Investors pump the brakes on buying Las Vegas homes

Investors have pulled back from buying houses in the Las Vegas Valley, according to a new report.

Purchases of homes by investors fell a whopping 20 percent year over year in the third quarter of this year, the largest drop out of any major metro region in the country during that time period, according to Redfin.

Redfin defines investors as any buyer whose name includes one of the keywords: LLC, Inc, Trust, Corp, Homes. Redfin also incorporates buyers whose ownership code has one following keywords: association, corporate trustee, company, joint venture, corporate trust and may also include family trusts.

Since the wake of the 2008 Great Recession, investors have purchased close to half a million houses in the valley and a recent UNLV study found they could own approximately 15 percent or more of the valley’s housing stock, and 25 percent in North Las Vegas alone. The two largest property owners in the county are Wall Street-backed companies, and there has been a growing chorus from local politicians to stem their ownership stake locally.

Investors purchased 1,451 homes in the valley in the third quarter, and Daryl Fairweather, Redfin’s chief economist, said this is par for the course regarding the valley’s real estate.

“Las Vegas has historically been a volatile housing market, growing in value when the market is hot, and losing value when the market is cool,” she said. “Investors are often the first to exit the market when the market cools, contributing to the volatility in home values.”

Nationally, investor purchases went up 1 percent year over year in the third quarter of this year, totalling roughly 52,000 home purchased across the country.

In Redfin’s report, senior economist Sheharyar Bokhari said investor activity is clearly slowing for a number of reasons.

“Investor activity is stuck in neutral because profits are harder to come by, more homes are selling at a loss, and the rental market has softened,” he said. “Investors aren’t completely retreating, but they’re not driving the housing market forward.”

The report also noted the other issues weighing down on the overall U.S. residential real estate industry.

“Investor activity has flattened for the same reason the housing market as a whole is stagnant,” it read. “Today’s market conditions are essentially the opposite of those that fueled the pandemic investment boom, and the current environment means many buyers are priced out of the market. Investors face additional roadblocks, including less potential to make a profit by flipping or renting out a property.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.c