Highlights of Investing in Las Vegas Real Estate
1.) Low Home Prices Attract the Buyer’s Market
In comparison to major cities across the world, home prices in Las Vegas are astonishingly low. This is the result of the housing bubble burst in 2008, which significantly affected Las Vegas in many different ways. Home buyers were facing challenges obtaining loans, which caused low home prices to prolong longer than anticipated. In 2013, when the market bounced back, home prices rose by 30% within the first year with 10% increases every year thereafter. Despite the increasing home prices, as it stands today, (July, 2017), Las Vegas home prices still remain on the lower end nationally, despite its 60%-70% increase since 2007.
2.) In a City with Increasing Population and High Demand for Homes, Sales will Continue to Rise.
Over the past twenty years, Las Vegas continues to be ranked as the city with the highest population increase in the Untited States. With the recent increased job opportunities, unemployment has been at its lowest in the past 10 years, attracting new residency from the neighboring states.
Below is chart of registered residents in the Las Vegas Valley from 1990 to 2015
| Clark County | Las Vegas Valley Urban Area | |||||
| Year | Population | Added Population | Growth Rate | Population | Added Population | Growth Rate |
| 1990 | 797,142 | 764,464 | ||||
| 1991 | 829,839 | 32,697 | 4.10% | 794,622 | 30,158 | 3.94% |
| 1992 | 870,692 | 40,853 | 4.92% | 834,446 | 39,824 | 5.01% |
| 1993 | 919,388 | 48,696 | 5.59% | 880,716 | 46,270 | 5.54% |
| 1994 | 986,152 | 66,764 | 7.26% | 945,620 | 64,904 | 7.37% |
| 1995 | 1,040,688 | 54,536 | 5.53% | 998,254 | 52,634 | 5.57% |
| 1996 | 1,119,708 | 79,020 | 7.59% | 1,074,362 | 76,108 | 7.62% |
| 1997 | 1,170,113 | 50,405 | 4.50% | 1,123,932 | 49,570 | 4.61% |
| 1998 | 1,246,193 | 76,080 | 6.50% | 1,195,376 | 71,444 | 6.36% |
| 1999 | 1,321,319 | 75,126 | 6.03% | 1,266,680 | 71,304 | 5.96% |
| 2000 | 1,428,690 | 107,371 | 8.13% | 1,366,916 | 100,236 | 7.91% |
| 2001 | 1,498,279 | 69,589 | 4.87% | 1,445,791 | 78,875 | 5.77% |
| 2002 | 1,578,332 | 80,053 | 5.34% | 1,522,117 | 76,326 | 5.28% |
| 2003 | 1,641,529 | 63,197 | 4.00% | 1,583,172 | 61,055 | 4.01% |
| 2004 | 1,747,025 | 105,496 | 6.43% | 1,685,197 | 102,025 | 6.44% |
| 2005 | 1,815,700 | 68,675 | 3.93% | 1,752,240 | 67,043 | 3.98% |
| 2006 | 1,925,654 | 109,954 | 6.06% | 1,860,495 | 108,255 | 6.18% |
| 2007 | 1,996,542 | 70,888 | 3.68% | 1,925,261 | 64,766 | 3.48% |
| 2008 | 1,986,146 | -10,396 | -0.52% | 1,916,436 | -8,825 | -0.46% |
| 2009 | 2,006,347 | 20,201 | 1.02% | 1,936,324 | 19,888 | 1.04% |
| 2010 | 2,036,358 | 30,011 | 1.50% | 1,965,950 | 29,626 | 1.53% |
| 2011 | 1,966,630 | -69,728 | -3.42% | 1,901,103 | -64,847 | -3.30% |
| 2012 | 2,008,654 | 42,024 | 2.14% | 1,945,149 | 44,046 | 2.32% |
| 2013 | 2,062,253 | 53,599 | 2.67% | 1,997,272 | 52,123 | 2.68% |
| 2014 | 2,069,146 | 40,725 | 2.01% | 2,036,338 | 39,066 | 1.96% |
| 2015 | 2,114,801 | 45,655 | 2.21% | 2,080,254 | 43,916 | 2.16% |
| Average | 52,706 | 4.02% | 52,632 | 4.12% | ||
On average, Las Vegas’ population is increasing approximately 4.12% annually, which translates to approximately 52,632 people per year. This is a very solid figure. Poplulation is an important factor for real estate growth in both the sales and rental markets.
3.) A Highly Reputable and Solid Industry
Las Vegas is a highly reputable and very well-known city by people all over the world. Over four million tourists visit every year. Foreigners view Las Vegas as a must-go destination when visiting the West Coast.
Las Vegas is more commonly referred to as the “entertainment capital of the world.” It is especially unique in its ability to accommodate to large populations of tourists. The city holds pride in having the most expansive industry for convention revenue, tourism, and gaming.
Las Vegas has recently acquired its own professional hockey and football teams, which will further expand its economy to a higher level, by bringing in more tourism and attraction.
4.) Post-Recession Home Buyers
Towards the end of 2008, large quantities of homes went into short sales, foreclosures, trustee sales and REO (bank or government owed properties). Thousands of households declared bankruptcy, which put a dent in their credit for 7 years. During this time, they were unable to apply for loans, yet most of these people remained in Las Vegas. In 2016, when their credit cleared, they are charging back to purchase properties, which will increase home prices. It is anticipated that the home prices will continue to rise for the next 3-4 years.
Below is a home inventory chart generated from GLVAR in June 2017:
5.) Construction Conditions in Las Vegas
During the downturn between 2009 and 2012, many construction projects were put on hold, due to the cost of construction exceeding property value. The increasing population along with the absence of new construction created a significant gap between supply and demand.
Today, even with new homes being built, that gap still remains quite apparent.
Since 2012, new construction has been ongoing and stalled projects have been revived. Properties with desirable locations and reasonable pricing have very short market life. The active market serves as a clear indicator of an optimistic outlook for Las Vegas Real Estate.
6.) Cash Transactions in the Real Estate Market
Below is a chart of the home sales volume between 1999 and 2017.
According to data gathered from the Greater Las Vegas Association of Realtors (GLVAR), the total amount of inventory was at 817,241, with 217,710 sales transactions occurring between 2009 and 2013, which made up of more than a quarter of the total inventory. During these five years, the majority of these sales were cash transactions, which diminished the issues with obtaining loans.
Historically speaking, Las Vegas had the largest home sales volume between the years of 2009 and 2013. Increased growth usually directly forecasts a peak in market price.
7.) Investing in Real Estate with Little Money Down
It is often perceived that purchasing real estate requires large amounts of capital. However, with the low home prices here in Las Vegas, it is much easier to qualify for a loan and become a homeowner, as long as the buyer has a good credit rating.
New York, Los Angeles and San Francisco were amongst the first three cities to recover after the recession. Home prices in these cities have already recovered and have now exceeded the highest price points in 2006.
A typical high-tech engineer with an annual salary of $150,000 stated, “Even with the assistance from my entire family, I am only able to afford an old tiny place in the bay area, with most of my mortgage payments going towards interest.” Because of this widely shared sentiment, it is not unlike for these areas to take a breather. Where will the investment money go then? An investor’s market with affordability and room for appreciation like Las Vegas!