Southern Nevada Real Estate -

Where is it Going?

Ok.. I’m going to release one of my secret sources to get all of the great stats and trends when it comes to the economy of Southern Nevada… which like Nevada is heavily dependent on Las Vegas.

Where do Las Vegas Realtors® get those stats about people moving into Clark County, hotel occupancy rates, Airport visitor traffic, and new home permits? Either from the newspaper, sales managers, this Las Vegas Real Estate blog :) or for us long time Las Vegas residents and UNLV alumni, None other then the Center for Business and Economic Research Center at UNLV. Bob Potts is the Assistant Director of this very important department and releases great reports each and every month right to my e-mail. (Thanks Bob!)

Here is a shot of the latest report below and I’ll give you some commentary below. My Major at UNLV was in the world famous UNLV Hotel Management so economic indicators for Las Vegas have Always been extremely important to me. Please click on the picture for a full size image that is easier to read or simply contact me and I’ll e-mail you the PDF report.

Click to View Full Size

We don’t use the information and bend the truth to sell you something… we use the information to make important decisions regarding our clients Las Vegas real estate investments. 

So… let’s give some commentary on this and what it means to you.

New Residents in Southern Nevada – According to the Department of Motor Vehicles, 5,714 people turned in out of state drivers licenses in Clark County for a shiny new Nevada Drivers License. Many people erroneously use this number as a population increase for Las Vegas when in fact it is what I just stated. It does not account for people who have moved out of Southern Nevada aka Clark County and includes the cities of Mesquite, Boulder City, North Las Vegas, Henderson and Laughlin. In other words, it’s a gross collection of out of state drivers licenses turned in and NOT the net population increase. BUT… it’s still a very good positive increase, just not as good as some would like to make you think it is.

August Stats:

• A 1.7% increase over the last period.
• A 7% decline compared to this period last year.

While the percentage of new residents moving to Southern Nevada has decreased compared to last year, it’s still a rather impressive number. Real estate still has value when people want to move to a city and with all of the gloom and doom in the media, I would be very worried if I lived in a City that has not taken a hit in real estate prices (yet) where the population is decreasing and is heavily dependent on big government aka high property taxes. Luckily, Nevada government is small in comparison to other states/cities and while our state budget is having a hard time, that’s because we are far ahead in the correction process taking place. Hopefully I don’t have to explain to you that the prices for Las Vegas Homes have decreased dramatically from this time last year.

Total Employment for Southern Nevada:

• Increased .2% over last period.
• Unchanged from one year ago.

 Which leads us to:

Southern Nevada Unemployment Rate:

• 7.1%
• 4.4% Increase from the previous period
• A 42% increase from this period in comparison to last year.

Jobs have been cut and Jobs have been added in Clark County.

The decrease in revenues being felt have made their way to the unemployment rates as companies adjust to cut costs in order to survive. Looking at various other indicators for the year, I’d be more concerned if the higher unemployment numbers were not already here — because basically it would just mean they were coming.

However.. as the rest of the country begins to feel the effects of a Recession, there are indicators that will be very important to follow to help predict what is going to happen. Obviously, Las Vegas is heavily dependent on tourism and the following numbers eventually end up in the financials as number crunchers evaluate their quarterly performances and have to make decisions such as laying off employees or the recent announcement of MGM-Mirage executives not getting annual bonuses this year.

Some things to keep in mind concerning the ratio of the total employment rate and the unemployment rate is the opening of Palazzo this past January. In other words… total jobs were added and jobs have been taken away keeping the total employment rate flat. If it was not for the opening of Palazzo and some various other places such as Trump Las Vegas and Palms Place, it’s probably safe to say that the unemployment rate would be higher.

What are some of the other very important Indicators to the Las Vegas Economy?

• Visitor Volume – Down 4% in comparison to last year.
• Convention Attendance – Down 22%.
• Hotel/Motel Occupancy Rates – Down 3.2%
• Gaming Revenue – Down 9.4%

You obviously have to assume that with the decreases in visitor volume that revenues are going to be down also. Room rates, Food & Beverage Revenue and everything else that comes along when visitors visit Las Vegas. Think trickle down theory here because eventually some of that money ends up going to Joe the Plumber and when Joe the Plumber is not making money, he’s got to make tough decisions also.

For Las Vegas Real Estate Investors:

For the novice real estate investor, these numbers might seem confusing to comprehend. How can the vacancy rate go up that much while the rental rate has also increased? When you do a little due dilligence and check into various apartment complexes it’s pretty simple and this goes in the form of Free Rent specials. Move in today and get a free month’s rent. You’ll see the “Free Rent” banners in front of apartment complexes all across town so be careful when evaluating your rental indexes because we are even seeing specials for residential rentals which leads us to:

Existing Home Sales:

• A 48% Increase in relationship to this time last year.

If it was not for the pathetic number of sales that took place in August of 2007, this would be a very significant increase. But any experienced Las Vegas Real Estate agent could tell you all about August of 2007. August of 2008 did show a nice rebound after the price corrections took place and if you’ve followed this blog and read the August 2008 Report for Las Vegas Real Estate you’ll have a pretty good idea of what fueled this increase. Hint.. keep an eye on the number of rental homes in Las Vegas that are available for lease.

The Whole Point of This Post

I know it seems to be Gloom and Doom but the intention is not that. The intention is to show you important numbers from an unbiased source that you can see to make your own decisions in buying Las Vegas real estate. Buying Las Vegas real estate because of somebody else’s certainty that projects on the horizon such as City Center are going to change everything is dangerous when they don’t even know the important numbers such as visitor volume, unemployment rates, gaming revenues and how it all ties together for a healthy economy. (Or even distorting where the numbers for “new residents” is coming from.) 

Keep in mind the opening of Palazzo this past January and what has happened since. The unemployment rate has still gone up, real estate prices have still gone down and visitor volume has decreased even though we’ve added well over 4,000 hotel rooms to Las Vegas since August of 2007.

New projects such as City Center are certainly going to have an impact but that impact is probably in the form of keeping the Las Vegas economy from getting even worse — Not magically turning everything around to where Las Vegas real estate prices are going to return to their historical highs anytime soon. Making statements such as that is an obvious indicator of the failure to understand how real estate prices in Las Vegas got to where they did in the first place.

My point is to buy because it makes sense. Buy right to begin with and don’t let emotions take over thinking that Las Vegas is going to run out of Bank owned homes anytime soon. The latest number of Bank Owned Homes on the Las Vegas MLS for areas 101 – 606 (Las Vegas which includes Summerlin, North Las Vegas and Henderson) is now 6,585 bank owned homes currently available for sale. Obviously no decrease or slowdown with our historical tracking for the past year. Las Vegas Bank Owned Homes Report.

Thanks for reading and if you made it this far, you are probably far ahead of the game in making decisions that are not based on sales propaganda but buying or selling Las Vegas real estate because it’s right for you.

Paul Francis, CRS
Las Vegas Real Estate
702.592.3058