Construction remained a weak spot within southern Nevada’s economy during the first quarter of 2010. Total construction permitting fell to an aggregate $187.1 million during the three months ending March 2010; this was 25.3 percent lower than permitting activity reported a year ago. Although existing home sales volumes have improved during the same time frame (+21.0 percent year-over-year), new home sales remained sluggish at 989 closings. This is a decline of 9.8 percent when compared to the same trailing three months of 2009. Based on the latest data from Homebuilders Research, new home median closing prices were down 2.7 percent compared to the prior quarter at $211,000. Median prices for existing homes were up a marginal 1.2 percent at $124,500, with a significant rate of foreclosure activity continuing. RealtyTrac noted Las Vegas posted the nation’s highest metropolitan area foreclosure rate during the first quarter, with one in every 28 homes receiving a foreclosure filing, which was 4.9 times the national average.
Construction-related employment has fallen 12.0 percent quarter-over-quarter, contributing significantly to the Las Vegas metropolitan statistical area’s 13.8 percent unemployment rate. Elevated vacancy rates in the office (23.4 percent), industrial (15.0 percent), and retail (10.5 percent) markets, as well as lower occupancy rates in southern Nevada’s hotel-casinos (80.9 percent), have all but stopped private, non-residential investment.Outside of the construction sector, southern Nevada’s economy is showing some signs of improvement. The region’s core industry, leisure and hospitality, added 100 jobs between fourth quarter 2009 and first quarter 2010. While not material, the addition reflects a reversal from the contraction the market experienced for the better part of the past three years. Other sectors reporting quarter-over-quarter increases in employment included government (+400) and other services (+200).
Las Vegas welcomed 8.9 million visitors during the quarter, up 1.5 percent and marking the second quarterly improvement after five quarters of year-over-year declines. Average daily hotel/motel room rates hovered under the $100-mark at an average of $96.73 during the first three months of the year, a 2.2-percent decline over the same quarter prior year. Gross gaming revenues for Clark County casinos increased by 4.1 percent year-over-year, its first increase after nine consecutive quarterly declines. Clark County casinos were responsible for 86.5 percent of gaming win held statewide, or $2.4 billion. Properties on the Las Vegas Strip and Boulder Strip were part of the only submarkets in Clark County to post a year-over-year increase in gaming win by 9.8 percent and 1.5 percent, respectively. High-end gaming play, partially sourced to the December 2009 opening of Aria -- a 4,000-plus-room resort at MGM MIRAGE’s CityCenter -- contributed to the improved gaming performance in southern Nevada.
By historical terms, southern Nevada’s economy remains remarkably soft. Comparing the current economy to one of 10 years ago, however, is of little relevance. At present, major employers that seemed surely destined for bankruptcy are adding employees, seeing stock values rise, and are considering mergers and acquisitions. Today, the conversation is more about taking advantage of the market than merely how to survive it. Consumers affected by the economic downturn are accepting a new reality, gaining confidence, and demonstrating a willingness to spend where they see value. |
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CURRENT QUARTER
INDICATOR BRIEF: |
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ECONOMIC
HIGHLIGHTS: |
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Total construction permitting fell to an aggregate $187.1 million during the quarter; down 25.3 percent over permitting activity reported a year ago. |
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New home median closing prices fell 2.7 percent compared to the prior quarter at $211,000; median prices for existing homes were up a marginal 1.2 percent at $124,500. |
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Las Vegas welcomed 8.9 million visitors during the first quarter of 2010, up 1.5 percent over the same month prior year. |
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Gross gaming revenues for Clark County casinos increased by 4.1 percent year-over-year, marking the first increase after nine consecutive quarterly declines. |
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