The Indicator Brief is a publication of the Clark County Monitoring
Program. The Monitoring Program was developed to provide a foundation
for on-going policy discussions and a baseline from which economic, fiscal
or social changes could be monitored over time.
As a briefing document, the Indicator Brief is not intended to be
comprehensive. Rather, this summary is intended to highlight the salient
findings of the research conducted during the third quarter of 2007. It is
subdivided into the program's five core study areas:
economic,
fiscal,
public health and safety,
environmental and
demographic. |
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Summary Overview: Economic
Southern Nevada's current economic performance continues to be impacted by a
sluggish residential construction sector, slowdowns in consumer spending, and
weakening national conditions. The pace and form of the current economic
cycle remains in line with expectations. Looking further out, we continue to
expect major investment activity, in and out of the region's core tourism
industry, to push the economy to new heights in coming years.
During the first quarter of 2008, southern Nevada reported an additional 3,192
new foreclosures, which was significantly more than 1,685 reported in the first
quarter of 2007 and represented an annual increase of 89.4 percent. Current
quarterly rates equate to an average of nearly 35 units foreclosing every day.
Active foreclosures (or residential units in the foreclosure process) reached a
new high of 6,165 by the close of the first quarter, up 129.9 percent from 2,682
in the same quarter of the previous year.
The number of resale homes on the market, those listed with Realtors and posted
in the Multiple Listing Service (MLS), increased by 843 listings during the end
of the first quarter 2008 when compared to the end of the first quarter of 2007.
It is not unusual for inventory levels to drop slightly during first few months
of the year as listings expire and may not be resubmitted. Resale inventories
for the end of the quarter totaled 23,813 units with 38.5 percent occupied by
owners while 61.5 percent remained vacant or tenant occupied. As the market
responds to decreased demand and softening price levels, foreclosure activity is
anticipated to remain elevated. However, the number of units listed as
"contingent" and "pending" continues to climb, suggesting sales activity is not
at a standstill.
Excess supply in the market has continued to put downward pressure on home
prices for both new and existing units. According to data reported by SalesTraq,
the median sales price of a new home during the month of March 2008 (most recent
data available) was $276,292, which represented a decrease of 10.2 percent over
the same month of the previous year. It is worth noting recorded prices
generally do not reflect incentives provided to homebuyers. Resale homes
reported a median price of $247,000, representing a 13.9-percent decrease when
compared to the same month of the prior year.
Although contingent and pending sales are increasing, the total number of sales
consummated continues to report weakness. The number of new and resale home
sales, compared to the same quarter in the previous year, declined by 47.5
percent and 60.5 percent, respectively. Recent drops in home prices signal the
market is actively seeking to establish a new, sustainable equilibrium. We are
optimistic that the increasing number of home sales that have been negotiated /
contracted will translate into higher closing levels in the coming months.
Overall, pricing levels are expected to remain flat to down during the next two
quarters.
In light of the above mentioned housing indicators, Clark County's housing
construction permits for residential properties are down for the first quarter
of 2008. A total of 2,563 units were permitted during the quarter according to
the University of Nevada, Las Vegas' Center for Business and Economic Research.
This represents a 66.5-percent decrease when compared to the previous quarter.
Single family permits comprised 1,169 units, or 45.6 percent of all permits
issued, while multi-family units accounted for 54.4 percent, or 1,349 units. The
number of single family units permitted decreased by 48.6 percent compared to
the prior quarter, while multi-family units decreased by 74.0 percent.
Residential building permit valuations in the first quarter of 2008 totaled
$303.1 million, down 73.9 percent from the previous quarter. This is an expected
and appropriate reaction to current market conditions and the levels remain in
line with expectations.
Commercial building activity is also showing some signs of weakening. A total of
167 commercial permits were issued, representing a 61.0-percent decline when
compared to the 428 permits issued during the prior quarter. Higher-than-average
vacancy rates, particularly in the office market where rates hit a notable 14
percent during the quarter, are sending a clear signal that an over-supply
condition is emerging.
The region's employment growth, in and out of the construction sector, continued
to soften during the quarter. Total employment fell to 925,500, which
represented a 0.3-percent decrease from one year ago and a 0.8-percent increase
from the end of the previous quarter. Professional and business services
employment decreased by 3.7 percent when compared to the end of the first
quarter in the previous year, to a total 113,000 jobs. Leisure and hospitality
employment, the largest local industrial employment sector, reported a slight
year-over-year decline of 0.3 percent as well. Construction accounted for the
largest absolute decline, posting an annual decrease of 9.6 percent, or 10,000
total jobs. Building foundation and exterior contractors reported the largest
sub-industry reduction of 5,400 jobs or a 22.9-percent decline during the past
12 months. This reduction in total employment has increased the Las Vegas valley
unemployment rate, which currently stands at 5.6 percent, up significantly from
the 4.3 percent reported in March of 2007.
Tourism industry performance remains a bright spot in an otherwise gloomy
economic portrait. Data released by the Las Vegas Convention and Visitors
Authority (LVCVA) reported the number of visitors to the Las Vegas valley during
the three months ending February of 2008 (most recent data available) totaled
9.3 million, a 1.0-percent increase when compared to the same three months in
the previous year. Convention-related travel, however, was down 0.7 percent when
compared to the same three months in the prior year, suggesting a modest uptick
in the rate of leisure-related travel. During the same time period, McCarran
International Airport reported a total of 10.8 million enplaned and deplaned
passengers, representing an annual decline of 1.0 percent.
Project openings, including the most recent opening of The Palazzo and Trump
International Hotel & Tower, will provide further capacity to the Las Vegas
valley, followed by Wynn's Encore (December 2008), MGM MIRAGE's CityCenter
(November 2009), Turnberry Associates' Fontainebleau (Fall 2009), and Boyd
Gaming's Echelon (Third Quarter 2010). The leisure and hospitality segment, as
well as the overall economy in the Las Vegas valley, is likely to experience
more aggressive growth rates following these major resort openings. |
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CURRENT QUARTER
INDICATOR BRIEF: |
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ECONOMIC
HIGHLIGHTS: |
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1. |
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Total employment fell 2,400 jobs during the
past 12 months |
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2. |
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Total unemployment rate is up 1.3 points
since the first quarter of 2007 |
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3. |
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During the quarter, an average of 35 units
entered foreclosure every day |
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4. |
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61.5 percent of all housing on the MLS are
vacant or tenant occupied |
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5. |
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New home sale pricing fell 10.2 percent
during the past 12 months |
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6. |
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Total housing units permitted fell to 1,133,
the lowest quarterly total since the fourth
quarter of 1985 |
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