Rent and Inflation
The cost of rent and inflation go hand in hand. Rent contributes to inflation, while it’s also affected by inflation. It’s a vicious circle. 34 percent of the Consumer Price Index (CPI) is made up of shelter. And in June 2023, rent was still a significant contributor to inflation.Las Vegas Rent Increases
In 2021, rent for a two-bedroom apartment was up 30 percent. That brought it to $1,946. Ultimately by 2022, rent had increased by 40 percent for the world’s entertainment capital. Neighboring towns to Las Vegas weren’t much better, including:- North Las Vegas: $1,845
- Reno: $2,353
- Sparks: $2,198
- Henderson: $1,989
Why Did Las Vegas Rent Increase
To be fair, rent on multifamily homes in Las Vegas has been on the increase for the last 10 years. But in 2021, it spiked higher than usual.The main reason rent went up in Las Vegas so drastically was inflation, but there were other contributing factors. Lack of inventory was a big cause. There was a shortage of vacant rental properties. The result was affordable properties weren’t available.
The vacancy rate for Las Vegas in 2019 was 7.3 percent.
Rent to Income for Las Vegas
The national rent-to-income ratio is 30 percent. In other words, 30 percent of your income should go toward rent. In keeping with this ratio, the average resident of Las Vegas or anywhere in southern Nevada needed a higher average income to afford housing. Income in 2022 needed was:- studio apartment: $34,043
- two-bedroom: $49,294
- three-bedroom: $69,860
Is Las Vegas Rent Coming Down?
But renters in Las Vegas may finally have some relief. Prices are starting to go down. Las Vegas saw the biggest rent decrease in the nation from year to year in July 2023. Prices fell 6 percent. The cool-down is affecting two-bedroom apartments the most. But why the sudden change in rental rate growth?Reasons Las Vegas Rent Is Decreasing
Multifamily housing availability has become more abundant. In the first quarter of 2023, nationally, the vacancy rate has increased to 6.4 percent. But in Las Vegas, vacancy rates have gone up 9 percent for the same period.One reason for the increase in vacancies is multifamily housing construction. In the first quarter of 2023, 1,934 multifamily units were delivered. That brought the inventory to 203,937. This is the biggest increase in units since the third quarter of 2009. Development is slated to increase. There are currently 9,155 units under construction.
Population decreases are another contributor to the slowdown in rent increases. The heat’s been taken out of population growth. Las Vegas is currently growing at a rate of 0.54 percent annually. Because Las Vegas is predominantly a tourist destination, it was hit fairly hard by the COVID lockdown. There are still residual effects.
Taking Advantage of Lower Rents
Landlords and management companies are starting to make some concessions to entice renters. For example, in 2021, only 10 percent of apartment management offered rent concessions. But in December of 2022, over 22 percent of Las Vegas properties offered concessions.There may be some wiggle room for negotiation in some apartments. But if you’re already under a lease or have just signed before prices started to drop, you may be out of luck.
It probably won’t be worth breaking the lease and taking the penalties to move to a lower-priced apartment. But at renewal, negotiation is possible.
The bottom line is that inventory is increasing, and rent is starting to decrease.