Average monthly apartment rents in Las Vegas remained within a relatively tight range in the past year and occupancy rates appear to be firming up, business advisory firm Applied Analysis reports in its second-quarter market comparison.
Average rent slipped to $758 a month, down from $766 a year ago, while occupancy rose to 92 percent from 90.7 percent a year ago.
Overall, the apartment market improved from the prior year when analyzing average rents and occupancy rates together based on revenue per average unit, Applied Analysis project manager Jake Joyce said.
On a year-over-year basis, Las Vegas apartment rents have declined for 11 consecutive quarters, he noted. However, the 1 percent drop in the second quarter was the smallest annual decline since late 2008.
The apartment market appears to be “feeling its way along a choppy bottom” with rents and occupancy rates generally improving, Joyce said. Occupancy bottomed out at 90.1 percent in late 2009 and has been slowly and steadily rising since then, he said.
“Certain pockets of properties are doing better than others,” the research analyst said. “We still see Class A (high-end) rents rising as well as occupancy. (Class) C’s are not doing so well because prices have declined so much.”
The highest rents were found in the southwest Las Vegas Valley at $914 a month, while the lowest were in the northeast at $624 a month, Applied Analysis reported.
Andy Miller of Phoenix-based Vested Housing Group said there is some movement nationally to develop new apartments, mainly because of the change in the housing market. Home ownership has dropped from a high of 69 percent in 2007 to about 66 percent today, he said.
“Part of it is the economy and part of it is age-group preference,” Miller said. “The broader trend is toward apartment development. Las Vegas is lagging the rest of the United States in apartment starts. There’s not a lot going on right now. Part of it is finding a site that makes sense.”
Apartment owners are having to compete with the “shadow rental” market of single-family homes in Las Vegas, local Realtor Bill Myers said.
Home sales rose to 5,500 in June and about half of the purchases are cash transactions, usually by investors who are going to fix them up and rent them out, Myers said.
“This is changing the dynamic of our communities as more and more homes have become tenant-occupied,” he said. ”Since many families in Las Vegas have lost their homes to foreclosure or short sales, there is a growing need for available homes to rent. Apartments are not a viable option, since many families have children and pets and wish to stay in the same school district.”
Investors have been quick to respond to demand for rental homes, Myers said. However, rents have been rising to meet the demand. In some cases, renting has now become more expensive than buying a home, he said.
Most apartment complexes being purchased by investors are real estate-owned, or bank-owned, said Patrick Sauter of the Sauter Cos.
He negotiated the sale of the 305-unit Rancho Alvarado apartments at 5088 S. Maryland Parkway to a Los Angeles investor for $7.3 million, or about $24,000 a unit. It was an REO sale that closed escrow in 10 days, he said.
In most cases, investors will not buy a property at a price they feel is above current replacement cost, he said. That’s why any new construction is way down the road, Sauter said.
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