By Michael G Lewis, Simply Vegas Real Estate

What’s ahead for the LV real estate market in 2022? All the factors that contributed to the increase in property values through 2021 are still going strong and showing no signs of weakening. 

The now years-long pandemic brought stark changes to industries across the board. But home sales prices are setting new records by the month and the current economic climate suggests that this growth trend will continue, especially here in Las Vegas.

The Changing Image of Las Vegas

Las Vegas is no longer a two-industry city. The era when the gaming/lodging sector along with the construction industry drove the local economy ended years ago. Since then, the city has attracted families and businesses from other regions of the country at a remarkable rate. Between 2010 and 2020, the population of Las Vegas and the surrounding metro area grew by 18.7 percent. Using data from U.S. Census Bureau’s Population and Housing Estimates Program and the Bureau of Labor Statistics, one report ranked Las Vegas among the top five fastest growing cities in America. New residents bring new skills, new ideas, and diverse cultural narrative to the city. 

The attractiveness of Las Vegas can be attributed to the nation’s awareness that the quality of life here is far richer than traditional stereotypes. In the last few years, adding a world class performing arts center, bringing in new professional football and hockey franchises, a WNBA team, and ongoing talks about bringing a Formula-1 grand prix to the city illustrate the dynamic variety of community’s interests. 

The presence of UNLV, a surging influx of tech companies offing high paying jobs, and no less than seven national parks nearby means we’re more livable than most cities. Add all these elements to a lower cost of living and no income taxes and you see why Las Vegas is becoming a magnet for home buyers.

Limited Housing Inventory and High Demand

The pandemic’s disruption of the supply chain will take time to recede which means the price of construction materials, which rose by 19 percent in 2021, will remain high for the foreseeable future. The sparse availability of skilled labor means builders are paying higher wages. When the price of housing construction starts at a premium, existing home inventory is in even greater demand. 

The pandemic also caused whole swaths of the workforce to reexamine their life-work balance. More than ever before, home buyers are looking for their living space to accommodate more remote business activities. This pattern combined with the continuing exodus of families and young professionals from older, inhospitable cities, the future demand for Las Vegas real estate remains promising.

2022 Las Vegas Real Estate Market Strengths

Any whispers about our current real estate market resembling a bubble are unfounded and ill informed. The economic circumstances supporting a strong Las Vegas real estate market in 2022 are sound and very different from the shaky speculative fever that preceded the 2008 financial crisis.

Virtually unregulated mortgage lending practices led to home buyers with no income, no jobs, and no assets, so called NINJA buyers, getting home loans they could not pay. Interest-only loans and adjustable mortgage rates compounded the odds of those buyers failing to meet their obligations. With little stake in the property, many simply walked away from the debt, leaving those who invested in mortgage-backed securities in the lurch. 

Banks have since tightened the criteria for qualified mortgage applicants, demanding minimum down payments and reliable streams of income to support each loan. As a result, mortgage default rates of 11.5 percent following the 2008 crisis are now less than two percent. Today’s homeowners own substantial equity, and cash transactions are not uncommon.

The near-zero interest rates prevailing in recent years are bound to rise during 2022, but there is no suggestion that mortgage rates will climb significantly. Higher wages and continuing low interest rates are likely to fuel a sustained high demand for housing in Las Vegas. The 23.2 percent spike in home values seen in 2021 is certain to slow. But demand for housing stock is still outpacing inventory and that spells swelling prices at least until the construction supply chain stabilizes. Allowing for a reasonable recovery time following the pandemic, the production and delivery of materials might not resume normality until mid-to-late 2023.

Sales of luxury properties were also steady throughout last year with no signs of wavering. With only 500 agents, my brokerage generated $2.1 billion in gross sales volume in 2021. And almost 2,000 Las Vegas homes sold for over $1 million in 2021.

Yet another factor stimulating demand and increasing property values is the escalating pace of investment in rental properties driven by the hot rental market. Recent arrivals who are not ready to buy or who need time to accumulate a down payment are renting first. Some tenants are renting to own in order to get into their dream home as they build their credit to meet the banks’ stiffer qualifications.

Staying Bullish on Las Vegas Real Estate

Confidence in the continued vitality of the Las Vegas real estate market is not an expression of “excited exuberance.” On the contrary, the firm economic conditions underpinning the increasing value of Las Vegas property indicate sustained strength even by conservative analysis.

Las Vegas remains a young city. Innovation in existing industries and investment in new technologies along with civic responsibility, increasing diversity, and energetic leadership create an ideal environment for people searching for a better life. As parents and people planning a family seek opportunities for improving their quality of life, Las Vegas won’t be able to hide its positive outlook or vibrant plans for the future. 

Michael G Lewis is a part-time author, full-time Realtor with Simply Vegas Real Estate. Michael can be reached at 702-340-5818. He is a resident of Henderson, but he calls Las Vegas home.  His hobbies include golf and gazing upon Las Vegas sunsets.