Las Vegas: Prices Increase for Housing and Parking
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index was released for March with the nationwide index up 6.5 percent. Seattle leads the pack up 13 percent, with Las Vegas sporting an 12.4 percent increase from a year ago, followed by San Francisco’s 11.4 percent year-over-year increase.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said in the report, “Seattle continues to report the fastest rising prices at 13% per year, double the National Index pace. While Seattle has been the city with the largest gains for 19 months, the ranking among other cities varies. Las Vegas and San Francisco saw the second and third largest annual gains of 12.4% and 11.3%. A year ago, they ranked 10th and 16th.”
The Vegas market price increase acceleration continued in April with the new home median reaching $374,440, according to The Las Vegas Housing Market Letter. Despite a shortage of labor, builders have pulled over 4,000 permits for new home construction through this year’s first four months a 33 percent increase from a year ago. Andrew and Dennis Smith ominously write, “This also marks the first time since 2007 that we have reported more than 1,000 permits pulled in two consecutive months.”
The father and son research team also warn that builders are buying more land. “Through April, builders have closed on approximately 675 acres of raw land. To this point in 2017, the total was just about 315. That is a whopping 114 percent increase year-to-year.”
On a positive note, there is little inventory for sale. Blitzer writes, “Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust.” In Las Vegas that number is twice as tight at 1.6 months.
Blitzer believes, “Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising. Compared to the price gains of the last boom in the early 2000s, things are calmer today. Gains in the National Index peaked at 14.5% in September 2005, more quickly than Seattle is rising now.”
The life blood of Las Vegas is visitor volume, which, through March, had declined 10 months in a row. The LA Times reports that casinos have become too greedy by, now, charging for parking and increasing resort fees.
Jay Jones writes, “The annual visitor count hit a record high in 2016: 42,936,100. Last year's total – 42,214,200 – was down 1%. While that may appear insignificant, that signifies a drop of 722,000 visitors.”
"I really do think that these fees are starting to cause people to second-think a trip here," Anthony Curtis, publisher of Las Vegas Advisor told the Times. "That stops a juggernaut of visitation that has been rising and rising and rising … coming out of the recession."
MGM Resorts is the most aggressive at charging for parking, having raised fees multiple times over two years. USA Today reported, "Overnight valet parking at MGM's luxury hotels — Bellagio, Aria and Vdara — is now $30 a night, up from $25. Valet parking at those hotels formerly started at $18 a night, so the fee has gone up 67% in two years."
Richard Velottta, writes for the Las Vegas Review Journal, "But there’s also a new wave of sentiment from longtime loyal casino customers warning that soaring resort fees and paid parking policies at Strip casinos threaten to kill the goose that laid the golden eggs."
More visitors equals more jobs equals more housing required. Builders load up on dirt, while casino owners annoy tourists with parking fees.