.
Land Shortage
Not many people realize that Las Vegas is an island surrounded by federal land. Approximately 84% of all land in Nevada and 87% of Clark County (in which Las Vegas is located) is owned by the federal government. See the map below for what has happened between 1984 and 2016. Note that 2017 and 2018 were huge growth years for Las Vegas so even less land is available now.
Since there is limited room for expansion, Las Vegas will not have urban sprawl, the only growth path is redevelopment. This is a huge advantage for investors. In most cities, urban sprawl leaves formerly desirable areas "behind" and they tend to decline with increased crime and falling rents and prices. Not the case for Las Vegas:
- Class A properties will stay class A in the future.
- Due to the lack of expansion room, increased demand created by people and companies migrating to Las Vegas will almost guarantee price and rent increases.
Summary
The current market is strong and we expect it to get stronger as 2019 progresses. A significant number of Californians are already moving to Las Vegas and the 2018 Tax Act will drive more people to look for a more affordable place to live. The lack of room for expansion almost guarantees prices will continue to rise as more and more people bid for the limited number of available properties. Las Vegas remains an outstanding investment location for the foreseeable future.
[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
Website View Page
34 Reply
Anthony Carbajal
Specialist · Las Vegas, NV · Member since 2018 · 33 posts · 19 votes
7y
Interesting!
1 Reply
Casey Powers
Las Vegas, NV · Member since 2018 · 403 posts · 474 votes
7y
If SB256 passes, rent prices will have to increase even more than they already have been. Ha
1 Reply
James Call
Specialist · Denton, TX · Member since 2018 · 126 posts · 84 votes
7y
@Eric Fernwood,
When are you going to start selling property in Southern Utah (St. George Area) where I live?
I love that information. As an investor, that is fantastic data.
When we have been buying properties here, we don't get that kind of info.
My theory is that if I am the most knowledgeable person in a real estate transaction, something is pretty messed up! :)

Thanks for sharing that info.
-James
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Eric Fernwood:
Hello @Jack B.
We just conducted our Q1 Las Vegas Investor Update and below are our findings.
Market Update
Note that the following data comes from the Las Vegas MLS and is only for properties that conform to our target tenant pool.
Median $/SqFt for Single Family Homes - The $/SqFt continues to rise. We expect the rate to increase towards the end of the year, likely driven by Californians looking for a more cost effective place to live. Already 30% of all sales today are to Californians. Also, we are still 20% below the peak prices of 2006. If you take inflation into account we are about 35% below peak 2006 prices.
Months of Supply - The months supply of properties has risen since late 2018, but still below 3 months where 6 months is considered a balanced market. The effect of the increased supply is that we are seeing increasing ROI and facing less competition from buyers.
Median Days on Market - The median days on market has risen from 12 to about 14 days. Not a significant change. There is still high demand for the type, configuration and price range we target.
Available Conforming Rental Units by Month - There has been steady decline in available rental units over time. This is what is driving up rents (6.6% average increase in 2018) in the property profile we target.
In summary, the real estate market is very strong. Demand for rental properties is outpacing supply resulting in rising rents. We expect demand to increase during the rest of 2019.
Other Information Worth Noting
Resident Population Growth - 2017 to 2018
Nevada ranks #1 in the US for population growth.
Source: U.S. Census Bureau
Driver's License Surrenders to Nevada by State for 2018
This shows which states people are moving from.
Source: UNLV CBER
Fastest Job Growth in the Nation
Source: U.S. Bureau of Labor Statistics (December 2018 vs. December 2017)
Fastest Personal Income Growth
This shows that the jobs being created are not low end jobs. They pay well and the wages are increasing with the current jobs.
Source: U.S. Bureau of Economic Analysis (Q2 2018 vs. Q3 2018)
Fastest House Price Appreciation
Source: Federal Housing Finance Agency (Q3 2017 vs. Q3 2018)
New Home Median Price - Median new home price is $410,000 which is well above the sweet spot for renters. The price of new homes is largely driven by the high cost of land, which is in short supply. Resales will still be the pool for investment properties and will not be diluted by new homes.
Major Projects
Major projects are big drivers of the future economy for Las Vegas. In the 2000 to 2010 era, there was a push to add hotel rooms. The problem was that it was effectively a zero sum game since there were no new attractions added to draw more visitors. This has completely changed in the last few years in that new attractions are being added instead of simply hotel rooms. The nature of Las Vegas has changed too. Until only a few years ago Las Vegas was just "Sin City", a great vacation destination. Today it has changed into a great place to live with endless entertainment, affordable housing and low cost of living. Below are some of the major projects currently under construction (not just planning):

Sphere Las Vegas - $75M
Resorts World Las Vegas - $7B
Drew Las Vegas - $3B
Raider's Stadium - $2B
Las Vegas convention center expansion - $750M
Google - $600M data center
Union Village - $1.2B
Project Neon - $900M
Palms Casino Resort Renovation - $690M
Caesars Forum Conference Center - $375M
There are many other projects underway but the above are the largest we know of. Any one of the above projects would be huge for a 2.2M population city. These projects will create a large number of additional well paying jobs which will attract even more people to Las Vegas.
Land Shortage
Not many people realize that Las Vegas is an island surrounded by federal land. Approximately 84% of all land in Nevada and 87% of Clark County (in which Las Vegas is located) is owned by the federal government. See the map below for what has happened between 1984 and 2016. Note that 2017 and 2018 were huge growth years for Las Vegas so even less land is available now.
Since there is limited room for expansion, Las Vegas will not have urban sprawl, the only growth path is redevelopment. This is a huge advantage for investors. In most cities, urban sprawl leaves formerly desirable areas "behind" and they tend to decline with increased crime and falling rents and prices. Not the case for Las Vegas:

Class A properties will stay class A in the future.
Due to the lack of expansion room, increased demand created by people and companies migrating to Las Vegas will almost guarantee price and rent increases.
Summary
The current market is strong and we expect it to get stronger as 2019 progresses. A significant number of Californians are already moving to Las Vegas and the 2018 Tax Act will drive more people to look for a more affordable place to live. The lack of room for expansion almost guarantees prices will continue to rise as more and more people bid for the limited number of available properties. Las Vegas remains an outstanding investment location for the foreseeable future.
I don't know how you get all this cool stuff on BP but I for one appreciate it.. I especially like the google earth showing the infill.. I am looking at infill lots currently.. we have crushed it on infill in Portland and Charleston Vegas is poised.. Portland has the Urban growth boundry that restricts supply and Charleston is like SF surrounded by water on three sides.. supply Demand create great markets.
and there will be no shortage of CA moving in.
look at this article.
https://www.theatlantic.com/technology/archive/201...
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
5 Reply
Andres I. Cepeda
Wholesaler · Temple, TX · Member since 2017 · 44 posts · 17 votes
7y
@Eric Fernwood thank you for the incredible information!
0 Reply
Robert StrohmeyerPro Member
Member since 2019 · 8 posts · 2 votes
7y
@Eric Fernwood beat me to it. California is the 6th biggest economy in the world. People are getting fed up with the costs involved with staying in California. With the large projects we have going, the land constriction starting to play a role, and influx of California's. The Las Vegas market will hold strong for the foreseeable future.
0 Reply
Daniel Kong
Rental Property Investor · Honolulu, HI · Member since 2018 · 335 posts · 251 votes
7y
Really cool stuff @Eric Fernwood !! Would love to see an analysis like that in my market!!
0 Reply
Jonathan W.
Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
7y
@Jack B. During 07 or 08 in the recession I lost over half my stock value. In the end of a few months after that I was up 7 percent from the original.
Whether your buying now or before the so called recession you are predicting, you should be looking at a place for cash flow and t hold long term.
Last recession interest rates were high so you’d better have cash ready if your waiting for a recession
0 Reply
Austin M Margarida
Flipper/Rehabber · Jacksonville, FL · Member since 2018 · 56 posts · 38 votes
7y
@Eric Fernwood While these numbers all look great, most are only statistics from when the market has been scorching hot...I guess as a new investor I am just worried if something (out of our control) flips, where will Vegas then be, compared to the rest of the market? What do you think redevelopment in Vegas would look like? What would the starting point be for a project like that?
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y
If it barely cash flows, and you're acknowledging we're at a peak, where are you planning for your profit to come from? From the barely cash flowing? If we are peak, then appreciation could be minimal. Those are the two primary sources of income on a rental property.
1 Reply
Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 993 posts · 1k+ votes
7y
Hello @Austin M Margarida,
The statistics shown are the latest available. The data from the MLS was through 3/2019. So, not certain about your statement that the data is not current. We did include historical data to show market trends.
I inferred from your post, “What happens in Las Vegas when the next market crash occurs?” A good question but not an easy answer. I doubt that we will have a duplicate crash as we had in 2008, it will be something different. Maybe something we never imagined. So, let’s agree that at some time in the future a national crash will occur and all markets will be hurt, some more than the others. I believe it is impossible for an individual to prevent a national event from impacting the market value of a property. However, it is very possible to protect the income stream from the property. This is accomplished by targeting the right tenant pool.
You want to target a tenant pool with the highest percentage of what I call “good” tenants. I define a good tenant as someone who -
- Has stable employment in a market segment that is very likely to be stable or improve over time.
- Pays all the rent on schedule.
- Takes care of the property
- Does not cause problems with neighbors
- Does not engage in illegal activities while on the property
- Stays for many years
I can go into how to select such a target tenant pool if you are interested, plus how to select properties that target this tenant pool. We did and do target such a tenant pool in Las Vegas. So how did our client’s properties perform during and after the 2008 crash?
In 2014 a potential client (who has since purchased multiple properties through us) asked how our client’s properties performed during the crash. Being engineers we like to provide hard data as opposed to flowery statements. We choose to base our answer on one of our target rental areas, which is shown in the map below. The property profile we selected is: 3 bedrooms 2 car garage, 1,200 to 1,500 SqFt.
So how did these properties perform in terms of market value? In a word, badly. Below is a chart showing the monthly average $/SqFt sale price between 2008 and 2014 for the conforming properties in the selected area above.
During the crash conforming properties in the selected area were selling for an average price of approximately $120/SqFt. By 2012 the average price fell to approximately $70/SqFt.
Next let’s look at the rent these properties generated during this time period. Below is a chart showing $/SqFt rental rates for conforming properties in the same area for the same time period as the above.
As the above shows, rental rates were virtually unaffected by the 2008 real estate market crash. This means that if you purchased an investment property in late 2007 that targeted the right tenant pool and the property was generating an 8% return in 2007, it would still be generating an 8% return during the crash and afterwards, even if the market value of the property went down over 40%.
My point is that no matter where you buy, if a crash occurs you cannot protect the market value of a property. You can protect the income stream from rental properties by selecting the right tenant pool.
Hope I addressed your concerns. If not, either contact me or leave another message.
[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
Website View Page
17 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Eric Fernwood:
Hello @Jack B.
We just conducted our Q1 Las Vegas Investor Update and below are our findings.
Market Update
Note that the following data comes from the Las Vegas MLS and is only for properties that conform to our target tenant pool.
Median $/SqFt for Single Family Homes - The $/SqFt continues to rise. We expect the rate to increase towards the end of the year, likely driven by Californians looking for a more cost effective place to live. Already 30% of all sales today are to Californians. Also, we are still 20% below the peak prices of 2006. If you take inflation into account we are about 35% below peak 2006 prices.
Months of Supply - The months supply of properties has risen since late 2018, but still below 3 months where 6 months is considered a balanced market. The effect of the increased supply is that we are seeing increasing ROI and facing less competition from buyers.
Median Days on Market - The median days on market has risen from 12 to about 14 days. Not a significant change. There is still high demand for the type, configuration and price range we target.
Available Conforming Rental Units by Month - There has been steady decline in available rental units over time. This is what is driving up rents (6.6% average increase in 2018) in the property profile we target.
In summary, the real estate market is very strong. Demand for rental properties is outpacing supply resulting in rising rents. We expect demand to increase during the rest of 2019.
Other Information Worth Noting
Resident Population Growth - 2017 to 2018
Nevada ranks #1 in the US for population growth.
Source: U.S. Census Bureau
Driver's License Surrenders to Nevada by State for 2018
This shows which states people are moving from.
Source: UNLV CBER
Fastest Job Growth in the Nation
Source: U.S. Bureau of Labor Statistics (December 2018 vs. December 2017)
Fastest Personal Income Growth
This shows that the jobs being created are not low end jobs. They pay well and the wages are increasing with the current jobs.
Source: U.S. Bureau of Economic Analysis (Q2 2018 vs. Q3 2018)
Fastest House Price Appreciation
Source: Federal Housing Finance Agency (Q3 2017 vs. Q3 2018)
New Home Median Price - Median new home price is $410,000 which is well above the sweet spot for renters. The price of new homes is largely driven by the high cost of land, which is in short supply. Resales will still be the pool for investment properties and will not be diluted by new homes.
Major Projects
Major projects are big drivers of the future economy for Las Vegas. In the 2000 to 2010 era, there was a push to add hotel rooms. The problem was that it was effectively a zero sum game since there were no new attractions added to draw more visitors. This has completely changed in the last few years in that new attractions are being added instead of simply hotel rooms. The nature of Las Vegas has changed too. Until only a few years ago Las Vegas was just "Sin City", a great vacation destination. Today it has changed into a great place to live with endless entertainment, affordable housing and low cost of living. Below are some of the major projects currently under construction (not just planning):

Sphere Las Vegas - $75M
Resorts World Las Vegas - $7B
Drew Las Vegas - $3B
Raider's Stadium - $2B
Las Vegas convention center expansion - $750M
Google - $600M data center
Union Village - $1.2B
Project Neon - $900M
Palms Casino Resort Renovation - $690M
Caesars Forum Conference Center - $375M
There are many other projects underway but the above are the largest we know of. Any one of the above projects would be huge for a 2.2M population city. These projects will create a large number of additional well paying jobs which will attract even more people to Las Vegas.
Land Shortage
Not many people realize that Las Vegas is an island surrounded by federal land. Approximately 84% of all land in Nevada and 87% of Clark County (in which Las Vegas is located) is owned by the federal government. See the map below for what has happened between 1984 and 2016. Note that 2017 and 2018 were huge growth years for Las Vegas so even less land is available now.
Since there is limited room for expansion, Las Vegas will not have urban sprawl, the only growth path is redevelopment. This is a huge advantage for investors. In most cities, urban sprawl leaves formerly desirable areas "behind" and they tend to decline with increased crime and falling rents and prices. Not the case for Las Vegas:

Class A properties will stay class A in the future.
Due to the lack of expansion room, increased demand created by people and companies migrating to Las Vegas will almost guarantee price and rent increases.
Summary
The current market is strong and we expect it to get stronger as 2019 progresses. A significant number of Californians are already moving to Las Vegas and the 2018 Tax Act will drive more people to look for a more affordable place to live. The lack of room for expansion almost guarantees prices will continue to rise as more and more people bid for the limited number of available properties. Las Vegas remains an outstanding investment location for the foreseeable future.
i love your posts.. Just the facts Mam :) well done..
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
Bob Malecki
Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
7y
If anyone has interest or knows anyone looking in LV, we just foreclosed on a 3/1 SFR. I just posted it forsale in the BP marketplace:

https://www.biggerpockets.com/real-estate-listings/las-vegas-reo
0 Reply
Brad D.
San Diego, CA · Member since 2011 · 85 posts · 67 votes
7y
@Jack B. if you're still deciding, I would say to wait. @Eric Fernwood I agree it probably won't be 2008 all over again, but it will definitely be significant. And it looks to me like Vegas will be the tip of the spear, from movoto trends:
https://www.movoto.com/las-veg...
Inventory is up YOY 70%, price is down 10%, days on market up a bit. It's worse than Seattle, Dallas or Irvine, other cities people are expecting to tank hard first. But the good news should be that LV should have the buying opportunities first as well.
Also, an interesting aspect to this is the the phoenix metro seems to be still doing well; I had thought (could be wrong) that LV and PHX followed very similar downward trajectory last time?
1 Reply
Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
Yeah. Today’s paper reiterated that Las Vegas lead the country in price appreciation again in July, although it was only 4.5% higher year over year. That’s 18 months in a row and means the house you were looking at for $285k is $300k now. Existing sales up 10% (4500 vs 4100). Days on market the 2nd lowest all year (19, the record was 17 in June)
Wait another couple years for a 10 % correction back to today’s prices.
1 Reply
Brad Bellstedt
Real Estate Agent · Las Vegas, NV · Member since 2017 · 279 posts · 133 votes
7y
@Eric Fernwood
Is it possible to get on the list of recipients for that information?
0 Reply
Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 993 posts · 1k+ votes
7y
Hello @Brad D.,

We see a completely different picture of Las Vegas than what I believe you are stating. Yes, the Movoto chart shows that the YOY inventory snapshot is up 70%. However, a year ago there was just over two months of inventory. Today there is about 3 months of inventory. Six months inventory is considered balanced. So there is still a shortage of homes for sale.

Below are updated charts I pulled from the MLS on 08/08/2019 for the period 2016 to the present, 3 bedrooms, single family, priced between $250,000 and $400,000, 2000SF to 2500SF, for the metro area.

Months of Supply

Note, 6 months of supply is considered a balanced market. We are currently at around 3 months.

Median $/SF

As you can see below, there has been no decrease in price/SF.

Median Sales Price

Based on the MLS data -
- The demand is still strong for single family homes. We are still in a seller’s market. Well priced good properties are still selling in a matter of days. Note that I am not considering million dollar or $50,000 dollar homes because we only deal in profitable investment properties.
- Prices continue to rise in 2019 but at reasonable rates. There has been no decrease in prices.
Market Update

Below are charts from SalesTraq.

There is currently $24B in projects under construction in Las Vegas. Remember that this is a city of about 2.2M. These projects will create a huge number of new, well paying jobs. These people will need housing and will continue to drive up rents and prices. This is prime time to enter the Las Vegas market.

Las Vegas still has reasonable home prices.

Summary

The current market is strong and we do not see any signs or reasons for a significant downturn in the foreseeable future. The continuing job growth, rising per capita income and population growth will increase the demand. Now is a prime time to invest in Las Vegas market.
[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
Website View Page
1 Reply
Account Closed
Member since 2018 · 214 posts · 175 votes
7y
However, from Core Logic Data, Las Vegas housing price growth from Sep 2018 to July 2019 is only 1.7%. House price has been stagnant last few months. If you wait for 4 more months, Core Logic Data may show a more clear picture that Las Vegas 12-months house price growth from Sep 2018 to Sep 2019 is closed to zero. Using the same deceleration trend, wait for another few more months, the probability that Core Logic Data from March 2019 to March 2020 year-over-year growth hit a negative number will be high. In fact, I have seen more and more seller reduce the price several times, and are still sitting in the market without offer... I can sense that Las Vegas headwind is changing gradually...
1 Reply
Account Closed
Member since 2018 · 214 posts · 175 votes
7y
We are at the top of the housing cycle. How many people disagree on it?
I truly sense that we are at the top of the cycle already...
1 Reply
Brad D.
San Diego, CA · Member since 2011 · 85 posts · 67 votes
7y
I would be careful taking direction from your local paper and your local realtor association GLVAR. Upton Sinclair said, "It's difficult to get a man to understand something when his job depends on him not understanding it." In any case, the local sources, zillow, redfin, movoto, etc all need housing transactions taking place to exist. So you are never going to hear any of them say, "Don't buy now."

The difference between the national platforms and your local sources is that you can use the national platforms to get a better picture of how your local market is performing relative to other markets. However, it should be noted the local sources will always be the best source of deep dive info. It's similar to how the media operates in sports. If you want detailed info on the team at every position, what's going on, the local media is your best source for facts and figures. If you want a realistic assessment of how good they are, check national sources.

All that said, the Eli Segall article does open with "the market has largely downshifted from a year ago' and the headline quotes the GLVAR president calling the market the 'most stable in 20 years.' That's like overhearing your girlfriend tell her friends the best thing about you is how reliable you are; you pretty much know it's over.
1 Reply
Chris Anderson
Rental Property Investor · Las Vegas, NV · Member since 2018 · 17 posts · 21 votes
7y
I don't care how unpopular my answer is, but if people don't study economic cycles, they won't understand that the catalyst for each recession (depression) has never been the same. Last one was real estate. The next will not be the same, BUT real estate will be majorly affected. People want to say, "well, the lending is stricter." I am here to say that all it takes for someone to lose their house is to not be able to pay for it any longer (loss of job for instance). You have numerous people who have that problem, you have a real estate affected issue. It is naive to base one's decision of the real estate market on the variables involved in real estate. And for the Las Vegas locals....global economics could not give 2 cents about the Raiders coming to Las Vegas. Study the things that are going to be major issues:
Pensions are underfunded and are now being run by the bankers who crashed the housing market. Calpers has to get at least a 7% return in the stock market just to be able to make due on their promises.
FYI: Robert Kiyosaki is sounding the alarm regarding the Pensions
Corporate buy backs of their own shares (when they were bailed out from the last crash, instead of putting that money into manufacturing, they bought their own company shares to increase the value. (which are overvalued and fake)
Government Debt.
Inverted Yield Curve - Short term lending makes more return than long term
Bond market is horrible and investment grade "junk" bonds have increased exponentially. Bonds that have been downgraded to junk I should say.
Corporate Debt - Have to borrow money just to pay back the interest on money borrowed. Interest rates were so low and money so cheap they went out and racked up purchasing power in the form of low interest debt.
Consumer Debt (3 times larger since the last crash)
Student Debt (largest in history)
Car loan industry (starting to experience substantial deliquencies) and because car companies are now in the finance game, what happens when people cannot pay in droves because the lending is not stricter like the housing lending is now.
Retail stores closing in mass
The devaluation of the dollar will be a huge one.
We are now a global economy and when one thing gets affected, everything well.
As investors, we all need to be prudent to watching the importance of our money, especially when it is your personal money and not borrowed.
The question is more of, how long can the government keep printing money and propping up the economy to save it? I think there is definitely more money to be made in this economy, especially because there will be a melt up.....BUT I think one of the best things investors can do right now is get your purchasing power in order for when that time comes.
FYI, the people that spoke in front of Congress and were laughed at by Congress regarding the housing crash for the last crash are sounding the alarm again for the new issues
only this time they are claiming 2008 will look like child's play compared to this one.

4 Reply
John P.
Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
7y
We may be at a peak in Vegas and may not. None of us truly know that answer. However, if you plan to hold the rental property for five years does it matter? Most importantly what will interest rates be when you declare it is time to buy? Rates might be high enough that you lose any benefit from the possible decline in prices. In the meantime you lose out on paying down that mortgage and lose out on possible gains in case prices go up. I’d say if you are a long term investor it’s a fine time to buy. Good luck to all of us!
4 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.