How Local Economic Development Affects Real Estate Demand And Price

How Local Economic Development Affects Real Estate Demand and Price
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Abstract
The local economic development of a given region plays a significant role in determining the demand and supply of goods and services. Rapid economic development, for instance, may lead to high purchasing powers among consumers for the different commodities reflecting an increase in demand for the same. Increased demand and people’s purchasing abilities may further create an inadequate supply of the same product irrespective of the constant rate of production maintained by both the manufacturers and suppliers. The real estate industry forms no exemption from the outlined trend as local economic development leads to increased demand for housing and office space for consumers. Summerlin development in Los Angeles, Nevada is an excellent depiction of the effect of economic development of a region and its subsequent influence on the demand price for real estate.
How Local Economic Development Affects Real Estate Demand and Price
Introduction
The Summerlin development project in Los Angeles, Nevada attracts major attention from real estate developers and investors from the local, state, and national levels. The rising cost of housing in the region contradicts the increasing housing demand in the region as well as an insufficient supply of the same. The supply and demand chain for the vital human need favors the investors and developers as they cash in on the increased or rising cost of housing in Summerlin. The cost of housing at the Los Angeles’ suburbs is 68% higher than the national average and thus ranking it as one of the places with the highest rent prices for both residential and office use CITATION Are191 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Real Estate, 2019). The wide margin between Summerlin’s cost of housing and the national average is indicative of the equally wide disparities between the economic developments of the local region and that of the nation as a whole. The difference is also a testament to the presence of underlying factor, features, or characteristics of the local region, which serve to invite an influx of investors, developers, and tenants to the region. One of the key factors affecting or influencing the rapid real estate development in Summerlin is the economic development of the region. Provided herein is a manifestation of the region’s economic development and its correlation with the rapid development of its real estate sector. A comprehensive analysis of the outstanding features or characteristics of the local region’s economy and their subsequent effect on the real estate provides an excellent platform for understanding the correlation between the two factors.
Summerlin Development Project
The real estate development standards at a pristine location at the feet of the Western side of the valley of Las Vegas, and is also adjacent to the attractive scenery of the Red Rock Canyon National Conservatory. The real estate development project is an evolution of the emerging, and current trend in the sector commonly referred to as planned communities. The Summerlin development displays effective real estate planning characterized by a wide range of amenities including open spaces for further development by potential land buyers and investors. Other characteristic features of the development project are the diverse housing provided for tenants across the economic differences. The project attends to the housing needs of both the high income and low-income earners wishing to spend their lives in Summerlin. Las Vegas. The real estate development of the Summerlin started in the early 1990s growing from a small-sized community to a benchmark project for the industry at both the local and national levels. Currently, the planned community project features close to thirty public and private schools, three resort hotels, over ten golf courses, approximately 250 recreational parks, and state of the art recreational facilities CITATION Len19 \l 1033 (Corporation, 2019). Summerlin development project also boasts of an electrifying urban center or a vibrant central business district as well as organized office parks and a world-class medical center. The outlined features or parameters are critical to the well-being of the Summerlin residents as they also function to enhance the people’s quality of life. The fact that all the outlined critical parameters are connected by a 150-mile long trail makes them easier to access and reduce the time costs towards reaching the diverse locations for the equally different needs CITATION Len19 \l 1033 (Corporation, 2019).
The 22, 500 acres of planned community developments is divided into three segments of the North, South, and West Summerlin Associations who oversee the development of the project and its expansion. However, it is the Las Vegas City Council who have the responsibility of ensuring that developers maintain the set standards of the planned community’s master plan. According to the 2010 national census, Summerlin’s population stood at approximately 100,000 which represented almost 50% increment in the number of people living in the area. The census further estimated that the average annual household income for the Summerlin inhabitants was $139,061 reflecting the high quality of life enjoyed by the people living in the planned community CITATION Lin12 \l 1033 (Ling, 2012). The region’s demographics can further be broken down to highlight some of the intricate features of the population, which would serve to create an understanding of the region’s economic developments and its subsequent effects on the demand for real estate. Since it is not easy to get the correct or specific data on the entire development’s demographics, information from the Summerlin North segment serves as an excellent platform for the project’s review. Summerlin’s North population, for instance, stands at 48,606 with a median age of 43.3 and a population density of 347 per square meter CITATION Are19 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Demographics, 2019). The population density for the segment is 92% lower than that of Las Vegas while the median age is 16% higher than that of the latter. Approximately 71.69% of the entire population represents members of the White ethnicity, 7.94% for the African American community, and 12.50% representing the population from the Asian ethnic background CITATION Are19 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Demographics, 2019). The household income distribution for the Summerlin North segment of the development ranges from a low of $10,000 or less to $200,000 annually with 24% of the households netting an average income of $60,000 to $100, 000 CITATION Are19 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Demographics, 2019). Salaried employment for the segment serves as the main source of income as it accounts for 78% of the total income generated in the segment. Investments also account for the second largest contribution to the region’s economy at 30% of the total income generation, followed by the social sector at 27% and retirement incentives at 21%. The self-employed individuals account for 12% of the total income generation at Summerlin North segment of the Las Vegas development. The highlighted demographic features function to provide an informed understanding of how the product, real estate, spreads across the population, the taste and preferences of consumers and the factors influencing their purchases or acquisitions of various real estate products.
Description of the Summerlin Real Estate Sector
The median home value for the Summerlin North segment, a representative of the whole real estate project, is $328,923 with the median rent price being $1,364 CITATION Are191 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Real Estate, 2019). Both the median home value and rent price for the segment are higher than the national averages on the same parameters by 78% and 44% respectively. The rate of home ownership in Summerlin North is 65%, which is 2% higher than the United States national average CITATION Are191 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Real Estate, 2019). The high home values coupled with the corresponding high rent prices reflect the high cost of living in Summerlin North which is 16% higher than the average cost of living in Las Vegas. The cost of living is also 20% higher than that of the national average, which correlates to Summerlin North’s 68% higher cost of housing than the United States’ national average CITATION Are19 \l 1033 (Areavibes, Summerlin North, Las Vegas, NV Demographics, 2019). The outlined statistics for the North...