Overview of the Las Vegas Nevada Real Estate Market

Information updated May 25, 2009.

The thrust of economic development in Las Vegas, Nevada has greater than anywhere in the United States, and greater than anywhere on the planet earth.  The gaming industry alone has spent 20 billion dollars over the last 14 years. This incredible economic growth, combined with available land, water and a political climate favorable to development has led a very strong market for both new and resale homes over the last several years. The market has slowed greatly since 2006 and the median price of a free-standing resale home has fallen over 55.8%. The strength and timing of any housing recovery has been tied to this continued economic development. The below information represents both the good news and well as the bad news, particularly with respect to development in and around the Strip. 

Until recently it was projected that with the projects coming online, 45,000 more hotel rooms would be added to the strip area by 2012. Deutsche Bank Securities estimated the casino industry would need to hire 113,500 new workers for the positions created. These projections have been subsequently modified. The projects underway include the 9 billion dollar project City Center, 2.9 billion dollar Fontainebleau, 1.8 billion dollar Palazzo (finished) and the 1.4 billon dollar Encore (finished).  Boyd Gaming's Echelon Place, a 4 billion dollar project on the site of the old Stardust has been under construction. Construction on that project has now ceased until financing issues resolve. Those projects that will finish up in 2009 will add an additional 14,000 new hotel rooms at a investment of 16.5 billion. That is up from the 8,600 rooms that came online in 2008 at a cost of 6.6 billion.

MGM Mirage now is accepting applications for the 12,000 employee City Center scheduled to open this year. Wynn Encore is now open with 5,300 workers. Turnberry Associate's 2.9 billion Fontainebleau on the Strip represent that they will begin hiring hiring for 6,000 positions in early 2009(Now there is a problem with Fontainebleau. An additional $800,000,000 is needed to finish this project and it is not there as I update this information). The one billion dollar M resort at Las Vegas Blvd. and St. Rose Parkway has now opened with 2,000 employees and is, according to reports, very successful . Aliante Station has already added around 1,200 new positions for its recently opened Aliante Station Casino.  Cannery East opened in 2008. 

There has been a slow down as of late with several more projects now on hold. The projects currently on hold include the new Plaza Hotel project on the site of the old Frontier and Crown Las Vegas on the site of what was Wet and Wild, just to the south of the Sahara. These are both multi-billion dollar projects. The list is long for other high-rise condominium, multi-use projects that have been canceled or delayed. The second Trump Tower is on on hold. Allure has cancelled their 2nd tower and Panorama Towers has cancelled their fourth tower. Additional cancelled of delayed projects include Las Rambas,  REI Neon, Harrah's AEG, Pinnacle Las Vegas, Sullivan Square, Spanish View Towers, Mira Villa, Paxton Walk, Desert Star, Verge and Vantage Lofts.

For the first time in several years, the rate of people moving into the valley has slowed, at least temporarily. Two reasons for this, in my opinion. First the job market that has been affected by the slow down in construction as well as the lower casino revenues. Secondly, many individuals need to sell their existing homes elsewhere in order to make the move. With the real estate slow down nationwide that has been increasingly more difficult. In fact, for the first time since records have been kept, the population of Clark County as decreased, from July 2007 to July 2008 by approximately 10,000.

The Brookings Institution just released a study that anticipates the states of Arizona, New Mexico, Colorado, Utah and Nevada will become over the next decade, the next "heartland' of America. The economic and political power of this area is expected to grow greatly relative to other areas of the country. The Las Vegas area has seen short term downturns before, but historically, anyone who has bet against the vitality of this local economy has lost.

IHS Global and National City Track released a study in the 3rd quarter of 2008. Their study shows that home prices in Las Vegas fell 18.8% below what market fundamentals would justify. This same forecasting entity showed that the prices in the third quarter of 2006 were 30% above fundamentals. This analysis looks at median home prices from 2000, household income, population density and interest rates.

Below represents by own calculations, base on raw data provided by the greater Las Vegas Association
of Realtors. Prices are for free standing homes only.

June  2006 median home sale price (resale)  $319,000  Median list price on these homes was $324,000.
July 2006 median home sale price (resale)  $316,000  Median list price on these homes was $326,000.
August 2006 median home sale price (resale) $310,000 Median list price on these homes was $315,000.
September 2006 median home sale price (resale) $313,000 Median list price on these homes was $319,000.
October median 2006 home sale price (resale) $308,000 Median list price on these homes was $311,000.
November  2006 median home sale price (resale $306,000 Median list price on these homes was $310,000.
December 2006 median home sale price (resale) $305,000 Median list price on these homes was $310,000
January 2007 median home sale price ( resale) $309,000 Median list price on these homes was $312,000.
February 2007 median homes sale price (resale) $305,000 Median list price on these homes was $310,000.
April 2007 median homes sale price (resale) $304,000 Median list price on these homes was $310,000.
May 2007 median homes sale price (resale) $300,000 Median list price on these homes was $308,000.
July 2007 median home sale price (resale) $297,000 Median list price on these homes was $305,000.
September 2007 median sale price (resale) $295,000 Median list price on these homes was $300,000
October 2007 median sale price (resale) $283,000 Median list price on these homes was $290,000.
November 2007 median sale price (resale) $274,000 Median list price on these homes was $282,000.
December 2007 median sale price (resale) $263,000 Median list price on these homes was $270,000.
January 2008 median sale price (resale) $248,000 Median list price on these homes was $255,000.
February 2008 median sale price (resale) $243,000 Median list price on these homes was $248,000.
April 2008 median sale price (resale) $237,000 Median list price on these homes was $243,000.
May 2008 median sale price (resale) $235,000 Median list price on these homes was $ 239,000.
June 2008 median sale price (resale) $224,000 Median list price was $224,000.  Days on market average, 71.
July 2008 median sale price (resale) $216,000. Median list price was $215,000.  Days on the market average, 64.
September 2008 median sale price (resale) $202,000. Median list price was $199,000 Average days on the market 57.
October 2008 median sale price (resale) $191,000. Median list price was $ $190,000. Average days on the market 61.
November 2008 median sale price (resale) $180,000. Median list price was $180,000. Average days on the market 57.
January 2009 median sale price (resale) $165,000. Median list price was $167,000. Average days on the market 60.
February 2009 median sale price (resale) $153,000. Median list price was $155,000. Average days on the market 70.
March 2009 median sale price  (resale) $144,000. Median list price was $146.000. Average days on the market 69.
April 2009 median sale price (resale) $141,000.  Median list price was $143,000. Average days on the market  65.

From June 2006 through September 2008 median resale sales prices for free standing homes have decreased just over  55.8%.  The rate of decline over the last month has slowed to just over 2%. The raw data for this calculation  is courtesy of the Greater Las Vegas Association of Realtors. Over 86.6% of free-standing homes closing escrow in April, 2009, were either bank owned or short sales (mostly bank owned). I believe that the lack of any meaningful discrepancy between list and selling price since June, is the result of banks being more aggressive in pricing foreclosures. This results  in multiple offers on some of these properties with some selling for more than list. After an average drop of around $10,000 a month over the previous months, the drop last month of $3,000 is hopefully a sign that the market here is stabilizing.

Snapshot of the market as of May  25, 2009 shows 10,817 free standing homes on the market ( last months figure was 13,346) with 5,297 having gone under contract of sale over the last 30 days. The  rate of sales has increased substantially with the inventory shrinking considerably. Consider  November 10 to December 10, 2007, when 944 homes went under contract. The National Association of Realtors regards a 5 to 6 month inventory of homes as a neutral market, neither a buyer's or seller's market  Prices have dropped substantially from a year and a half ago. There is now right around a 2 month supply of homes available, at the current rate of sale.  It would appear that the downward spiral of prices has started to have an upside in sales and a dampening effect on inventory. This is a curious situation. Sales are great, but mostly bank owned. Resale inventories are down somewhat and prices are down also.

Sales are very strong. March had more bank owned dispositions than acquisitions. Lenders, however have lifted a moratorium on foreclosures in March resulting in 7,747 homes taken by banks in March. That is more than double the number from February and four times the figure from March 2008. 

New construction - In February 2007, the housing research firm, Salestraq, represented only 3 single-family neighborhoods offering houses priced under $200,000. The lowest priced of these being $198,900. Salestraq as of April 25, 2009 shows 146 new single family home models in the Las Vegas valley and surrounding communities offering houses under $180,000.  Projections are that new home sales this year will fall to less than 5,000 which is less than half the number sold in 2008. There are now around 300 active subdivisions. Sounds like a lot, but in 2005,2006 there were around 1,200.

Short sales and foreclosures- Of the 16,979 properties (including free-standing homes, condos, townhomes and manufactured homes)  on the market, at the time of this writing, 9,383, just under  67% are represented as being short sales or foreclosures. 58% of all listed properties are represented as vacant (note that historically, this figure has been in the 41% range for the last number of years). Just under11% are tenant occupied.

General Economic Indicators as of December, 2008
(Courtesy of the Las Vegas Review Journal)

In the way of new information, I have included the elevations of all the major planned communities and age restricted communities on their respective pages. There is a wide range of elevation at which homes are constructed inside the valley ranging from just over 1,600 ft. to over 3,500 ft. The lower elevations are generally on the east side with the highest elevations in the newer areas of Summerlin. Elevation can be a factor in temperatures as well as possibly air quality.

High-rise construction is well under way in Las Vegas. There has been talk of some of these offering lower priced product, but on average, the starting price for smaller units is around $400,000. Those projects built close to the strip now have prices of over $1,000 a square foot.  This market has stagnated over the last year, with prices dropping, and financing becoming much more difficult. More high-rise information here. One interesting option to a high rise would be the residential opportunities in mixed use developments. This building concept is often referred to as "New Urbanism". Here the reality is that you can potentially live, work and shop in the same proximity and where you can literally walk to everything you need.

 Call me or e-mail me with any questions you may have.

Millie Fine
Toll Free 1-888-449-3463
Home office 1-702-363-5599
E-Mail Millie!
millie@milliefine.com 

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