The advantages of investing in properties in Las Vegas despite the crisis

Posted On Tuesday, 19 January 2021 21:57

You’d imagine that during the pandemic crisis, housing markets would suffer disastrously. And in many areas that might be true, but strangely the opposite has happened in Las Vegas. In fact, experts predict a total housing boom in the Nevada city known for its nightlife entertainment and gambling industry.

What exactly is causing Las Vegas property to become so hot during a pandemic? Well simply, demand is up, while availability is low, which is causing home prices to sky-rocket. But it’s more than that, there are a few variables behind this hot seller’s market. In this article we’re going to highlight some of those variables.

The rental and staycation market is performing well

Despite social distancing and lockdown measures in some US states, Las Vegas was still a top fly-in destination for tourists over Thanksgiving. Las Vegas has grown a large luxury staycation house market, providing accommodations to travelers outside of hotels.

Furthermore it’s easier for travelers to take early vacation, or take their work on the road, thanks to work-from-home measures implemented by many industries. So despite the pandemic, Las Vegas tourists brought in $347.1 million in revenue on Thanksgiving alone.

As Las Vegas' economy is primarily driven by tourism, the vacation rental market plays a large role in the real estate economy. Traveling families can easily find a rental home for a couple of weeks, while wealthy businesses and individuals can rent out luxurious mansions with all the amenities of 5-star resorts.

And tourism in Las Vegas isn’t all casinos either, as there is so much to do in Las Vegas besides gambling. It’s within driving distance of many attractions and parks, including the Grand Canyon.

So because of Las Vegas on-going performance in tourism metrics, the vacation rental business is proving quite attractive to investors in the real estate industry.

A driving force behind this is a very low housing inventory in Las Vegas, which makes these homes such a valuable premium. In September there were less than 4,700 homes listed for sale, and millennials with money, such as tech workers, are entering the market as buyers.

Migrants from New York, Hawaii, and California have also been streaming to Las Vegas, due to being relatively more affordable than those areas, and offering a suburban appeal near the buzzing nightlife on the strip.

It may shift to a buyer’s market

As mentioned, Las Vegas real estate prices have soared all throughout the year, with single-family homes climbing as high as $337,250 in September. Experts predict that the market could shift closer to a buyer’s market, if there is enough boost in inventory from distressed properties.

It’s also important to note that mortgage rate forecasts show that rates may drop as low as 2.9% in 2021, so demand will remain high. If there is a short influx of inventory, you’d certainly want to grab something while the market is in the buyer’s favour, as its value will skyrocket again.

Unemployment rates are recovering

The Las Vegas unemployment rate had reached 17% in June, but dropped down to 11% by November. As the local economy rebounds, the housing market will be directly impacted, as higher future incomes lead to a higher demand for housing.

Thus the housing market is already bouncing back faster than anticipated, and house sales have been up by 9.5%. Las Vegas had already been named the number one real estate market in 2018 by Realtor.com, and experienced growth through 2019.

The pandemic slowed the market in 2020, but has increased demand as the Las Vegas tourism industry has shown to be performing better than expected as well.

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