Real Estate Inventory Increases Slightly
It’s the time of year when sales either flat line or decrease. Buyers hunker down for the holidays and historically, volume decreases and so do prices. The majority of the activity is from primary buyers – not investors. It still doesn’t make financial sense to buy an investment property because the returns on cash are terrible.
- The current inventory of homes for sale consists of 5,600 single-family homes and 2,304 condos and townhouses, totaling 7,904 units.
- Compared to last year, the number of single-family homes for sale has increased by 34.2%, from 5,308 units. Condos and townhomes have also seen a significant surge of 67.2% in their inventory.
- Despite the sluggish sales, September recorded the sale of 1,718 single-family homes and 512 condos and townhomes, totaling 2,230 homes.
- The single-family home sales experienced a 16.2% decline from August and a 1.6% drop compared to September last year.
- Based on the current sales rate, it would take approximately 3.5 months to exhaust the current inventory of homes. This duration inches closer to a balanced market, typically characterized by a six-month supply of homes.
Filling Vacancies Faster (by Bob Kinniburgh)
Folks sometimes ask us why we begin marketing a property as soon as a tenant gives notice. Over the past years, we have seen rental applicants in Las Vegas start their searches earlier. Qualified applicants are on the trail of their perfect rental 30-45 days before their anticipated move-in date and are not in a hurry. We have had applicants ask for a rental property to be held for 3, 4, or even 5+ weeks!
Picky Candidates – Applicants have more choices and are not simply applying to the first home they tour. In addition, many applications don’t meet the minimum rental criteria for A-class rental homes. Top renters require quality properties that are “move-in” ready. Clean properties, maintenance issues addressed before move-in, and well-landscaped properties attract the most attention.
Always Vigilant – We are experiencing a surge in rental application fraud year over year. (fake paystubs, altered bank statements, and identity theft). We remain careful with tenant selection and have added an additional layer to our screening process.
Hollywood 2.0
A $1.8B movie studio and mixed-use project backed by some of the biggest names in show business received approval from the Clark County Zoning Commission. The vote moves the project, planned for the Summerlin area on the west side of Las Vegas, one step closer to reality.
Summerlin Production Studios is a collaboration between Howard Hughes Holdings, Sony Pictures Entertainment and actor Mark Wahlberg. An estimated 10,000 jobs could be created, the Las Vegas Review-Journal reported.
Luxury Homes Still On Pace for Record Year
The wave of Californians is still crashing on the Las Vegas shore.
- The Las Vegas luxury home market continues to thrive in 2024, with August seeing 147 closings of $1 million and higher.
- The top sale was a $6.4 million home in The Ridges, Summerlin, with four bedrooms, 5½ baths, and a three-car garage.
- Other notable sales include a $5.9 million home in MacDonald Highlands, a $4.45 million high-rise condo at the Waldorf Astoria, a $4.17 million home in Summerlin, and a $4 million home in MacDonald Highlands.
- Market conditions remain favorable for luxury homes, with low inventory and strong demand driving quick sales.
It is uncertain how long it will take for Governor Newsom to drain all the wealth from California.
Vacancy Rates Up for Industrial and Office Space
As vacancy rates have increased for the industrial and office markets with reduced demand.
- Industrial market added 3.8 million square feet to its inventory in the second quarter of 2024, increasing the vacancy rate to 6.4 percent.
- Office vacancy rate increased for three consecutive quarters to 12.1 percent.
- Panelists discussed the impact of the upcoming presidential election on decision-making for businesses regarding their space needs.
- Some tenants are waiting until after the election to make decisions due to uncertainty about future economic conditions.
- Interest rates, particularly the 10-year Treasury notes, play a crucial role in real estate investment decisions.
- Loan sizing and equity requirements are important factors to consider, as lenders may not provide the same level of financing as in previous market cycles.
Office space will continue to decline in value. Builders got a little too aggressive on building industrial space but that will be absorbed as time goes on.
We Are Catching Our Breath
In April, we acquired a broker’s book of business of about 40 doors. That broker used to be one of our property managers. She was super smart and was instrumental in migrating the software I built for property management into Appfolio. This migration occurred in 2016 and our business has improved tremendously since. I was proud to have helped her launch her business and we met up occasionally to share ideas and catch up. Sadly, she had a meltdown in March and walked away from the smoldering ruins of her property management business. The Real Estate Division took her license and appointed us receivership of her trust accounts. Fortunately, her clients received close to 90% of all the funds due to them. We just finished distributing close to $400k in money to all those clients.
To avoid a similar fate, we are actively distributing properties so none of our managers get overwhelmed. I personally have way too many accounts. For the next few years, I will be distributing some of my accounts to our new amazing bunch of property managers. This will enable me to focus on training and mentoring managers so your assets can be managed well into the future.
We would like to distribute these along some geographical regions so you get faster and better service. The graphic below is a loose guideline for distribution. This will not be a hard rule. For example, we don’t want our customers who have properties in different areas to have multiple managers. Our goal is to provide you with faster and better service.
The majority of our properties are occupied now and the bulk of all our rehabs are completed. As we head into the winter season, we will be re allocating some properties, working on improving our systems and training our folks in an effort to keep improving.
If you have questions or concerns, please reach out to me.