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StumbleLas Vegas apartment market still in grip of recession
Move-in specials and deals on amenities, such as these at the Mountain Vista apartment complex, are among enticements being advertised to attract Las Vegas Valley renters. High unemployment and stagnant growth have reduced the demand for apartments.
Tuesday, March 16, 2010 | 2 a.m.
By The Numbers
- $40,300: The average price per unit of apartment complexes sold in Las Vegas in 2009. Average price per unit was $72,200 in 2008, and $108,500 in 2007.
- 11: The number of Las Vegas apartment complexes — with 100 units or more — that were sold in 2009. In 2007, 42 complexes were sold.
- $525: Monthly rent for a two-bedroom unit at one complex in the southeast Las Vegas Valley. Monthly rent had been as high as $710 per month in 2007.
Sun Archives
- Report: Vegas housing market shows no ‘glimmer of hope’ (12-29-2009)
- Valley job losses driving apartment vacancies (10-30-2009)
- LV apartment rental rates decline in third quarter (10-21-2009)
- Foreclosure frenzy hits apartments (8-7-2009)
- Analyst: Apartment market points to further deterioration (4-24-2009)
- Foreclosed, vacant homes pressure apartment rents (4-10-2009)
- Apartment occupancy dips due to economy, unemployment (2-20-2009)
Nevada is not only at the top of the list in home foreclosures. The state also leads the nation in the percentage of delinquent loans for apartment complexes.
Nearly one in four loans for multifamily residences that rely on commercial mortgage-backed securities are in arrears, according to Fitch Ratings. That’s about double the national average.
Rents will remain depressed as landlords offer significant concessions to sustain occupancy levels, said Mary MacNeill, a managing director at Fitch Ratings. High unemployment and stagnant growth have reduced the demand for apartments and, therefore, cash flows, she said.
“Nevada has a stressed multifamily market,” MacNeill said. “It’s certainly showing a lot higher deterioration than the rest of the country.”
Despite the high number of delinquencies, lenders are reluctant to foreclose on apartment owners, MacNeill said. That would drive down values and rents, she said.
Michael Belnick, an apartment market specialist for Re/Max Central Commercial, said frustrated investor groups are waiting on the sidelines to gobble up foreclosures, but lenders haven’t been putting them on the market. Many are managing the properties and waiting for the market to recover before selling them at better prices. Lenders are working with apartment owners to help them get through the recession, he said.
“Nothing makes sense right now. We are not getting the amount of product that was anticipated,” Belnick said. “The vulture-fund people with the dollars don’t like it because they don’t have access to the product. They are not getting anywhere.”
Belnick attributes that to federal banking regulators relaxing rules for commercial properties and reserve requirements.
This has affected the sale of apartment complexes of 100 units or more. Just 11 changed hands in 2009 in Las Vegas after 42 were sold in 2007 and 17 were sold in 2008, according to Belnick.
More activity has been in the fourplex market, with 416 sales in 2009 in Las Vegas, nearly doubling the 209 sales in 2008, Belnick said.
Of properties that are on the market, many transactions have multiple offers, sometimes driving up the price, Belnick said.
The investor groups, however, are looking for bargains.
“If a property is running at 25 percent vacancy and expenses are running high, they are not going to pay $60,000” per unit, Belnick said. “We have a test of wills going on right now.”
The price per unit for all complexes sold in 2009 in Las Vegas was $40,300, down 44 percent from $72,200 in 2008. It was as high as $108,500 in 2007. That’s a function of rents and occupancy, Belnick said.
Belnick cited the Village at Karen in the southeast valley — a cluster of fourplexes run as one big complex. In 2007, it cost $690 to $710 a month for a two-bedroom unit; today that’s down to $525 a month and there’s a 25 percent vacancy rate, he said.
Lloyd Sauter, co-owner of the Sauter Cos. real estate brokerage, said he has seen a noticeable increase in interest by investors who think the apartment market has bottomed out and don’t expect any more declines in rental rates.
Many apartment owners are reluctant to sell because they would receive less than they would spend to build a new complex, Sauter said.
Most of the foreclosures have occurred in older lower-end properties that were bought for $60,000 to $70,000 a unit. They’re worth about $30,000 today, Sauter said.
Owners of newer complexes are in better financial positions to wait out the economy, he said.
“We have a lot of money laying on our desk that wants to invest in Las Vegas,” Sauter said. “What we are saying to aggressive buyers who want to be in Las Vegas for the long term is that they are going to have to adjust and take a little risk. We haven’t convinced heavy-duty buyers to pay more than they are worth today. They are not that excited about that.”
Despite the downturn, Belnick said he’s optimistic about a recovery because he thinks there will be a shortage of apartment units in a couple of years because of the lack of construction.
The strongest demand among tenants will be for older, more affordable complexes with fewer amenities, which are in shorter supply because much of the construction has been on high-end units, Belnick said.
The apartment market will recover and rents will go up again, Sauter said. But it is tough, he said.
“There are lot of frustrated people out there,” Sauter said. “What we have are a tremendous amount of people in the construction industry who have lost their jobs and can’t pay their rent. They walk from one property to the next.”
This story appears in the current issue of In Business Las Vegas, a sister publication of the Sun.
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Until there are jobs offered here in the valley, no one will be renting apartments, or buying homes anytime soon...
Let's raise some more taxes and drive up the cost of fuel. That is the current plan of harry Reid and Obama.
Gasoline over $3.00 with Harvard University projecting $7.00 to cover the "green" revolution they champion. How many visitor, jobs, and dollars do you think that will take from Las Vegas?
These ideologues are determined to make a fundamental transformation of America, whether you like it or not.
WHY WOULD ANYONE WANT TO BUY AN APARTMENT COMPLEX IN AN RIDICULOUSLY OVERBUILT MARKET
THAT HAS *NO WATER*.
NEVADA ONLY GETS .3 PERCENT (POINT THREE PERCENT) OF ALL THE WATER THAT FLOWS IN THE COLORADO RIVER BY LAW, WITH CALIFORNIA AND ARIZONA GETTING ALMOST ALL OF THE REST....
neiman1 - would you mind staying on topic and tell me what your comments have to do about apartments?
Anyway, I'd like the "Sun" to have found out the following: how many people who used to have an apt. lease have gotten renewals at lower rates if at all and how many of them have just waited out their lease and then moved into a cheaper place? Also, what is the current vacancy rate in the apt. market? What percentage of that is affected by the end of people flooding into the area and what percentage of it is due to people moving away?
Delinquent loan issues for apt. complexes seems to be a combination of the lack of construction as the story indicates but also the lack of renters. That needs to be covered. And what are apt. owners doing to keep good tenants and attract others other than "great deals" to move there? The article cites that the apt. owners will raise rates eventually - based on what formula and to what degree? Just want a fuller story. Thanks.
They were paying better than a hundred grand per unit back in 2007 ? They deserve to lose their buts for being that stupid
Is Camden still treating tenants like garbage?
Good points chediski.
In my area four units have moved out in the last month, but all of them to buy homes. I also wonder what the numbers are on people moving out of apartments and into homes locally...
good ole' supply and demand.
they built all those homes and condos and apartments so people here to build city center, red rock station, etc. could live and now that those jobs are gone, there's not enough people moving to las vegas to fill up enough rentals to the "tipping point" where rents can be raised.
and when you buy that foreclosure home and then try to rent it out, you're just adding to the supply.
i have a feeling vegas is entering the "third wave". first was housing crash, then unemployment, now it's population loss.
population loss is taking place - so tell my landlord to give me the deal I have requested. There will continue to be empty apartments and houses for the foreseeable future - and empty hotel rooms - it is a good thing because perhaps the supply will be slowly reduced and the water allocation will last now that the courts have forbidden the attempt to take water from the Great Basin.
" how many people who used to have an apt. lease have gotten renewals at lower rates if at all..."
Last year when I was still in Vegas, my lease came up for renewal. They gave some incentives ie 12 month lease - $500 off the first month's rent, 16 month - $750 off the first month. I signed the lease with the hope of finding a job BUT THEN found out, for new renters, they reduced the rent, for example in my size apartment, from $895 a month to $750!! (I'm sure it is less now). I did not know at the time I resigned my lease that these incentives for NEW tenants were in place and it infuriated me because none of the current residents were informed of these new rents nor able to take advantage of these new rents...unless they did not resign their current leases and moved to another apartment in the same complex. And as we all know, even renting a Uhaul truck and getting friends to help can cost money. That was not an option for me. Also, what some of my neighbors and I noticed that with the lower rents, the type of tenant changed. You had families, and that included mom, dad, gramma, grandpa and 5 kids, moving into 2-3 bedroom units and 4 or 5 20 somethings that liked to party all night moving into the 2 bedroom units. Before that the complex was family friendlyand you never heard loud music or all night pool parties.
"Delinquent loan issues for apt. complexes seems to be a combination of the lack of construction as the story indicates but also the lack of renters".
Back in 2007, the abundance of NEW construction on apartment complexes was booming. In fact, it bordered on ridiculous. There were so many NEW places that we all wondered why all this building was going on because the writing on the wall was becoming clearer that there was NO WAY these places could fill up. In the NE part of the valley around Losee and 215, there were 3 huge new complexes that were built. My guess they have more than 25% vacancy rate. You figure how many more like complexes were built all over the valley? We even laughed that they will all end up Section 8 apartments one of these days!! Don't think some of these investors have that in mind.
Also, if the apt complexes are in trouble - what about all the homes that are being rented out? I'd like to know what your average 3-4 bedroom home is renting for these days; back in 2008 you could still get at least $1200 a month rent for these properties. I highly doubt that is the case currently.
"Supply and Demand for Apartments" is all smoke and mirrors.
Back in 2005 the Vacancy Rate for apartments was artificially depressed because of two large factors:
* Apartments being Converted into Condominiums
* Low-income trailer parks being destroyed.
This created a panic situation among renters between those who lost their homes, and those who still had places to live, but were terrified that they'd be kicked out at any time. Lack of confidence started the first phase Las Vegas' mass exodus of renters who would continue to pay rental fees because they couldn't afford to leave the city when they suddenly saved up the cash to leave in a hurry. What happened then was the apartment complexes started citing "supply and demand" as an excuse for jacking up rental fees.
Now fast forward to 2010:
Rental prices are now being driven down because of the high vacancy rate which is due to 3 big factors:
* Population Decline
* Condominiums being converted BACK into Apartments.
* Flood of Rental Homes available as a result of the Foreclosure crisis.
The last two items are the biggest threats of all. Why would you want to rent an apartment, fight over parking, listen to your neighbor's loud stereo or TV all the time when you can live in a safer, detached home? Never minding the fact that individual properties owners themselves can actually give incentives as good as most Apartment Complexes?
In 2005 even this newspaper here was reporting that Apartments were in dwindling availability, citing some local real estate report that in turn was citing the aforementioned condo conversions and destruction of trailer parks. And just like as we've seen with Commercial Real Estate, a single report gets released, and suddenly every two-bit development corporation was taking out loans to build new property in an effort to meet said demand, hence the development of new apartments in 2007.
Sorry apartment complexes, but you really got what you deserved. In 2004 I had a friend who was married, and his wife had just given birth to another child. They lived in the Camden apartments @ 9000 LVB South. A few days after the baby was born, Camden completed the transaction of selling the property, and the new owners gave a 3-day notice of eviction to all residents so that apartment conversions could begin. They suddenly had to move, and many others who knew him and other residents who also lived there were not only shocked, but lived in fear of being evicted from our own apartments. Paying your bills on time didn't matter, because you could easily be evicted just like that. For years after many apartment renters here in Las Vegas got to live in fear of losing our homes because of these greedy apartment complexes. Well, now it's their turn. I hope they get to loose just as much sleep as we did with the fear that they'll get to loose their properties because residents they chased off won't be returning, taking their money with them. Serves them all right.
DMCV you have a good point. The apartment conversion market a few years ago was very unfair and unethical in it's relationships with tenants.
Despite the downturn, Belnick said he's optimistic about a recovery because he thinks there will be a shortage of apartment units in a couple of years because of the lack of construction.
There is a lack of contruction because there are a lack of new residents moving into Las Vegas because of a lack of opportunity. I say opportunity instead of jobs because there are jobs being offered by scum business persons looking to exploit the unemploymed.
I am def in agreement with the above postings on how Karma came back to bite these greedy apartments in the you know what.
We were living in an OLD APT (leaving the property name anonymous) and they were charging us $1220 for a 2 bedroom. As the economy was deteriorating we discovered that they were charging new tenants $870 for the same model 2 bedroom unit. I found this out as about 2 months before the lease was up I would call each week and pretend to be a "new customer" inquiring about rates.
We also noticed a change in the tenancy as there was more partying, drugs, fights, gym equipment theft, and rent box vandalism. Some criminal broke in to the rent drop box, stole our money order which was written out to the apartment, wrote someone fake name on it and cashed it at Bank of America (another organization of greed). Luckily we were not held responsible but we were still inconvenienced as had to go out of our way to file police reports and deal with the money order company. The last straw was when they sent us a renewal notice offering less than $100 off rent if we signed an 18 month lease.
The good news is that this beautiful gorgeous NEW PROPERTY was being built up the road and was initially going for about $1600 a month when construction began. Due to the economic conditions the NEW PROPERTY dropped their rates from $1600 to $999. We signed an 18 month lease with minimal deposits/ move-in costs and told OLD APT to take a hike.
If your lease is up and you do not have a foreclosure destroying your credit score you are definitely in the drivers seat and can negotiate prices on a new apartment.....
I am not a scientist or an expert on our water supply but I do wonder if the reduction in population would result in an increase in water supply. If so, it would be another incentive for me to continue residency in SINCITY....
This is real simple for apartment management teams
DONT require a 800 credit score
DONT require a 20 yr background check
DONT require a 3 yr min job requirement
I get that you are trying to get the best renters,BUT the process you property management types put people through to rent a 400 sq ft hole in the wall is ridiculous
My buddy moved here last year,and every one of these places ran him through the mill just to rent a piece of crap off rainbow/russell
He wasnt perfect,no,but the credit requirements you people seek,no wonder there is 25% vacancy rate,and look at the areas that you have these idiotic requirements in place
The only reason these apartments have any vacancy is because of deception with the signee,or they the applicants have 8 people living in an apartment,and 1 of the 8 qualifies to actually reside on the lease
Im not an apt owner/renter,but i have heard this the last couple years with new arrivees looking for a place to live
then again after i write all this,I think to myself WHY would anyone be moving here?
peace out
also i understand that this article was mainly the purchaser,but it still affects rentals as well
Worse, some of these weekly rentals especially the ones on Harmon Avenue are drug, roach and bedbug infested.
If you are looking for an apartment to rent, you are better off to get the weekend classifieds and look at condos to rent. There are numerous privately owned condos which rent at the same price as apartments, and which are not involved with apartment managers and/or management companies that treat all prospective renters like dirt. If you have a decent job, all you have to do is show the condo owner your paycheck stub, and tell him/her your story. You should be able to strike a nice deal.
Stay away from apartment managers and management companies, they are nothing but trouble.
Well I posted above and I have since gotten an offer for a new lease which is actually 240 below my previous lease. As for privately owned buildings - beware for often they are in default. Good luck wherever you may be and may you enjoy your green beer!
I know,I have seen the ones on Harmon by MGM,nasty looking!
"If you are looking for an apartment to rent, you are better off to get the weekend classifieds and look at condos to rent."
Better yet, www.realtor.com. Click on "Rent", fill out zip code and all the other info, ie 1 bd, 2bd, etc. and click search. Or pick out the area you want to live and drive around.
revtomperl
That's a nice reduction. Good job!
I know several people who have rented for years, saved up a little money, and bought a house recently. With the average home price well under $150K, buying is now often as cheap as renting. FHA-backed loans require a 3.5% down payment. That's less than $5000 on a $140K house, and you'll get more than that back from the First Time Homebuyer Tax Credit.
There isn't going to be a recovery for a LONG LONG time. lol Nevada's fortunes are closely tied to Calif., and Calif is facing a total financial collapse in 2012.
I feel like I am haggling over a used car with Camden! I got duped into signing a 2 year lease and they actually raised the rent by 10 a month! I realized later after reading all these articles about reduced rent I could have gotten a huge discount! I called Camden and they wouldn't quote a price unless I identified myself in detail, but as I was hanging up on her, I said "just tell me how much for a 2 BR!" and she coughed it up a price $170/mo less than I'm getting nailed for! Yea, they know for me to move will cost me a bundle, so moving is not an option, so they have me over a barrel! If I could move easily I'd bolt now. They threatened me that I could go ahead and move if I felt like it, they'd watch me leave and then rent out my unit for hundreds less, they are that stubborn. And their gambit usually works! I went in and told them I wanted my rent reduced now and I was mad I got taken, and they just laughed at me and told me to move then...this is ridiculous! Back in the 90's I got kicked out of a rental house I liked a lot because the owner "wanted the cash to put in the stock market" so I had to move at great expense and personal pain move all my stuff, what a nightmare! I even offered to put in a bid on the house but the agent refused, saying they "wanted to see what it would get on the open market"...what a dick. But this is this town, everyone knows unless you are single and a vagabond with no possessions, it is very difficult and traumatic to move! So I gave in to these jerks. Now when my lease comes up again, they'll play the same game again, knowing I don't want to move, and I'll be lucky to pay just under what I'm getting nailed for now...I hope Camden eats it
Yea, I watch people move in, stay for 6 months, then leave (cause they get a free month for signing a lease)...the good part of this is I get to watch all the jerks and families of 8 move after having annoyed the crap out of me for 6 months FINALLY LEAVE! I was actually scared to buy a house in 2002 (and would have made a fortune) because I get so mad at neighbors (who know you won't move) and they tortue you, and realistically sitting next to OJ for murder or agggravated assault isn't worth it (although maybe at the time it would be!)...The ONLY good thing about an apartment is your moron neighbors move after about 6 monnths or so, so you can just wait it out, but if you buy a house, you are STUCK THERE! And that barking dog next door, the loud crazy kids across from you, the house with 3 Mexican families crunched in it together, well you are stuck with them! Selling a house with a bad neighbor situation is really hard! So I got an apartment, and I've been here for 11 years now, and they KNOW I'm not moving over $100-$175 a month savings...I hate them! But what can I do? Yes, I am thinking of bolting and getting a nicer apt in a nicer neighborhood for the same price, but it would cost me at least $1000 to move all my crap. Plus the dudes that in the past helped me move are either dead or moved on, so I have no-one to help me anymore so there goes any leverage...Plus Vegas went down the crapper anyways, this town is a complete and utter joke, you can live in other parts of the country for half as much in new digs! (Except for California, housing is still really expensive)
I know house prices are really cheap but you might be sitting on that house for years...you will not be able to sell it! You have so many forclosures hitting the market and they will continue for the next few years that your house will sit unsold forever! That's why we are renting! But these nasty apartment managers are greedy and telling their minions, the workers, to screw every tenant at every chance! Yes, they are telling their robotic employees to screw any existing tenant that either doesn't want to be inconvenienced by moving, or isn't threatening to just move! You can try to bluff them, but they are menacing and threatening, and if they call YOUR bluff, be ready to pack up and move, no matter how expensive and inconvenient it is! Talk about abuse!!!!!!!!!!!
manfrom I got news for you pal the party has already crashed in CA and now their just waiting for the cops to take them to jail. Getting this economy needs five things and all problems would be solved.
1. Get the troops home from Iraq. We are trying to rebuild a city when we cant even help our own country out.
2. Get rid of the majority of prisions. The average person in prison costs us $82,000 correct me if Im wrong. If you are a murder you get shot. If you are a child molester you get your dik chopped off. If you steal you get your hands chopped off. So on and so forth. And for the people that just need a little bit of time for something stupid there will be no guards inside. Beat the sht out of eachother and do what ever you want if you step one foot off property you get shot by the guards on the outside. Put just a little bit of food in there and let them fight for it and dont turn the heat or ac on let them sweat or freeze. As far as you Jose or Juan you get a ticket back to Mexico if I catch you here again your getting a bullet to the back of the head.
3. The politicians need to take pay cuts start paying into SS and start collecting SS instead of these crazy retirement packages. They pretty much make what they make working when they retire how is that far? They make $170 a year and dont do anything all day but screw us. Let us decide how we want to spend our money and let us vote. We dont want this health care bill passed and Nobama is going to push it through.
4. Instead of bailing out the banks give the money to the American people that are upside down in their house. It would allow them to refi and more than likely stay in their home. Instead they give the CEO golden parachutes for failing a company. And it probably would have been cheaper to do that than give the banks billiions and billions of dollars.
5. And last but not least no more free sht. Tyrone no more walfare for you go get your dead beat ass a job and get off section 8 and food stamps. Jose no more free schooling for your childern so they can learn English you teach them that. Juan no more free health care for you get your own health care. Carlos if you want to stay here get a real job and pay taxes. Im sick of people getting to sit around all day and do nothing while I bust my ass to pay for them. If everybody got their own job and had money that would stimulate the economy. When people have money they spend money. When people spend money there needs to be someone there to service them thus creating JOBS. WOW how hard.
I lived in apartments for 25 years. Yes, they suck, but I was making big bucks with Bechtel. So I lived with drunken bums, whores on call, stupid ignorant kids playing BBall all day, all over the country. When I stopped working, I decided to live in the desert. I like the weather.
But I didn't buy a house in North LV. Not downtown LV. I bought in Henderson. Nice place. Sure, the schools suck, but my kid was already grown up.
My point? Your choices determine your outcome. Want to get shot in the head? Go to NLV. Want to have stupid kids? Live in downtown LV.
Want a decent life? Go to Henderson or Boulder City. Sorry, but that's the facts, Jack.
"My point? Your choices determine your outcome. Want to get shot in the head? Go to NLV"
With all due respect, not ALL of NLV is crime infested with gang bangers and the usual suspects. There are some very nice areas of North Las Vegas, mostly in the new sections starting North of Tropical Parkway or Centennial Parkway going North and starting West to East from about Allen to Losee up to the 215. This area includes Aliante. South of Ann Road, the area started getting shady when we were still living off of Simmons and Ann back in 2007, but going north from there, it was okay.
Todd, I don't agree with your idea of going back to a more medieval form of punishment for crimes, but it's obvious that in an ideal world all of your other suggestions would be enacted. When Meg Whitman says she's going to cut govt spending I wonder if she means she's going to cut off welfare to anchor babies and default on a few public employee pensions. Do you know what the NEXT bubble is that's going to blow up? It's the $1 trillion in outstanding student loans, half of which is in default or deferment. High school counselors have to start telling students DON'T BORROW MONEY TO GO TO COLLEGE. If you can't afford it, DON'T GO. You may end up with huge debt and no job, and you CANNOT declare bankruptcy on a student loan. Did you see that story about the doctor with $555,000 of debt?
http://www.huffingtonpost.com/2010/02/21...