The Las Vegas condo market is currently experiencing increased optimism, fueled by a combination of a lack of new supply, favorable mortgage debt levels, a booming growth of professional sports in the city, and an impressive $30 billion in planned construction projects.
Las Vegas Condo Market | Lack Of New Supply
In the years preceding the 2008 crash, 122 high-rise condominium buildings with 17,000 units were announced. In 2023, I am unaware of any viable condominium projects planned.
Waldorf Astoria | Veer | The End Of New Condo Projects on Las Vegas BLVD (opinion)
Before the COVID-19 pandemic, Luxury Real Estate Advisors performed a thorough examination of the potential for condominium developments along Las Vegas Boulevard. Our study was conducted in collaboration with the former Chief Development Officer of a large casino entity. The aim was to assess the viability of constructing condominium towers across various properties, with a target price of $1,500 per square foot. However, after a comprehensive analysis, it was determined that developing new condominium towers was not economically feasible. The primary reason behind this conclusion was the comparison between potential revenue streams from condominium sales and hotel room rentals. In parcels where a condominium tower could be constructed, a hotel room tower was also a viable option. The revenue generated from nightly rentals of hotel rooms significantly surpassed the potential profits from selling condominium units.
Mortgage Quality in 2023: A Superior Landscape Compared to 2008
Decrease in Adjustable-Rate Mortgages (ARMs): In 2008, adjustable-rate mortgages (ARMs) were a major contributor to the housing market crash. Borrowers were often lured into these loans by low initial interest rates, only to face financial hardship when rates were adjusted higher. In 2023, ARMs accounted for less than one percent of the total mortgage market, indicating a significant reduction in the prevalence of these risky loans. This shift towards fixed-rate mortgages has increased the stability of the mortgage market, reducing the likelihood of a repeat of the 2008 crisis.
Residences with Negative Equity at Near-Historic Lows:
Negative equity, or “underwater” mortgages, occur when a homeowner owes more on their mortgage than the current value of their home. In 2008, a significant number of homeowners found themselves in this predicament, further exacerbating the housing market collapse. In 2023, residences with negative equity have reached a near-historic low of 1.1%. This decrease is a result of tighter lending standards, improved underwriting practices, and a more stable housing market. With fewer homeowners in negative equity positions, the mortgage industry is less susceptible to a large-scale crisis similar to 2008.
Condominium | Current Inventory | Demand
An average of 8.4 people relocate to Nevada EVERY HOUR, with 38.3% originating from California. As of 4/25/2023, there were 56 condominiums listed at $1m+; thus, there is sufficient demand in the luxury condo segment to avoid widespread pricing corrections.
Nevada’s Top Ranking for Corporate Investment:
Nevada has recently been ranked as the best state among Western states for corporate investment. This is due to its business-friendly environment, including low taxes, minimal regulations, and a supportive state government. These factors create a favorable climate for businesses to thrive and expand, making Las Vegas an ideal location for companies looking to invest in the region.
Employment Growth
Nevada has experienced significant employment growth in recent years, outpacing other states in the region. As a result, Las Vegas boasts a growing and diverse talent pool, enabling businesses to access skilled labor and facilitate their growth. Additionally, the city’s relatively low cost of living makes it an attractive destination for employees, further solidifying its status as a hub for business growth.
New Developments |Major League Baseball and Formula One Expansion:
The entrance of Major League Baseball (MLB) and Formula One into the Las Vegas market presents new opportunities for businesses in the city. The addition of these sports franchises will not only draw more tourists but also create new jobs and stimulate the local economy. This expansion signifies the city’s growing appeal as a sports and entertainment destination, making it an even more attractive location for business investment.
MSG Sphere
Formula 1
Fontainebleau
A’s Stadium Parcel
