Housing appreciation in Las Vegas remains strong, but pace slowing

ASSOCIATED PRESS

LAS VEGAS (AP) - A major real estate trade group has once again ranked Las Vegas among the nation's best for housing appreciation, but local analysts acknowledge the pace of the city's soaring prices is slowing.

Statistics released this week by the National Association of Realtors showed the median home price in the Las Vegas area rose to $291,000 in the first quarter, an increase of 29.4 percent over the same period a year ago.

As a result, Las Vegas ranked sixth on the association's 136-city list of appreciation rates.

"What's driving appreciation is the growth of the city," said Lee Barrett, past president of the Greater Las Vegas Association of Realtors and owner of Century 21 Barrett & Co. "Las Vegas doubles in size every 10 years, and the market's performance is a combination of that population growth and the fact that we became an area where investors saw good opportunities in our community."

Nationally, the median home price was $188,800 at the end of the first quarter.

Four Florida cities and California's Riverside-San Bernardino market all posted bigger appreciation gains than Las Vegas. The city's ranking is lower than in recent quarters. Las Vegas was second in appreciation in the first quarter of 2004, with a median price increase of 31.3 percent.

In the third quarter, Las Vegas led the nation with an appreciation rate of 53.7 percent.

Analysts say existing homes have seen relatively small price increases, about 4 to 6 percent since January, because of market saturation.

The Greater Las Vegas Association of Realtors had 14,830 single-family homes listed in April, up 71.4 percent from the same month a year ago. The association also had 2,676 condo and townhouse units listed last month, up 53.2 percent from April 2004.

Dennis Smith, president of local consulting company Home Builders Research, said he expects appreciation rates to bounce back to around 8 to 10 percent a year once resale inventory drops.

Vegas Multi-Family Sizzles, But Is Condo Craze Cooling?

May 01, 2005
By Carrie Rossenfeld, Contributing Editor

A wave of condominium conversions, combined with unprecedented increases in land values and residential pricing, resulted in phenomenal multi-family sales figures for the Las Vegas market in 2004. Last year alone, 96 apartment communities were sold totaling $2.1 billion, and more than 7,100 units were revealed to be condominium conversions, with several other communities speculated for future conversion, according to The Bentley Group.

"Las Vegas is on everybody's radar screen," said Jim Crews, senior director of Cushman & Wakefield Inc. "It's been difficult recently for conventional apartment buyers because prices have been bid out by condo converters. Housing prices have gone up a lot, and because of that, some people have been pushed into the condo market and into the rental pool."

Crews said that multi-family construction is expected to be limited due to land prices rising significantly in the past two to three years, along with an expected rise in construction costs as a result of higher oil and cement prices.

Chris Bentley, principal of Bentley Group, predicted that condominium conversions will subside since the majority of acquisition targets were identified and approached last year, with more than 6,300 units slated for completion in areas close to the I-215 Beltway.

Apartment occupancy rates are expected to remain flat at 96 percent after four quarters of increases, according to Bentley, and rental rates should continue to rise over the next several quarters, reaching a valleywide average of $790 per unit by the end of June. Meanwhile, concessions are becoming increasingly scarce, with free-rent periods continuing to shorten or be eliminated.

The company also stated that vacant land transactions of all types nearly doubled between year-end 2003 and year-end 2004, and valleywide median home prices increased by more than 40 percent.