Are Future Sin City Housing Needs a Safe Bet?
- Jan 10, 2008
Las Vegas may still be reeling from the housing slump, but its economy is growing–and so is its pool of renters, according to the Las Vegas Business Press.
The Business Press‘ recent article about the rental market indicates the tighter mortgage atmosphere, which has made buying less of an option for many residents, is giving multifamily rental properties a push.
The Bentley Group, a Vegas-based real estate advisory firm, says the city can thank its healthy tourism trade.
"Nearly 40,000 hotel rooms are coming on line over the next four years, creating more than 285,000 new jobs," Bentley Group President Christopher Bentley told the Business Press. "Demand for multifamily product will increase to meet the housing needs of new employees."
Fantastic. Or is it?
Multifamily builders are only scheduled to deliver 1,500 new units this year–roughly 1,000 fewer than in 2006, according to real estate brokerage Marcus & Millichap.
What’s going on?
- Renters have other options.
As Vegas is finding, in today’s housing market, an increase in renters doesn’t necessarily translate to an increased need for apartment properties.
People may not be able to afford to buy a home–and rightfully so, the area’s cost of living ranks among the highest in the Southwest, according to the Council for Community and Economic Research–but they’re more than happy to rent one of the city’s vacant houses.
Roughly 25 percent or more of the 23,494 homes listed for sale in December in Vegas are on the rental market.
Not enough to cancel out the multifamily market, but the city’s vacant home options could be making a noticeable dent in it.
- Everyone’s gun shy.
Multifamily property need is likely to increase once some of the area’s new hotels are finished and start hiring. Website VegasTodayandTomorrow.com said today that more than 110 high-rise, condo, hotel, mixed-use and other projects are in stages of planning, development and construction in the Las Vegas area.
Those 1,500 units planned for 2008 had better be roomy.
Las Vegas was particularly hard hit by the housing decline. Property values were big during the boom and crashed hard when the slump started.
Are builders just hesitant to start multi-family projects until the residents have physically arrived because they’ve been burned before as residential building declined and projects got called off?
Or are they just having a hard time nailing down funding and support–despite a clear need for housing–because residential building is not considered a popular investment these days?
What do you think?