Affordable Housing Projects

The Las Vegas City Council led has voted to spend $22M for another boondoggle. Tax payers money is going to be squandered with these affordable housing projects. Whenever the government attempts to play with supply and demand (with great intentions) it backfires every single time. Building them is easy and garners many votes from the disenfranchised. Santa Claus came to town.

The party ends when the government starts operating them. The people who will run these are the same people who run Section 8 (aka HUD). These people can’t run a hot dog stand. Any property manager will tell you these programs encourage terrible tenant behavior and properties inhabited by government funded vouchers  are destroyed. My personal stories are endless. The last tenant I evicted was frequently visited by the police for firearm discharges and did about $15k of damage to the property. That’s one story out of hundreds. Only 1 in 8 Section 8 tenants will keep a property in good order. I should also mention the constant maintenance requirements created by neglect. Not changing air filters is an example. They even just remove the filters which destroy the HVAC.  It gets better. When you try to evict them for being a nuisance to neighbors or destroying the property, they get a government funded lawyer to defend them. We don’t renew the leases of most section 8 tenants we inherit because of all the damages they cause.

Everyone on that city council is forgetting the family who scraped up all their money to buy one of those old fourplexes downtown. They put all the sweat and effort into making one of those decrepit buildings inhabitable. Soon, the government building will be offering nearly free rent next door with modern features. The government will simply crush all of those poor mom and pop neighbors. Thank goodness our investors who owned some of these multi-family buildings unloaded them back in 2016. 

Housing Prices Increase In July

Las Vegas housing prices by bedroom type for July 2024 compared to the previous year: 

The home price of 1 bedroom homes increased by 5%, 2 bedroom homes increased by 6.7%, 3 bedroom homes increased by 4.6%, 4 bedroom homes increased by 7%, and 5+ bedroom homes increased by 9%.. On average, homes in Las Vegas sell after 37 days on the market compared to 40 days last year. There were 879 homes sold in June this year, down from 1,023 last year.

I don’t get it. The increase in price coupled with high interest rates make homes completely out of reach for most residents in Las Vegas. Wages are not keeping up with these increases and this is not unique to Las Vegas. Houses in America now cost six times the median income.   In 1984, the median annual income for an American household stood at $22,420, and the median house sales price came in at $78,200. The house sales price-to-income ratio stood at 3.49. The gap continues to widen to an unsustainable ratio.

The increase in housing prices has pushed investors even further away. Any investor who purchases a single family property now will be lucky to get a 3% return if any. Prices are going up and rents are relatively flat.

 

Short Term Rental Fined $55k

After an attempt to appeal $55,000 worth of civil penalty fines, Las Vegas council members showed property owner Jonathon Tyler Foulks they won’t be taking it lightly when it comes to unauthorized rental operations.

“On top of my mortgage, [the fine is] basically putting the place into foreclosure. It is way too steep of a fine for what I did,” Foulks said at Wednesday’s council meeting. 

He had to be lying for not knowing short term rentals rules or he was a complete idiot  for  ignoring  all those  notices.

Rents Will Probably Decline Rest Of 2024

After rents fell in late 2022 for the first time since the COVID-19 pandemic began, last year was still marked by prices for rental units plateauing at rates significantly higher than before the 2020 COVID pandemic.   Rents began dropping across the state during the second half of 2022. From August 2022 to July 2023, rents dropped around 8.5 percent in Las Vegas while rents nationally dropped 1 percent in the calendar year 2023.

We are witnessing longer times to fill units and have dropped prices across the board to get tenants in before the fall. Once November 1st hits, you won’t be able to give a property away.

The median income per person in Las Vegas is $3,022  according to the U.S. Census Bureau. This means that if a person lives alone or is the sole breadwinner of their household, they would be spending 46 percent of their income on rent as a Northern Nevada resident and 43 percent of their income on rent if they lived in Southern Nevada.

More renters — notably seniors — are also living on fixed incomes such as retirement and Social Security that don’t give them flexibility to respond to swings in the rental market. According to RentCafe, a media organization that shares data stories based on information from public government databases, the population of renters over 60 grew by 43 percent from 2007 to 2017 nationwide. It also projects that by 2035, nearly a third of renter households will be made up of seniors — making them the second-largest demographic of renters. Single story houses or first floor condos will be able to command a premium. 

Not All Heroes Wear Capes

The 2023 legislative session, which featured numerous bills that dealt with slowing the growth of rents and giving renters more recourse in evictions, has been a talking point for politicians and activists throughout the beginning of 2024 and heading into the 2025 legislative session.  If it were not for Governor Joe Lombardo, we would have a property management disaster on our hands.

2023 housing bills  included SB426, which would have prevented landlords from raising rent within a tenant’s first year living in a unit and limit rent increases to 5 percent after the first year. The bill died in committee.

There was also AB298, a bill that would have capped rent increases at 10 percent from July 2023 to December 2024 for renters over the age of 62 or people who receive Social Security benefits — a measure vetoed by  Republican Gov. Joe Lombardo. He said housing affordability was one of the top two issues he cared about, but that he disagreed with many of the housing proposals that made it to his desk last year.

During the March 6 IndyTalks event, Lombardo responded to criticism from activists in an interview with The Nevada Independent CEO Jon Ralston and said that he did not regret vetoing any of those bills. He said it’s a fallacy that rent control is the solution for housing affordability challenges and contended that rents are being driven up by inflation, construction costs and the slow pace at which the federal government releases public land in Nevada for development.