Las Vegas Real Estate Market Thrives Despite Business Closures

Guest Blog By: HomeLight, Kelsey Luvisa

Across the nation, more than 100,000 small businesses have closed for good in the first two months of the pandemic. Since then, tens of thousands more have followed suit, causing millions of people (the highest was 18 million back in April) to lose their livelihoods. One would think that due to the severe impact the pandemic continues to have on the nation, the real estate market would be in turmoil, too. 

That’s not necessarily the case. In fact, 81% of real estate agents who participated in HomeLight’s Q4 survey for 2020 are optimistic about the future! The demand for housing is booming, although the survey indicated housing inventory was low in 84% of markets. 

There’s no denying that COVID-19 has made real estate adapt to the many challenges they face, but one challenge that remains is trying to sell homes in communities where many businesses have closed.

Let’s take a look at some of the effects mass business closings have on the surrounding communities and how Las Vegas is the exception to this trend.

Buyers and renters lose interest

When you’re thinking about buying a house or finding a rental, one of the biggest factors we consider is whether there are job opportunities. Understandably, people want to know that they’ll have a steady and reliable source of income if they’re moving into a new house or rental. 

As a result of the pandemic, communities where businesses have (and continue to) shut down are seeing fewer people wanting to move into the area. Why, even the San Francisco’s financial district has experienced massive business loss and it’s even being dubbed a “ghost town!”

Also, buyers lose interest in cities like New York City (where over half of the restaurants could be on the verge of closing) because they aren’t able to have access to fine dining, culture, and sense of community as before.

How Las Vegas differs: In 2019, housing demand has increased as people from higher-priced cities are moving to Las Vegas. The luxury home market is particularly doing well – they’re actually setting records as demand soars for high-price neighborhoods. 

Also, the median rental price is about $1,500 and with there being a 16.48 price-to-rent ratio, investors can benefit from the high demand for rentals in the area. 

Lower rent and home values

Communities where buyer and renter interest is waning, sellers and landlords need to pull out all the stops in the hopes to get some movement on their properties. Landlords are lowering rent just so they can fill a vacancy and regenerate that source of income. Sellers are lowering their asking prices so they can appeal to buyers. 

The lowering of these rents and listing prices may be appealing to those looking for a place, but they need a steady and secure job among other things. Sure, when workers are able to work from home business closures may not be a big issue in that regard, but like we mentioned, the lack of dining, shopping, and other businesses are a deterrent. 

How Las Vegas differs: Single family homes have actually increased by 10.2%! Condos and townhomes sold about 5.8% higher than last year, the median sale price being $185,000. 

Increased homeless population

Mass business closures lead to mass job loss, and when people cannot find work, they’re going to fall into debt. They can’t pay their bills, their mortgage, or rent. When the eviction and mortgage moratorium ends, millions of people are on the brink of being homeless. Why, 20% of real estate agents say they’re already seeing an increased homeless population; the pacific region being the hardest hit.

How Las Vegas differs: Right now, the foreclosure rate is 0.4%. Although the national foreclosure average is 1%, due to the mortgage forbearance issued in July, Las Vegas has seen the lowest number of foreclosures and short sales in the history of the city. 

The residential real estate market is tied to the commercial real estate sector much more than one would think. As more businesses close, more commercial buildings go vacant and it’s highly unlikely that there will be any new businesses setting up shop any time soon. We can thank the pandemic for the slow decay of communities that rely on the small businesses. Despite all of this, we have to remember that this will not last forever, even though we can’t pinpoint when it’ll come to an “end.”