While the headline “real estate in Las Vegas slowing” might have you feeling sorry for real estate investors in Las Vegas, this is not the whole story. Las Vegas real estate has risen in value nearly every month since mid-2012 with double-digit percentage increases year-on-year. In August 2012 the year-on-year increase was 14.5% rising to a staggering 34.1% in April 2013. When you take into account the fact that the year-on-year increase in September 2013 was still a phenomenal 26.2%, this has certainly been a very lucrative party for those with exposure to Las Vegas.
So, why are experts now predicting a slowing of the Las Vegas real estate market and will this be a long-term change?
Negative equity is no longer a problem
One common factor associated with the ongoing rise in Las Vegas real estate prices was the fact that many people were struggling with negative equity and supply was thin on the ground at a time when domestic and overseas investors were looking to snap up Las Vegas real estate. While not everybody is out of the woods yet with regards to negative equity there is no doubt that more people today are now in positive territory and therefore able to cash in on their real estate exposure and perhaps reduce their financial liabilities going forward.
Quote from PropertyForum.com : “Over the last few years the Indian real estate market has attracted the attention of both domestic and foreign investors. It is a country with an enormous population, a growing economy, deep rooted interest in real estate although everything is not as rosy as it could be in India.”
This increase in supply to the market comes at a time when some investors are taking a backward seat and cashing in their Las Vegas real estate chips. Therefore, this is the predominant reason why many experts believe we will see a slowing of real estate price increases over the next few months with April 2014 perhaps set to show the worst year-on-year increase of late – simply because it will be compared against a phenomenal period in 2013.
Taking steam out of the market
It will be interesting to see how the Las Vegas real estate market performs over the next 12 months because in the real world a reduction of the ongoing appreciation in real estate values is healthy. We are perhaps now at a situation where the depressed nature of the Las Vegas real estate market just two years ago is consigned to the history books and maybe we are approaching fair value?
When looking at the potential for Las Vegas real estate we should also take into account ongoing difficulties with regards to the US economy. There are still a number of economic hurdles for the government to overcome, budget problems could arise again in early 2014 and the worldwide economy is not really out of the woods as yet. Against this background perhaps it is understandable that some real estate investors are now taking their foot off the gas and perhaps cashing in some of their lucrative real estate chips.
The performance of the Las Vegas real estate market over the last 18 months has been phenomenal to say the least. Prices peaked in April 2013 with an increase of 34.1% year-on-year and while September’s annual increase was still 26.2% there are signs of a slowdown in appreciation. As a consequence of April’s phenomenal performance there is no way that April 2014 can live with this increase therefore the like-for-like figures will perhaps inject some reality into the situation.
What the future holds for Las Vegas real estate, nobody knows.