Las Vegas, dubbed the riskiest housing market in the nation less than a year ago by real estate analyst CoreLogic, is on track to price the working class out of the market by the end of the year, says Las Vegas Realtors president Aldo Martinez, and Wall Street is scrambling to scoop up the rentals would-be buyers will be forced to lease.
Southern Nevada’s housing market, rumored to be on the brink of collapse since it began recovering in earnest from the crash of 2007, is among the upstarts of the pandemic economy, which has seemed disconnected from reality at times, with record stock market and real estate gains starkly contrasted against a backdrop of widespread financial and emotional despair.
In September 2020, real estate analyst CoreLogic predicted with 70 percent certainty that home prices in Southern Nevada would fall by 7.8 percent by July 2021.
What seemed like a sure bet proved to be a fool’s wager.
The median price of a home — $385,000 — has increased more than 14 percent since CoreLogic deemed Las Vegas the riskiest market in America.
The company did not respond to questions submitted by the Current.
“Their crystal ball works about as well as everyone else’s,” says Martinez. “If it were a science, Wall Street would be making a gazillion dollars.”
Investors, he says, are wagering that Southern Nevada’s housing prices are for real and the market is nearing a tipping point.
The median price of a single family home was $295,000 in August 2020. It’s increased $90,000 in less than a year.
“By the end of year we’ll be well over a median of $400,000, outpricing the median wage earner who will no longer be able to afford a home,” says Martinez. “That’s what Wall Street is banking on — that they’ll have to rent and become tenants.”
Martinez says investment companies such as Zillow and BlackRock are “buying up everything between $250,000 and $400,000 with some going as high as $450,000,” with the intention of turning them into rentals.
It’s a new twist on the strategy made popular by investment firm Blackstone when it gobbled up properties after the Great Recession, leasing them through a company called Invitation Homes.
“There is more institutional capital (Private equity funds such as Blackstone) flowing into such asset types now as opposed to mom and pop landlords, which were the traditional owners for such rentals,” Dr. Vivek Sah, director of UNLV’s Lied Real Estate Institute, said via email. “Such funds/institutions have a bigger appetite and hence have been purchasing in bulk especially in cities that have younger demographics and growing population (due to large in-migration like in LV MSA).
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