Two major factors that could cause Las Vegas Residential Real Estate prices to jump even higher next year are, 1) an Influx of Foreign Buyers, namely Chinese Nationals, and 2) a Lack of Housing in the San Francisco Bay Area.
It is no secret that the buying power of the Chinese can have a major effect on housing prices. We first witnessed this a few years back with the impact these buyers had on the Sydney RE Market. Mainland China is within a reasonable distance of Australia and nearly their entire economy is built around the Chinese importation of consumer goods and the purchase of raw minerals. It was only a matter of time when a natural progression occurred and the Chinese began to notice in droves what a beautiful and healthy environment such places as Sydney and surrounds were and then it was off to the races in a price bracket where already the average home was around one million dollars.
After Sydney, it was Los Angeles, Las Vegas, Seattle and now Vancouver where they now have an average price point of one million dollars for a home mainly due to the impact of Chinese “cash” Buyers. We had our shot for roughly a year then it waned, but; I wouldn’t count our participation out permanently just yet. My instincts tell me they may be back for round two especially when the Asian-Themed Genting Project gets up and underway on the Strip.
We also know the impact Chinese Influence has had on San Francisco history as a whole. Well that is a drop in the bucket compared to the impact a near catastrophic lack of housing is having on prices if you need a roof over your head in the Bay Area today.
San Francisco has gone “cranes in the air” ballistic. There is construction in the city everywhere right now. And, for the first time ever high-rises are popping up out of the ground under a “rental component” loophole. There is renovation of existing homes to carve out room rentals within domiciles and all forms of construction are on the rise since the outlying residents in areas like Marin & Silicon Valley have decided they aren’t close enough to the action and now need to be in the city for a competitive edge.
How does $4000 for Studio sound? If you can get one! Not too good, I’m sure. My belief is that very similar to the 1999 through 2005 influx of Northern Californians, Las Vegas will again see a net-migration of new residents who have decided that their line of work does not dictate a mandatory presence in the Golden State. These folks will choose quality of life and take a pay-cut deciding to make Las Vegas home. And, may actually be able to buy a home as opposed to renting at utterly ridiculous prices.
We saw a major wave during the dot.com bust due to relatively high unemployment levels in San Jose that created a relatively steady stream of people moving in to our city at that time. This along with the added convenience of more frequent and affordable 45 to 60 minute flights between Oakland, SFO & McCarran, make Vegas a logical choice for a Bay Area resident trying to make a move.
In short, as we round out 2015 with a somewhat softening market these are just two mitigating factors that could propel us along in 2016 and beyond.