Page 12 - 2016 Las Vegas Residential Real Estate Report

INVESTOR
& RENTAL
Investor interest in Las Vegas residential real estate peaked in the years 2012 and 2013, which we call “The Great Opportunity,” an epochal event when investors could scoop up distressed or historically undervalued homes. Today, the purchase side of the market is led by owner-occupants but residential rentals are still maintaining the interest of investors.
Now that prices have rebounded markedly, most investors are looking to achieve returns that exceed popular xed-income investments, even if they lose some liquidity. Despite cap rate compression as home prices recovered, the historically low interest rate environment continues to cause a search for yield
and rental housing still ts into this basket of potential investment opportunities. Throughout 2016, we helped a multitude of investors conduct analysies and ultimately purchase investment properties.
In 2016 Institutional interest, some of which are organized as REITs, was minimal as most existing rms concentrated on management or M & A activity. Most of the investor activity in 2016 was dominated by the mom and pops.
LANDLORDS THAT PURCHASED DURING THE RECESSION ARE LOOKING LIKE GENIUSES
Although investment buyers continue to purchase in themarket,investorsarealsoemergingassellers. For investors that purchased in 2010 through 2013, they could be sitting on in ation-adjusted paper gains of
30 to 60 percent. Incentives to liquidate are plausibly, manifold. In our experience, sellers are listing properties in order to fund other growing business, are no longer willing to manage the assets or the private funds that were assembled to buy distressed assets have reached the proposed sale dates. We anticipate more sales activity by investors in 2017, many of which will be offset by other investor purchases.
One of the most interesting stories that the data revealed took place in the rental segment, which was characterized by swift lease-up times and rising rents. We observed that as turnovers occurred, landlords could often achieve rent increases of
$25 to $100 per month.
Using the multiple listing service rental inventory as
a proxy for the valley’s rental supply, 2016 revealed
a mild decline from 2015, concluding the year with almost 12 percent fewer active for-rent listings. This was far more stable than in previous years and for perspective, December 2016 had roughly 60 percent fewer single family active rentals than December 2015. With many recent months showing more leases being signed than homes placed on the market, it’s no surprise that rents have been growing for the past several years. Importantly, marketing times have also dropped dramatically. Days on market bounced around historic lows during 2016’s summer, the seasonal low point for the measure. Although managing disparate rentals can be challenging, in retrospect, a lot of the landlords that purchased during the recession are looking like geniuses, with both asset price increases and increasingly strong rental fundamentals.
SINGLE-FAMILY RENTAL –DAYS ON MARKET–
Source: Clark County Assessor, GLVAR, Coldwell Banker Premier Realty