Apartments are getting cheaper to rent in Las Vegas thanks to increased competition from the “shadow market” of single-family rental homes, a commercial broker said Tuesday.
An online search found 457 rental homes in Las Vegas for $1,100 a month and at least 1,400 square feet, said Spencer Ballif, senior vice president of multifamily housing at CB Richard Ellis.
“There’s plenty of options,” he said. “It’s mind-boggling what’s available.”
Ballif said it’s hard to quantify the number of rental homes on the market, but he thinks it’s at least 10,000, maybe 15,000. It could go higher as more people lose their jobs and let their homes go to foreclosure, he said.
That’s on top of the estimated 6,400 apartment units completed or under construction this year.
“What they thought is more foreclosed homeowners would become apartment renters and demand would go up,” Ballif said. “What we found is people who’ve been in a home would rather go into another home than an apartment.”
Apartment occupancy rate dropped to 90.5 percent in the second quarter, compared with 91.3 percent in the previous quarter and 92.9 percent in the same quarter a year ago, Las Vegas-based business advisory firm Applied Analysis reported. Average monthly asking rent decreased 3.8 percent from a year ago to $857, or 95 cents a square foot.
Occupancy is at its lowest level in more than a decade and rents are at price points quoted three years ago.
A frail job market and continued home price depreciation both contributed to weakening demand for apartments, Applied Analysis project manager Jake Joyce said. These trends are not expected to correct through the end of the year, he said.
Greg Willett, vice president of research and analysis for MPF YieldStar, said there’s absolutely no need for new apartment construction starts in Las Vegas. Inventory will grow by 4.2 percent in the next 18 months, one of the most aggressive rates in the country, he said.
“You still continue to lose a significant number of jobs, which is limiting demand potential for rental units,” Willett said. “We’re looking at further softening in the marketplace.”
He reported average Las Vegas apartment rental rates of $805 a month, down 5.7 percent from a year ago.
CB Richard Ellis showed 10.5 percent vacancy in June for 104,535 apartment units, compared with 10.4 percent in May. Average rent was $862 a month, a 4.4 percent reduction from May.
Ballif found a bit of good news in CB’s second-quarter apartment market survey. Concessions such as free rent and move-in discounts seem to have stabilized. Sixty-three percent of properties were offering concessions, compared with 84 percent in the first quarter, CB reported.
A June survey of more than 870 property managers across the nation revealed that half of the respondents are experiencing more difficulty locating qualified renters compared to last year, according to TransUnion rental screening group.
The survey results, released at the National Apartment Association’s Education Conference & Exposition in Las Vegas, found another 81 percent of respondents are concerned that they will not find reliable residents for the remainder of the year.
When asked if they were seeing an increase in the number of applicants moving to rental units from foreclosed properties, the tally was almost evenly split.
“While one would expect to see a more pronounced increase of applicants coming from foreclosures in this environment, a possible conclusion to draw is that many consumers coming from these circumstances are moving in with family members or friends to share expenses,” TransUnion vice president Mike Britti said.
The highest rents for a two-bedroom apartment in Las Vegas are found in the southwest ($904) and Green Valley-Henderson ($900), while the cheapest rents are in the northeast ($727) and southeast ($823), CB Richard Ellis reported.
Contact reporter Hubble Smith at email@example.com or 702-383-0491.