With Las Vegas home prices tripling in the last decade, including increasing more than 20 percent since May 2020, many aspiring owners are being priced out of a market where the median resale home costs almost $400,000.
“The market dictates where (prices) should be, obviously,” said Nevada Current senior reporter Dana Gentry, who has written extensively on the real estate market. “It's just very clear to see that wages, especially in minority communities are not going to keep pace with the values.”
Gentry said there are market-based and governmental responses to the situation, but they come with downsides attached.
One approach becoming more popular in Southern Nevada is institutional investors buying or even building specifically to serve the rental market.
“So instead of new home developments for purchase, these are actual neighborhoods developed for the purpose of attracting tenants,” Gentry said. She said she fears the deck is stacked against aspiring homeowners, particularly those involved in “rent to own” agreements, where a renter typically has an option to buy during terms of their lease.
“I can imagine that the terms of those are probably way in favor of the investors. I would hate to be on the buying end of one of those deals,” she said.
Gentry said opening up more land to development, something proposed under legislation pending in Congress, would contribute to sprawl and fail to serve those struggling to afford a home.
“The price of those homes with those in those new developments will not be in reach for minority communities,” she told State of Nevada.
Aldo Martinez, president of the Las Vegas Realtors trade group, said institutional investors that buy and develop homes to rent are chasing the appreciation of the Southern Nevada market as much as driving it.
“It's alarming when you see the mindset behind it is that they are forecasting that the market will outprice the normal homebuyer,” he said, “and therefore that potential home buyer will now become a long-term, renter.”
Vivek Sah, director of the Lied Center for Real Estate at UNLV, said the interest in single-family rentals is driven in part by a change in consumer tastes.
He said many, particularly young families, are moving “to rent single-family homes over apartments, which tend to be tiny and congested with no back yards,” Sah said. “They need these access to the back yard but also to green spaces, libraries, and schools. So we're seeing that shift.”
Shantay Patton, regional vice president for the National Association of Real Estate Brokers, said those interested in renting a home should do their homework, particularly if they’re considering renting to own.
“The terms can be a little ambiguous at times, so you don't necessarily know exactly what price you're purchasing the home for,” said Patton, who advises the city of Las Vegas on how to boost homeownership in the Black community.
She warned that entering into a rent-to-own deal ties buyers to neighborhoods that they might not want to live in for the long term, and they might be better served by putting money away regularly for a down payment.
Aldo, president of the Realtors group, said some of the seeds for today’s tight housing market were planted a decade ago when several homebuilders failed during the Great Recession and others reined in their operations.
“They built the bare minimum that they had to, and that went on for 10 years,” Also said. “So we have a 10-year backlog of housing that should have been built, that would have met the demand that's here today.”
He said that even as builders are bringing more product to market, demand continues to outstrip supply.
“The inventory coming to the market is increased,” he said. “What isn't there is that supply, and builders are still not building at a pace that will adequately feel the needs of the consumers.”
Dana Gentry, senior reporter, Nevada Current; Aldo Martinez, president, Las Vegas Realtors; Vivek Sah, director, UNLV’s Lied Institute for Real Estate Studies; Shanta Patton, regional vice president, National Association of Real Estate Brokers
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