Sales and conversions cited as shrinking rental market
Rising home prices, condo conversions, and REIT activity fueled record levels of apartment sales in 2005. This in turn further diminishing the valley’s rental market. Last year, $2.7 billion worth of sales were made. This represents a 6 percent gain over 2004. It also marks an all-time record for Southern Nevada.
Meanwhile, median prices climbed to $88,700-per-unit in 2005, which is 29 percent higher than the previous year. Although there were only 30,602 units sold in 2005, an 18 percent drop from the prior year, the market still achieved $152 million more in sales revenue. There were 851 apartment complexes sold in 2005, or 8 percent less than in 2004.
The four-plex was a popular product with buyers and investors recording $234.6 million in sales in 2005, a 27 percent revenue jump from 2004. Its average current sale price is $97,700-per-unit, or 27 percent higher than a year ago. Roughly 24 percent of all four-plex owners were from out of state in 2000. That figure has since risen to 33 percent today.
The valley’s rental market, as a result, is shrinking as demand continues to rise. There were 190,694 apartment units in Southern Nevada in March 2004. The current inventory, however, is now around 178,914 units, or 6.1 percent less than 21 months ago.
Skyrocketing construction costs resulted in 17,000 apartment unit conversions last year as opposed to none the prior year. New home prices reached $345,130 in December, excluding condo conversions, reports Home Builders Research Inc. It marks an 18.9 percent price increase over the previous year.
Condo and townhomes, by comparison, were $204,000 in December, making them a far more financially affordable entry-level option.
(Source: Las Vegas Business Press)