Real Estate Forum Article

This morning I read an article titled "For Multifamily, Road to Prosperity Is Full of Obstacles" I couldn't help but recall what a year 2007 was for Las Vegas' real estate market. After a strong housing price appreciation for years 2004 - 2005, prices peaked in 2006 which was an obvious Real Estate Cycle Top. Here's an interesting quote from this article:

An oversupply of houses and condos is creating a glut of "shadow rental" product in some areas, and high-leverage investors and developers are finding it impossible to put together the extensive debt packages that were available a year ago.

This is precisely what has occurred for many developers in the Las Vegas real estate market. The thousands of Single-Family homes and Condo Conversions For Sale (approximately 25,000), have now recycled into our rental market. This has put a lid on rent increases for existing apartment properties and has caused "absorption" to nearly cease. I suspect this will lead to increases in vacancy and rent concessions for 2008.

Much like the recession years of '2000-'2001, owners and/or property managers will begin discount pricing in order to keep occupancy levels up. Trying to lessen "turn-over" which hammers the "effective occupancy" levels taken into account vacancy plus lease-up time.