Southern Nevada renters faced a much faster increase in home prices than tenants saw around the country over the past two years, a new report shows, squeezing affordability in a state with a big shortage of low-income housing.
The typical rental rate in the Las Vegas area in February was $1,805 per month, up 32.9 percent from February 2020, listing site Zillow reported last week.
That was the fourth-largest rental increase among the 50 metro areas tracked for the report, behind Phoenix (35.4 percent), Miami (36.9 percent) and Tampa, Florida (37.1 percent).
Nationally, rents were up 17.6 percent over the past two years, according to Zillow.
The findings underscore Southern Nevada’s ongoing housing boom, one marked by fierce demand, tight supply and rapid price increases for buyers and renters alike.
The frenzy has made it more difficult, more expensive and, some say, increasingly unaffordable to land a place to live in the Las Vegas Valley.
‘Affordability starts to vanish’
Affordable housing developer Nevada HAND, for instance, operates around 4,500 apartments across Southern Nevada. It only has 10 vacant units, chief operating officer Tim Veenstra said Monday.
More than 2,300 people joined its interest list in the past 30 days alone, he added.
“There’s just massive numbers of people that need access to quality, affordable housing,” he said.
Zillow senior economist Jeff Tucker told the Review-Journal that the hottest housing markets during the pandemic have been relatively more affordable and sunnier regions with somewhat newer and larger housing stocks.
Las Vegas fits that bill, though as Tucker noted, cities can become so popular because of their lower prices that their “affordability starts to vanish.”
“That’s what we’re seeing now,” he said.
Las Vegas’ housing market has accelerated with fast sales and record-high prices over the past year-plus, fueled in large part by rock-bottom mortgage rates that have let buyers stretch their budgets.
Long a popular place for people to move to, Southern Nevada also has drawn more out-of-state arrivals than usual, especially from California, amid widespread work-from-home arrangements, as newcomers can often get a bigger home for less money here.
As it stands, Southern Nevada house prices and rental rates are skyrocketing from year-ago levels and at faster speeds than national averages.
Locally, house prices in December were up 25.5 percent from a year earlier, compared with a gain of 18.8 percent nationally, according to the most recent S&P CoreLogic Case-Shiller index from S&P Dow Jones Indices.
The median sales price of previously owned single-family homes — the bulk of the market — was $450,000 last month, up 26.8 percent, or $95,000, from February 2021, trade association Las Vegas Realtors reported.
“Local home prices can’t keep going up this fast forever,” LVR President Brandon Roberts said in a news release. “The increases we’ve been seeing in the last year or so are just not sustainable.”
Meanwhile, Las Vegas-area rents last month were up 23.3 percent from a year earlier, compared with a 17 percent jump nationally, Zillow data shows.
By comparison, in February 2021, Las Vegas rents were up 7.8 percent from the year before, and U.S. rental prices were essentially flat with an increase of 0.5 percent.
‘Inundated with phone calls’
Faced with big rent hikes, tenants might start living with roommates to help cover the check; move farther out for a lower home price in exchange for a longer commute; find a new place in another part of the city; or move to a new city altogether, Zillow’s Tucker indicated.
He also said that in a normal year, rental prices typically grow 3 percent to 4 percent, a pace that “sounds unbelievable now.”
With the bulk of its population in the Las Vegas Valley, Nevada has an estimated shortage of 84,320 affordable and available rental homes for extremely low-income tenants, according to the National Low Income Housing Coalition.
Veenstra, of Nevada HAND, said the group normally has 100 to 150 vacant units in its portfolio at any given time — 10 to 15 times more than it has now.
He said tenant demand picked up a lot last summer, adding Nevada HAND was “inundated with phone calls.” At one point, he said, its properties were collectively getting 2,000 calls a day.