SunVest purchased Desert Shores Villas for $43 million and converted the 424-unit property within the upscale northwest Las Vegas community into condominiums priced from $150,000 for one-bedroom units to $170,000 for two bedrooms.

Since sales began July 1, Desert Shores Villas is 80 percent sold, Birdman said.

This follows the successful conversion of Latigo at Silverado Ranch, the first Las Vegas property purchased by SunVest Communities that was the fastest-selling subdivision in the second quarter, according to SalesTraq, a local housing research firm.

Apartment complexes are being snapped up by investors and converted to condos at a faster rate than new units are being built, which is putting upward pressure on rental rates, said Brian Gordon, principal of Applied Analysis in Las Vegas.

The average monthly rent for a 900-square-foot Las Vegas apartment was $805 in the second quarter, up from $788 in the first quarter and $758 in the same quarter a year ago, Applied Analysis reported. That's 6.3 percent annual rent growth, the largest jump in nearly a decade.

Rising home values, flat to modest increases in personal incomes and a lack of new inventory all point toward continued growth in rental rates, Gordon said.

"The most recent quarter's market performance confirmed our predictions from the prior quarter and we continue to remain bullish on the apartment market," he said. "We believe that apartment rent growth will range from 8 percent to 10 percent by the close of 2005."

The southwest submarket had the highest rent at $915 a month, followed by the southeast ($894), south ($814) and west ($810). The cheapest rent was in the northeast submarket at $723.

Occupancy at the end of the second quarter averaged 95.1 percent, a slight increase from 95 percent in second quarter 2004.

Spencer Ballif, senior vice president with CB Richard Ellis, reported an apartment vacancy rate of 4.76 percent in June, up from 4.65 percent in May, on about 85,000 units surveyed.

Median home prices remained stable during the quarter and new home building permits declined 27 percent from the same period last year, Gordon noted. For the past 12 months, permits dropped 21.4 percent to 32,000.

Gordon said the housing market's feverish pace from a year ago is clearly cooling, yet the market remains relatively healthy with job growth of 7.6 percent and an unemployment rate well below national and regional averages.

"While investment activity is slightly off the pace reported from the prior year, pricing premiums have held, given the economics of the Southern Nevada market and expectations of rising profitability," said Christopher Bentley, principal and broker of The Bentley Group. "With capitalization rates remaining at all-time lows, the current environment bodes well for apartment owners."

Bentley represented Jackson Square Properties, a Northern California-based REIT, in the recent sale of the 312-unit St. Charleston Village apartments and 204-unit Torrey Pines Village apartments for $38.4 million, or $74,380 a unit.

The buyer, Atherton-Newport, a Southern California real estate investment company, will keep the property as affordable rental units, a commodity that's becoming more difficult to find as rental rates continue to climb and vacancies decrease as a result of the condo-conversion trend and limited new supply, Bentley said.

Birdman of SunVest said the reality is that a lot of the condo conversions are bought by investors and will go back into the rental market. Las Vegas is experiencing the same maturation process as Florida and the bottom is not going to fall out, he said. "In Florida, we have huge numbers of condo conversions and fears of the rental supply disappearing and rates rising just didn't happen," Birdman said. "There's enough people buying for investment and future appreciation. The property ends up getting upgraded and you end up with a better stock of rentals."   Aug. 11, 2005 Copyright © Las Vegas Review-Journal