AS A RESIDENT of Las Vegas and Henderson for over 20 years, I have certainly seen my share of changes in regard to our real estate market. For the first part of 2006, we have all witnessed a general cooling of our residential real estate market compared to the previous two years. What does this mean for our area? Does it mean we are waiting for the proverbial bubble to burst? Should all residential real estate professionals secure new employment? The answers are not as negative as some would have you believe.
First, let me clarify that the previous two years are more of an anomaly than the baseline for future consideration. Our county and state had never before experienced the sharp increase in pricing and appreciation we saw in 2004.
According to the experts, we saw price appreciation of anywhere between 5060 percent that year. Then, in 2005 we again experienced double-digit increases, although at a much more moderate rate (1012 percent). Some would say that we are now victims of our own success.
Today, we are experiencing a "soft landing" with price appreciation. Knowing that we could not sustain the rate of increases on a percentage basis for long, our market has finally stabilized as per expectations. Prior to the frenzied two years, a "normal" market appreciation rate was anywhere from 515 percent, depending on the elements: schedule of hotel-casino construction, interest rates, employment growth, etc. Most analysts predict that 2006 will end up with a 510 percent growth rate, which will come primarily at the end of the year. This is based upon closings of new properties already scheduled for this timeframe.
With such a robust, growing area that we are so fortunate to be a part of, the "bubble theory" is indeed flawed. Clark County is experiencing record low unemployment, record high job growth, and a continuous flow of new residents (approximately 5,000 people per month). Add to these ingredients low interest rates and a variety of product categories and pricing, and the bubble theory becomes just air in the head of a proponent of this thinking. Between construction permits pulled and a record high number of active new subdivisions under various stages of construction, you have a very rosy short-term future.
Should real estate professionals flee to other employment options? The answer is not if they are treating it as a true profession. Specialization is the name of the game. Even within the residential real estate industry, we are seeing specialization. With the onset of apartment conversions to condos, low-rises (fewer than five stories), mid-rises (five to 15 stories), and high-rises (over 15 stories), we have increased options that we did not have even five years ago.
Our valley has become so widespread with the enormous amount of growth that many professionals are specializing in particular areas of the county. Focus and planning are imperative to changing with the times. Study the success stories and look for trends within the market to better consult with your clients and customers. Remember to be flexible so that whatever the market is requiring of us, we are in position to react accordingly. And finally, have a plan and work the plan in order to reap rewards regardless of the present situation.
For more information, e-mail Linda Rheinberger at LindaR@lvcoxmail.com or call her at One Source Realty and Management at 702-242-3303, extension 22.