Overview of the Las Vegas Nevada Real Estate Market

Information updated February 8, 2010.

The thrust of economic development in Las Vegas, Nevada has been 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%.  The strength and timing of any housing recovery has been tied to this continued economic development. The information below represents both the good news as 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 an investment of 16.5 billion dollars. That is up from the 8,600 rooms that came online in 2008 at a cost of 6.6 billion dollars.

MGM Mirage has accepted applications for the 12,000 employee City Center scheduled to open in December, 2009.Part of this development is now open with the hotel/casino to open later in December.  Wynn Encore is now open with 5,300 workers.  Turnberry Associate's 2.9 billion dollar Fontainebleau on the Strip represent that they will begin hiring for 6,000 positions in early 2009. (Now there is a problem with Fontainebleau. An additional approximate $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 which was 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 cancelled or delayed.  The second Trump Tower is on hold.  Allure has cancelled their 2nd tower and Panorama Towers has cancelled their fourth tower.  Additional projects cancelled due to delays 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.  Firstly, 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 market slow down nationwide that has been increasingly more difficult to do.  In fact, for the first time since records have been kept, the population of Clark County has 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 my own calculations, based 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.
June 2009 median sale price (resale) $139,000. Median list price was $140,000. Average days on the market 68.
July 2009 median sale price (resale) $137,000. Median list price was $137,000. Average days on the market 62
August 2009 median sale price (resale) $135,000. Median list price was $$135,000. Average days on the market 55.
September 2009 median sale price (resale) $139,000. Median list price was $137,000. Average days on the market 52.
October 2009 median sale price (resale) $141,000. Median list price was $139,000. Average days on the market 50.
November 2009 median sale price (resale) $139,000. Median list price was $139,000. Average days on the market 49.
January 2010 median sale price (resale) $136,000. Median list price was $134,000. Average days on the market 55.

 

From June 2006 through January 2010 median resale sales prices for free standing homes have decreased 59%.  The last six months shows the first stabilization of selling prices in three years, with prices basically static . The raw data for this calculation is courtesy of the Greater Las Vegas Association of Realtors.  79% of free-standing homes closing escrow in November 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 far more than list.  After an average drop of around $10,000 a month for several months, prices have been steady since July.   One figure not reflected above is the median number of days on the market. That figure is 29.  Many of the bank owned properties, particularly those priced under $200,000 are being purchased quickly. There were 44,885 recorded resales in 2009.

Snapshot of the market as of February 8, 2010 shows 8,412 free standing homes on the market ( May's figure was 13,346) with 4,793 having gone under contract over the last 30 days.  The  rate of sales has increased substantially with the inventory shrinking considerably.  Consider  November 10, 2007 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 well under a two month supply of homes available, at the current rate of sale.  It would appear that the downward spiral of prices has subsided, at least for now. Over 80% of sales over the last 30 days have been foreclosures of short sales.

Sales are great, but mostly bank owned.  Resale inventories are down considerably with prices steady. The one qualifier here is that over 2,000 of the homes going under contract in the last 30 days are short sales. The percentage of short sales that close is much lower than for conventional sales or foreclosures.

 There is a great deal of uncertainty as to just how many foreclosures are in the pipeline. There has been talk of the banks holding back on selling properties they have taken back so as to keep the prices up.  There were just over 25,000 foreclosures in 2009 and estimates are that we will have about the same number for 2010.

New construction -   There are now around 300 active subdivisions.  Sounds like a lot, but in 2005-2006 there were around 1,200. 5,271 new homes were sold in 2009. That is down from 38,957 in 2005. The Median price for a new home fell 13.2% to around $210,000. This is down from ahigh of $339,000 in 2006

Short sales and foreclosures - Of the 10,317 properties (including free-standing homes, condos, townhomes and manufactured homes)  on the market, at the time of this writing, February 8, 2010, 5,962 just over 57% are represented as being short sales or foreclosures  53% 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 over 12% are tenant occupied.

General Economic Indicators as of  November, 2009
(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.

The new high-rise product is a difficult sell now in Las Vegas. Several projects have seen sales stagnate. City Center is offering reduced prices to those individuals already under contract. The real opportunities, in my opinion, are resales with prices having fallen dramatically.

More high-rise information here.

 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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