From Boom to Bust
Back in 2006, Las Vegas was in the midst of the biggest housing boom in the city’s history. Prices had gone up 80%, there was ongoing construction bringing more jobs into the area, and mortgage lenders were especially lenient with low down payments. Investors and homeowners alike took on huge loan amounts, assuming that their home value would continue to rise and that they could simply sell and make their money back plus more.
But because of the size of the housing bubble back then, Las Vegas was one of the hardest-hit real estate markets once the bubble finally burst. Nevada became the #1 state for foreclosures, and about 25% of the people who bought homes when prices were high lost their homes or simply walked away from them. Casino revenues also dropped significantly and the local unemployment rate skyrocketed to 14.2% by April of 2010.
Nearly 10 years after the Great Recession, some in the industry remain skeptical that Vegas has bounced back, or that it will ever again be the real estate free-for-all it once was.
Has the Real Estate Market Really Recovered?
That depends on how you define recovery. Are house prices as high as they were 15 years ago? No. But on the other hand, the Las Vegas market experienced a major resurgence in 2018 and although the rate of growth has slowed in 2019, prices are still steadily climbing.
The arrival of an NHL team to the city in 2017, in addition to the impending arrival of the NFL Raiders to Las Vegas, is projected to bring $636 million in revenue to the city. It already has caused a spike in investor interest in Las Vegas properties.
Ready to shed the “transient” label, the city is hoping that two national sports teams will encourage more Las Vegas residents stay put and put down roots. A massive multi-billion dollar stadium is under construction, and many seem optimistic about future growth.
Reasons to Invest in Las Vegas Real Estate
There are, of course, no guarantees in the real estate game, but the Las Vegas market continues to show signs of making a solid comeback. Here are some of the most compelling reasons to consider investing in this desert metropolis.
Housing Demand Continues to Rise
In 2018, the Las Vegas real estate market was named the number one in the country. Although Phoenix now holds that title for 2019, demand remains high in Vegas with home prices rising by 4.7% this year. Job growth, too has increased by 2.6%. Rent prices have also increased significantly since this time last year. Median prices are now just shy of $1200 for a 2-bedroom apartment, a 3.8% increase since last October.
The Market is Stable
Greater Las Vegas Real Estate Association (GLVAR) president Janet Carpenter noted that although home values are appreciating at a more gradual rate than last year or during the last boom, the Las Vegas real estate market is the most stable it has been in 20 years. This stabilization means properties are staying on the market just a little longer, allowing investors and buyers to be pickier when choosing a worthy property to invest in.
Taxes Are Low
Nevada’s state property tax is just 0.69%, one of the lowest in the nation. There is also no state income tax, meaning more of your investment stays in your pocket. Not to mention, the last time most existing homes’ values were assessed was during the recession, when home values were much lower. Thus, homes will continue to increase in value while taxes remain comparatively low thanks to tax rate caps.
The Population Keeps Growing
Las Vegas has undergone explosive population growth in the past few decades. The entire metropolitan area including North Las Vegas and Henderson totals over 2 million people. That number is expected to grow, especially as Californians are forced out of their home state by an increasingly unaffordable cost of living.
Investment Types Abound
Las Vegas is simultaneously an entertainment capital catering to tourists and a series of sprawling suburbs that many call home. This provides real estate investors with lots of options when it comes to choosing their investment strategy. Single-family homes, condos, luxury apartments, penthouses, section 8 housing, and commercial real estate abound in this unique city — and all of them are likely to grow as the does the city.
There’s no arguing that Las Vegas was devastated by the Great Recession. People have the right to be wary about rising home prices, but the market has changed considerably since that time. Mortgage lenders are stricter about who they lend to, and growth has been much more moderate than it was in the early 2000s. The addition of two major league sports teams and the increased revenue and jobs they will bring makes now an exciting time to invest.