According to the Nevada State Apartment Association (NVSAA)’s newest report, the Las Vegas valley multifamily housing market has seen a 5.5% increase in new inventory and a 2% increase in vacancy rate from this time last year to now at 8.9%. The average rent decreased by 3.1% to now at $1,430 per month, below the national average of $1,670. The forecast calls for vacancies to approach 10% by the end of 2023.
“As southern Nevada continues to rebound from the pandemic, we are seeing waves in the multi-family housing market, particularly related to vacancy rates,” said Robin Lee, Executive Director of the NVSAA. “Supply in the region is currently higher than demand and we’re forecasting a vacancy rate near 10% by the end of the year, largely related to persistent inflation, rising interest rates and less ability for people to save money.”
The rent decreases are seen at all apartment types including high-end or luxury apartments. Many renters are moving towards lower-tier, more affordable properties. Las Vegas ranks at the bottom of markets for absorption in the past 12 months with roughly 4,000 units of net move-outs.
Roughly 9,900 units are currently under construction, which would increase the existing inventory by 5.5% once complete. Projects are largely under construction in the Henderson, Enterprise and Summerlin areas due to strong demand, higher rents, and availability of land. Many of these projects are in the higher end tier.
Sales volume cooled down in the second half of 2022 and failed to breach $600 million in quarterly volume for the first time since 2021 Q1. This trend continues in 2023 with back-to-back quarters of $125 million in multifamily trades. Based on recent trades, cap rates have risen from 80-100 basis points.
“Las Vegas is such a unique area and is seeing incredible positive economic growth including more than $1 billion in gaming revenue for 23 consecutive months and the most passengers to come through Harry Reid International Airport in a single month than ever before,” furthered Lee. “With these positive notes for the Las Vegas economy, we look forward to making positive growth for our multi-family industry in continual support of the region.”
For more information on the Nevada State Apartment Association, visit their website here.
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