What’s happening with rents in Las Vegas?

Rental rates for a one-bedroom apartment in the Las Vegas Valley dropped double-digits over the last year, according to a new report from Rent.com, which is owned by Redfin.

But month to month, from July of this year to August, rental rates bumped up slightly, by 0.36 percent, the report states.

“I would say the biggest thing, both in Las Vegas and nationally, is that price growth has slowed relative to the last two years, but prices remain elevated well above pre-pandemic norms,” Rent.com CEO Jon Ziglar said in a statement.

The average cost for a one-bedroom apartment in the valley in August was $1,654, an 11.9 percent drop year over year, according to Rent.com.

“Nationally prices were down too, albeit at a much lower rate of 0.06 percent,” Ziglar said. “The caveat to that is prices today are being compared to a period that produced the highest prices we’ve ever seen. But on a longer-term basis, prices continue to be elevated.”

Tom Naseef, a commercial Realtor with Coldwell Banker, who focuses on the luxury apartment market in the Las Vegas Valley, said landlords are offering concessions right now to get new tenants to lease, including cash and free month’s rent.

“We believe it has more to do with the number of deliveries coming to the market all at once,” he said. “We also believe these units will get absorbed over the next 12 to 24 months.”

An unprecedented number of apartment units are currently coming onto the market in the valley, part of a building frenzy kicked off during the pandemic when interest rates and construction costs were at historic lows. Rents have dropped month over month and year over year in 20 metros across the country, including the Las Vegas Valley, nearly all of them secondary cities such as San Antonio and Austin in Texas and Raleigh, North Carolina.

However, the median U.S. rent was $2,052 at the end of August, only $2 below the record high set a year earlier. This is a 0.7 percent increase from the previous month. Rents are still skyrocketing in a number of metros, mostly in the Midwest and Northeast and dropping in the West and South, creating an unbalanced national market.

This makes for an interesting dichotomy across the country, where landlords are charging record high prices, however now having to offer concessions given vacancy rates are climbing as units are coming onto the market in record rates across the country, Ziglar said.

Nationally, prices have risen a quarter since the height of the pandemic, and in Las Vegas, prices are up 21 percent over that same period, even given the recent slide year over year, he said. Now, though, there appears to be downward pressure on landlords.

“A year ago, you really didn’t see concessions in the market. Fast forward to today, and they are far more common, with landlords offering from one-to-three months free in an effort to attract new tenants without lowering their asking rents,” Ziglar said. “Higher-end properties are beginning to see pressure in certain markets as a significant portion of new units coming online are in the higher end and luxury segment. We are still seeing a lot of competition for more affordable units due to less new supply, as well as increased pressure on consumer wallets limiting the ability to stretch for that higher level experience.”

Analysts point to the Federal Reserve’s stated goal of bringing down the Consumer Price Index — which measures inflation in the country — to 2 percent, from a high of 9 percent last summer. The current rate at the end of August was 3.7 percent, up from 3.3 percent in July, and according to a recent statement from National Association of Realtors Chief Economist Lawrence Yun, rent is basically one of the last key inflation markers that have yet to drop.

“The trend line indicates falling inflation, especially if considering the impending sharp deceleration in overall shelter cost (rent),” he said. “Private sector apartment rent data is implying even slower gains. That means that a heavyweight component of overall inflation will be much calmer in upcoming months. Inflation will be one main determining factor in upcoming monetary policy decisions. Overdoing the rate hikes, considering that inflation is likely to calm, will unnecessarily damage the economy.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.