Not everything in the news is trustworthy.
If you’ve been following local news or scrolling through social media, you might have seen headlines like “Las Vegas Housing Market Flooded With Listings!” or “Inventory Explodes as Sellers Rush to Market!” My team and I were baffled. We track inventory daily for our investment segment, and we haven’t seen any real increase. Curious if we were missing something, I pulled broader market data to check for a sudden spike elsewhere.
“Exploding” Inventory?
Below is a chart from the MLS that shows inventory level for the last 3 years including ALL property types (condos, townhomes, single-family homes) and ALL price ranges.
Today, the combined overall inventory is at 4.4 months. Six months of inventory is considered “balanced” (the number of buyers and sellers are approximately equal). This is still a seller’s market.
If we only look at single family homes, the inventory is even lower:
What about the specific segment we target?
Our segment has about 1.8 months of inventory, firmly in the seller’s market.
Is there an increasing number of homes going on the market? Below is the chart showing the number of (single-family) new listings each month (this is for the entire MLS).
It has decreased in the last two consecutive months (May and June).
The total number of (single-family) homes on the market is not increasing either:
Everywhere I or my team looked, we could not find the “exploding” inventory the headlines screamed.
However, this media hype plays into our advantage.
A Window of Opportunity
There is no doubt that the Las Vegas housing market has experienced a slowdown compared to the expected seasonal trend. See below the chart for the number of (single-family) homes going under contract each month (for the entire MLS). I attribute this to emotional reactions to tariffs and global geopolitical tensions.
The median $/SqFt decreased slightly in May and June (but still up YoY).
Sellers who believe media sound bites and speak with realtors often believe the market is in free fall, and are more inclined to sell now and give concessions. Consequently, we are seeing more better deals.
If you want to get a better value for your investment dollars, now is the time. We believe the market will reverse to its normal upward trajectory in the near future (6 to 9 months).
Why do we believe that? Because the market fundamentals have not changed.
What are the market fundamentals for us?
Supply and Demand
Prices are a function of supply versus demand. What is the supply and demand situation in Las Vegas?
Supply
Due to our target tenant segment’s income, they can only afford to rent houses that today are priced between $350,000 and $475,000. Can the inventory of single-family homes in this price range be increased? The short answer is No. The main reason is the cost of new single-family homes, which is largely driven by the cost of land.
Raw land in desirable areas starts at over $1 million per acre. The result is new single-family home prices start at $550,000. And, according to a study by Applied Analysis, Las Vegas could run out of developable land in as little as seven years at the current absorption rates. As the amount of available undeveloped land diminishes, prices will continue to rise.
Bottom line, there is no way to increase the inventory of single-family homes priced today between $350,000 and $475,000; supply is virtually fixed.
Could a large number of homes in this price range go on the market due to a sudden population decline and/or high unemployment? Sure, theoretically it is possible. However, in reality, things are quite the opposite. See below.
Demand
Demand comes from population growth, which is primarily a function of jobs. People don’t suddenly decide to move to Las Vegas on a whim. Those living in states like California are choosing Las Vegas for its more reasonable living costs and better quality of life. Unless California suddenly becomes affordable with better housing and improved safety, this migration pattern will continue. So, what about the availability of jobs today?
The last major job fair had over 20,000 open positions. There is a huge demand for employees. What about future job growth? The total value of ongoing and planned construction projects in the Las Vegas Metro area—including those late in design—is over $29 billion, according to BuildCentral, which tracks 660 projects either in planning or under construction as of early 2024.
As jobs continue to increase and conditions in California deteriorate, more people will relocate to Las Vegas, causing housing demand to continue to increase over time.
Final Thoughts
Next time you hear someone claim Las Vegas is drowning in unsold homes, ask to see the data. This might be a great investment opportunity 😉. I will be happy to share the real numbers with you. Until then, take these sensational headlines with a grain of salt—and perhaps a dash of healthy skepticism. For actual statistical data on the segment we target, visit our regularly updated charts here.
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