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Investors are buying up Las Vegas homes again. Here’s why

Updated May 22, 2024 - 11:26 am

Investor purchases are on the rise again, and the Las Vegas Valley has seen one of the biggest upticks in the country, according to Redfin.

The share of homes bought by investors — which Redfin defines as a company — in the valley increased 2.7 percent in the first quarter of 2024 from the previous quarter. Only Oakland, California, (2.9 percent) saw a bigger increase out of all the major cities in the U.S.

Francesca Gilbert, a real estate agent with Berkshire Hathaway HomeServices, said she is seeing this uptick on the ground.

“If the number of phone calls, text messages and emails that we receive as agents from buyers looking for off-market properties that they can rehab and flip, or rehab and rent, is any indication of demand, then I would say that investor demand is up,” she said. “I personally get at least one request a day from someone trying to find a property. Across the valley inventory is still historically low.”

Most investor purchases right now (69 percent) are all-cash transactions so they are less impacted by the high mortgage rates currently strangling the residential real estate market, Redfin said.

Why investor activity is up

Redfin estimates the typical price of an investor home in the U.S. is $464,560, a 9.2 percent increase from a year earlier, and so far they have bought $31.3 billion American homes in the first quarter alone, a 6.6 percent increase year over year.

Gilbert said according to MLS data, there are just under 4,000 single-family residential properties on the market in the valley and approximately 697 of those are priced under $400,000, which would be just over 17 percent. Redfin has the median home sale price in the valley at $435,000.

“Considering that there is limited inventory in that price point, it makes sense that we are seeing an increase in investor activity, especially as rent and resale values continue to stay strong,” she said. “I think that the investor activity is mirroring what we are seeing in the market overall, strong demand and strong prices.”

Redfin outlined the roller coaster ride investor purchases has been on over the past few years across the U.S.

“Investor activity in the housing market is stabilizing following several years of dramatic ups and downs. Investor home purchases more than doubled during the pandemic homebuying boom in 2021, and then plunged nearly 50 percent at the start of last year as declining rents and home values ate into potential profits,” Redfin’s report stated. “But now, with home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal.”

Las Vegas has also been confronted with an ever-increasing number of Wall Street-backed hedge funds and institutional investment companies such as Invitation Homes buying up single-family residential properties and turning them into permanent rentals. Multiple bills have now entered the U.S. House and Senate and various state legislatures that would either ban institutional investors from buying more homes, or force them to also sell off their current stock over a period of years.

A UNLV study authored by Shawn McCoy, the director of Lied Center for Real Estate, found that investors of all kinds (he defines them as any entity that has bought five or more properties in the past 10 years) have bought up close to 15 percent of the housing stock in Clark County and owns close to a quarter of North Las Vegas.

Last year two Wall Street-backed companies swapped 264 Las Vegas homes in one real estate transaction in an unprecedented sale for the local housing market. The sale was part of a much larger deal between Starwood Capital and Invitation Homes, a $650 million swap for a portfolio of close to 1,900 single-family rental homes, with the majority being in the Sun Belt, including in Texas, Florida, Phoenix, Las Vegas and Los Angeles.

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.

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