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Bucking a trend, Las Vegas sees rise in rental rates. Here’s why

Updated May 22, 2024 - 9:31 am

Rental rates in Las Vegas are rising faster than the national average, according to new data from Redfin, but local data has them holding steady in 2024. However a lack of supply in the pipeline is creating an uncertain future.

Sun Belt cities are seeing drops in rental rates year over year, according to Redfin, but Las Vegas appears to be an outlier as rents are up 2.4 percent since the end of April, a 1.7 percent increase from this time last year.

The median asking rent in Las Vegas is $1,505, according to Redfin, and the average rent in the nation is $1,648. The average rent across the United States was up 1.7 percent since last month, a 1.1 percent increase year over year.

However, Colliers International, which has offices in Las Vegas, is showing rental rates in the valley remaining “flat” this year. Jeffrey Swinger, an executive vice president for multifamily investment sales with the brokerage, said Colliers’ forecasting has stayed steady the past few quarters, with rental rates only projected to increase 0.4 percent quarter over year. He pointed to Colliers’ first-quarter report, which shows the vacancy rate forecasted to stay at around 6.8 percent in this quarter.

But Swinger pointed out in previous interviews with the Las Vegas Review-Journal that the pipeline for new multifamily projects in the valley dries up after this year, which could force rents into an upward trajectory.

“The forward-looking supply and demand fundamentals for multifamily continue to be strong and will get stronger through 2025-2026,” Colliers’ first-quarter report stated. “This is due to a strong economy and the current difficulties that persist to start new projects in this environment. Sales will continue to be slow in the foreseeable future until we can experience improvements in the capital markets. But overall, we’re very bullish on the performance of Las Vegas apartments going forward.”

The valley added 1,130 new apartment units in the first quarter of this year, which is up from 543 units in the first quarter of 2023, and new properties were completed in Henderson, North Las Vegas and the southwest valley.

Currently 6,625 multifamily units are under construction, virtually all over the valley, and the largest expansions of inventory are occurring in the southwest and Henderson submarkets.

The area with the highest vacancy rate right now is east Las Vegas and Sunrise Manor (7.6 percent) and the lowest is the south valley (5.1 percent). The submarket with the highest average rental rate in the valley is in the southwest ($1,706) and the lowest is the university/the Strip ($1,218).

National outlook hitting home

The cities that have seen the biggest drops in rents in the past month are Austin, Texas (4.9 percent), San Diego (2.6 percent), Tampa Bay, Florida (1.9 percent), Dallas (1.6 percent) and Portland, Oregon (1.5 percent). Seattle, Washington has seen a 7.3 percent drop in rental rates from this time last year, which leads the nation, followed by Austin (6.6 percent) and Nashville (5.9 percent).

“The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom. But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall,” said Redfin senior economist Sheharyar Bokhari. “The good news is that the uptick in housing supply in the Sun Belt has improved affordability for renters, which can be a lesson for other American cities grappling with housing affordability challenges.”

The Redfin report also outlined how interest rates continue to strangle the market and fuel America’s housing crisis.

“Elevated mortgage rates are likely bolstering U.S. rental demand, and as a result, propping up prices. The average 30-year-fixed mortgage rate is more than double the 2.65 percent record low hit during the pandemic. Some renters are putting off their home purchasing plans because monthly payments for homebuyers are near their all-time high.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.

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