April Las Vegas Rental Market Update

[Eric Fernwood]

It's April, and it's time for another Las Vegas update. For a more comprehensive look at the Las Vegas investment market, please DM me for a link to our blog. There, you'll find detailed information on investing, both in general and specifically in Las Vegas.

Before I continue, note that unless otherwise stated, the charts only include properties that match the following profile.

• Type: Single-family
• Configuration: 1,000 SF to 3,000 SF, 2+ bedrooms, 2+ baths, 2+ garages, minimum lot size is 3,000 SF.
• Price range: $320,000 to $475,000
• Location: All zip codes marked in green below have one or more of our client’s investment properties.

What we are seeing:

The chart below, from the MLS, includes ALL property types and price ranges. The overall inventory is trending down.

Rental Market Trends

The charts below are relevant only to the property profile we target.

Rentals - Median $/SF by Month

We track rent trends using rent per square foot. It has risen steadily since January, up 3% year over year, signaling a strengthening rental market. Over the past 13 months, it has stayed in a tight $1.17 to $1.20 range, indicating strong stability with minimal downside risk.

Rentals - Availability by Month

The number of homes available for rent continued to decrease, indicating that rent prices are likely to rise during the busiest rental period, late April to mid-July.

Rentals - Median Time to Rent

Days to rent continued to decrease rapidly since January, now at a very healthy 25 days. This shows the rental demand is increasing.

Rentals - Months of Supply

Inventory has plummeted for three consecutive months, now at only 0.9 months (less than a 30-day supply), the lowest in the last 13 months, and 30% down YoY. This is a strong landlord’s market, and rents are likely to keep rising.

Sales - Months of Supply

Inventory has dropped to a 13-month low of 1.4 months, driven by fewer homes for sale and an increase in transactions, likely from sellers accepting lower prices. A balanced market is around 6 months of supply, so 1.4 months indicates a strong seller’s market with upward pressure on prices and strong buyer demand.

Sales - Median $/SF by Month

Median price per square foot decreased slightly MoM, bucking the usual seasonal trend (it usually increases during the spring). This shows that more sellers are willing to accept lower (than their desired) prices to make a sale.

Why invest in Las Vegas?

The goal is to achieve and maintain financial freedom. Financial freedom goes beyond simply replacing your current income—it's about sustaining your lifestyle for life. To accomplish this, you need an income that outpaces inflation. Otherwise, you won't have the additional funds necessary to cover the rising costs of goods and services.

What causes rents (and prices) to increase?

Supply & Demand

Unlike financial markets, real estate prices and rents are driven by supply and demand. What is the supply and demand situation in Las Vegas?

Supply

Las Vegas is unique because it is a tiny island of privately owned land in an ocean of federal land. See the 2022 aerial view below.

Very little undeveloped private land is left in the Las Vegas Valley, and desirable areas cost more than $1 million per acre. Consequently, new homes in these locations start at $550,000. Homes that appeal to our target tenant segment range from $350,000 to $475,000, so the supply of housing we target remains almost the same regardless of how many new homes are built.

Demand

Population growth drives housing demand and price increases and rent increases. Las Vegas's average annual population increases by 40,000 to 50,000. What attracts people to Las Vegas? Jobs. Ongoing construction projects valued between $26 billion and $30 billion fuel employment opportunities. The most recent job fair featured over 20,000 open positions.

In Conclusion

While nothing is guaranteed, the combination of population growth and limited land for expansion virtually assures that prices and rents will continue to increase.

Thanks for reading my post. Reach out if you have questions or would like to discuss investing in Las Vegas.