There is a huge disparity between renting and a mortgage payment in Las Vegas. Las Vegas did not have this disparity until our 2004 "boom".
Let me give a couple of examples on what is happening in our rental market. When we moved into our present home in 2002 fair market rent hovered around $1200/month. Now, with a pool, fair market rent tops $2000. More than enough to pay our mortgage. My mother in law rents an apartment. Since she moved in back in 2004, rent has climbed 10%.
Why is this?
Supply: There were around 7000 condo conversions since 2004 and they are not being replaced quick enough. Individual investors who were around prior to 2004 have dumped their inventory. Our rental market fluctuates between a one to one and a half month supply. Land is at a premium and it isn't cost effective to build more high density rental housing units.
Demand: We still have about 7K incoming residents per month with about 2K outgoing. If they don't have suitable means to buy or live with a relative/friend, they mostly rent. We are also seeing many potential buyers sitting on the sidelines "waiting" for prices to go down: which ain't happenin' to the degree they wish it will happen.
What I am observing in the rental market is the gap is closing between the disparity of paying rent vs buying a home and paying a mortgage. I think the gap will close in the next couple of years, along with our resale inventory problem. Builders are pulling residential building permits at decade-plus lows. Depending on 2007 economic conditions staying stable/getting even better, this should wipe out our resale inventory problem. This could happen VIRTUALLY overnight just like our oversupply of today and our undersupply of 2004.
The sideline renters could be stranded in a rental "holding pattern" and back to wishing of the days of yore (right now), where buyer's incentives were being thrown out a dime a dozen. I am also seeing builder incentives slowly disappearing.
The builders have a bottom line and they are going to be major players in this game. I hope I am right about my predictions. 2007 will prove to be a turning point for real estate in Las Vegas.
I would really love to see other opinions especially from NV agents!
All the Best,Realtor®
Nevada Realty Solutions - Your Dream, Your Investment, You\'re Home!
8942 Spanish Ridge Avenue
Las Vegas, NV 89148
direct: 702-580-1783
fax: 702-995-8237
Renee@ReneeBurrows.com
http://www.ReneeBurrows.com
Interesting that the rental market is just now slowly correcting itself after our sharp decline in resale prices. :foot in mouth disease:
We are now seeing an abundance of all cash investors buying which is increasing supply and the renters are turning into first time buyers which is decreasing demand :)