Las Vegas Rent Decreasing

View of Las Vegas, Nev., from the south, with Turnberry Towers in the foreground, on May 19, 2019. Leeds Fotografica/Shutterstock

In 2022, most Americans had it rough financially. Inflation surged up to 9.1 percent at one point, and food prices hit an increase of 9.9 percent. If that wasn’t enough, those who rented were also hit hard. Overall, in the United States, multifamily renters were experiencing increases of 12.2 percent for new tenants. Renewals were going for a 3.5 percent increase.

But that was 2022. Now are rent increases still hitting double digits? Some cities like Las Vegas may be seeing some relief.

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.

Significant rent increases in 2021–22 added to the already tenuous economy.

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

The 40 percent increase for multifamily housing in Las Vegas was the highest in the country.

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.

Between 2021 and 2022, the national vacancy rate estimate was lower than at any point between 1985 and 2019. This brought the vacancy rate to 5.8 percent. Las Vegas decreased to 5.5 percent in 2021. This created a rent increase.

The vacancy rate for Las Vegas in 2019 was 7.3 percent.

Another factor that went along with inventory was a population explosion. Between 1990 and 2000, the population increased by 85 percent. It did slow down to 1.55 percent growth between 2019 and 2000. But the damage was done, and the increase in population put a strain on the already limited multifamily housing.

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

Based on multifamily rental rates for a two-bedroom, that’s a rate-to-income ratio of approximately 45 percent for Las Vegas. Reno’s rate-to-income ratio for a two-bedroom apartment was around 57 percent. Both cities are over the national 30 percent rent-to-income ratio.

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.

Post-pandemic, household formations helped in causing rents to stabilize. Families have combined living arrangements, including multigenerational living.

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.

The Epoch Times Copyright © 2023 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.