Good news for the Las Vegas apartment rental industry as apartment rents in the city remained within a relatively tight range over the past year. In addition to that, occupancy rates appear to be firming up as well according to reports from Applied Analysis.
Average rent in Las Vegas slipped down to $758 per month, which is down from $766 per month rent one year ago. However, occupancy increased to 92% from 90.7% the previous year. Overall, the apartment market has improved year-over-year if you analyze average rents and occupancy rates together based on revenue per average unit.
On a year-over-year basis, Las Vegas apartment rents have declined for 11 consecutive quarters according to Applied Analysis project manager Jake Joyce. However, the 1% drop in the second quarter was the smallest annual decline since late 2008. According to Jake, the apartment market appears to be “feeling its way along a choppy bottom” with rents and occupancy rates usually improving.
“Certain pockets of properties are doing better than others,” he 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 area at $914 per month. On the flip side, the lowest were found in the northeast at $624 per month. However, apartment owners are having to compete with the “shadow rental” market of single-family homes in Las Vegas according to Bill Meyers, a local Realtor.
Home sales increased to 5,500 back in June and nearly half of the purchases were cash transactions, typically by investors who are going to fix them up and rent them out to families. According to Meyers, “This is changing the dynamic of our communities as more and more homes have become tenant -occupied. 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 responded quickly to the demand for rental homes. However, rents have been increasing in order to meet the demand. In some cases, renting has become more expensive than buying.
A majority of apartment complexes that are being purchased by investors are real-estate owned or bank-owned according to Patrick Sauter of the Sauter Cos. In many cases investors won’t buy a property if they feel that the price is above current replacement cost, Sauter said. That is why any new construction is a long way away.
Source: Las Vegas Review Journal – Las Vegas apartment rents, occupancy steady