Las Vegas property market begins long-awaited recovery
Patrick W ONeill
Cai Shen 財神 is a welcome site in Las Vegas these days. Statues of the Chinese god of prosperity are appearing at the major casinos courting Chinese gamblers and it appears that Cai Shen’s influence is spreading to the housing market.
Las Vegas was one of the hardest hit markets during the US housing meltdown of 2008. Prices in Sin City plummeting 70 percent in some markets; double the national drop of 30 percent. The Vegas market lead the nation in foreclosures and loan defaults but good luck has returned to property owners with prices increasing and foreclosure levels at new lows.
According to the Association of Realtors, the average price of sold condominiums in September is up 19.8 percent and single family homes are up 13.7 percent. The number of available units without offers for condominiums and singles family homes is down 35.6 percent and 63.1 percent respectively. This mirrors the national trend of lower inventory, increasing demand and upward pressure on pricing.
U.S. foreclosure filings dropped to a five-year low in September as fewer properties were on track to be seized by lenders, according to a report released by RealtyTrac. Foreclosures in Nevada dropped 71 percent with one in 158 homes filing foreclosure.
Adding to the local demand is the influence of international purchasers including an increasing number from Hong Kong, Taiwan and Mainland China. Visitors from these areas are arriving in record numbers and the US Department of Commerce projects arrivals of Chinese visitors to Las Vegas to increase 219 percent by 2015. To accommodate the exploding growth of the international visitors, Las Vegas recently completed the new HKD19 Billion Terminal 3 at McCarran Airport.
The Las Vegas luxury market, with properties over HKD6 Million, is particularly pleased with the increasing number of international arrivals. The Residences at Mandarin Oriental Las Vegas has been popular with intercontinental buyers with the combination of the Mandarin brand quality and rental income opportunities. Units originally priced at HD11,841,000 are now available from HK6,030,000 representing a near 50 percent discount. Located on The Strip in the heart of Las Vegas, the luxury building also has a grand penthouse offered at HKD40.3 Million.
The low-end market is made up of properties in the HKD600,000 to HKD1.1 Million price range with net rental yields averaging 7% and above. Several groups are targeting international buyers through buy to let offerings with tenants in place. Las Vegas is one of a handful of US States that has no capital gains or income tax increasing its appeal to investors.
- Patrick W ONeill is a 30 year property veteran and CEO of the ONEILL Group Hong Kong. The firm specialises in assisting international purchases of US properties with offices in Hong Kong and the United States and is coordinating the Hong Kong US Property Conference in December.