Southern Nevada Economy Remains Stable

Most Las Vegas MSA metrics are positive or at least neutral this month, with just two exceptions including the commercial mortgage rate.

Stat Highlights

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Positive

 ***

Employment Index
The RCG Employment Index 12-month moving average (“12MMA”) for Clark County again held at 97.3 from May to June. When compared to June 2015, the Index is up 0.9 points in June 2016. The Index peaked at 99.8 in November 2006.
 
Job Growth
The 12MMA of Clark County’s headline unemployment rate did not change in June, remaining at 6.4% for the 3rd month in a row. Compared to June of the previous year, the headline unemployment rate decreased by 0.9 points. The rate reached its lowest level in October 2006 when it was just 4.0%.
Job growth in the Las Vegas MSA continues to decline, falling by 0.1 percentage-points to 2.9% (12MMA) in June 2016. The region’s YOY job growth rate fell by 1.4 percentage-points from 4.3% in June 2015. Job growth has declined for 10 straight months, similar to the decline in new jobs at the national level. According to Brookings, this is mainly due to a decline in demand for unskilled labor.
 
U-3 & u-6
The U-3 and U-6 unemployment rates for Nevada diverged in Q2. The U-6 rate fell to 13.1% in Q2, 2016, down 0.3 points since Q1. The U-3, or headline rate, increased by 0.2 to 6.7%. Nevada’s U-6 rate is still the highest in the U.S., 0.7 points ahead of the 2nd worst state, New Mexico. In terms of the U-3 rate, Nevada ranks at the bottom as well, 0.3 points behind New Mexico, Alaska, West Virginia and Washington DC.
 
Yoy construction
Construction jobs in the Las Vegas MSA numbered 53,883 in June 2016 (12MMA), up 5,717 jobs (11.9%) since June 2015. Construction jobs represented 6.1% of the job-base at the end of June, near the national average. The current number of jobs in construction is still far below the November 2006 peak of 108,833 when the industry accounted for 11.4% of all jobs. This is not necessarily a bad thing since Construction is not considered a “primary industry” and can be volatile.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebound. Jobs in this sector have now grown for 47 straight months.
 
Visitor Volume
On a 12MMA basis, Clark County visitor volume grew slightly in June to 3.55 million. When compared to June 2015, the YOY visitor count was up 2.9% in June 2016. So far this year visitor totals are relatively close to the totals for the previous year with 21.3 million from January through June of 2016 compared to 21.0 million over the same period last year. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 
Convention attendance
Monthly Clark County convention attendance increased by 1.8% in June compared to May (on a 12MMA basis) to 512,329. However, compared to June 2015, convention attendance increased considerably more – by 17.2%. The monthly peak attendance of 527,268 occurred in June 2007. This June’s attendance represented 97% of the peak.
Convention attendance has increased significantly over the last 11 months, nearly equaling the growth of the previous 5 years in that short time. This can be attributed to a stronger national economy and business investments in marketing. The previous peak in YOY growth, now eclipsed, occurred in February 2006 when convention attendance rose by 10.5%.
 
Hotel REv
The 12MMA hotel revenue per available room (RevPAR) in Clark County was $108.15 in June, an increase of $0.83 (0.78%) from May. Compared to June 2015, RevPAR is up $6.55 (6.4%). RevPAR is back up after seeing a decline the previous month. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has generally been around 3.0% or more since the start of 2011.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
 
Gaming Rev
June’s 12MMA gaming revenue (net of baccarat) of $695.7 million was an increase of 0.40% from May and was up 1.7% compared to June 2015. The monthly peak ($834.4 million) occurred in October 2007.
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for 2 reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 
Home Sales
According to Home Builders Research, total (new and resales) Clark County home sales (closings) in June, which numbered 4,391 (12MMA), jumped 9.3% compared to June 2015. Resales saw an 8.5% YOY increase to 3,790, while new homes sales increased 14.8% to 601. This was the 12th straight month of increasing YOY new home sales after 14 months of declines. The most recent peak occurred July 2012 with 4,777 sales.
 
Median Home price
Per Home Builders Research, the 12MMA median home price (new and resale) in June was $213,982, an 8.8% gain over June 2015. The peak of $305,333 occurred in February 2007.
The median new home price in June was $316,778, up 5.4% from the previous year. The peak of $327,066 occurred in February 2007. This means that the current new home price has recovered to 97% of its pre-recession peak.
The median resale home price was $197,416 (69% of peak) in June, a 9.1% increase during the last 12 months. The peak of $286,833 occurred in April 2007. This means that the current resale price has recovered to 69% of its pre-recession peak. By comparison, the Reno-Sparks average resale price for June was $293,077.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In June 2015, the YOY price increase from 2014 was 7.3%. This is 1.5 percentage-points less than the 2016 figure. The annual peak of 35.8% growth occurred in February 2005.
 
30 yr fixed
The 12MMA 30-year fixed rate mortgage in the Western Region fell 0.05 points to 3.75% in July. The 10-year peak of 6.4% occurred in October 2006. This rate should remain relatively low.
 
Case shiller
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 145.8 in May, an increase of 5.9% compared to May 2015. The index peaked at 233.2 in December 2006. The latest index is 63% of the peak, making the region a competitive housing market. The greatest positive annual change (44.5%) in the index occurred in March 2005, while the greatest negative change (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
Multi-indicator market
Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 61.3 (41% of the peak, see below) in May, a rise of 12.7% compared to May 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This growth is still not quite as much as the 18.6% increase recorded between May 2014 and 2015, much like with the Case-Shiller index. The index peaked at 148.4 in March 2006. The greatest (45.1%) change in the index occurred in May 2014 and the fastest decline (-51.2%) occurred in December 2009.
The MIMI index measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
 
Commercial Market
Commercial vacancy rates in the Las Vegas Valley fell across the board in Q2, 2016.
The Industrial market vacancy rate dropped by 0.4 points to 4.6% in Q2. On a 4-quarter moving average basis it dropped by 0.2 points from Q1 to 4.7% in Q2.
The Spec Office vacancy rebounded from a small uptick in vacancy the previous quarter, falling a considerable 2.5% from Q1 to 16.2% in Q2. On a 4-quarter moving average basis it fell from 18.6% in Q1 to an even 18.0% in Q2.
Vacancy in the Anchored Retail market also decreased this quarter, declining by 1 point to 9.1% in Q2, 2016. The 4-quarter moving average Retail rate fell 0.4 points to 9.9%.
Overbuilding of Office units during the boom continues to prevent the vacancy rate from being from dropping faster. It will take years of natural growth to get the Spec Office rate under 10%.
 
commercial mortgage
As of August 1, 2016 the prime rate remained at 3.5%. The 10-year treasury bond rate declined to 1.56%. The 90-day LIBOR increased to 0.49. The Life Company, CMBS, Agency and floating rates saw increases. These rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 
taxable retail sales
Taxable retail sales in Nevada and Clark County continued to rise thanks to increased visitation, as well as local resident and business spending, but the YOY change is slowing as the local economy reflects a certain amount of uncertainty because of national and global trends. Sales hit $3.24 billion in May, up 4.3% compared to May 2015 on a YOY basis using a 12MMA. This year’s taxable sales total through May was approximately $15.9 billion, while in 2015 the total over the same period was approximately $15.5 billion, thus, putting taxable sales in Clark County on pace to exceed the previous year’s total.
Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
 
average weekly earnings
The Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in June increased by approximately $2 from May to $735 and is $26 (3.7%) from June 2015. On an inflation-adjusted basis, earnings continued to improve as well, increasing by 3% in June 2016 compared to June 2015 to $648 (in 2007 dollars). Still, Las Vegas’ average weekly wage remains $103 (14%) below the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
 
average weekly hours
On a 12MMA basis, the number of average weekly hours worked in Las Vegas (Clark County) in June was again 33.1 for the 4th straight month and was down 0.1 hours from June 2015. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate, implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.1% as of Q2, 2016.
 
regular unleaded
As of Aug 1, the price of regular unleaded fuel decreased by $0.09 from $2.51 a month before. When compared to the previous year, the average price per gallon for regular unleaded gasoline declined significantly by 25.6%, from $3.26 to $2.42.
According to AAA, “Strong global oil production and a strengthening U.S. dollar have contributed to West Texas Intermediate crude oil trading near lows not seen since Spring. One item market-watchers are considering this morning is the news that OPEC may again consider production limits by cartel members in an effort to boost oil prices by curbing supply. OPEC will hold an informal meeting in Algeria in late September, where member countries Ecuador and Venezuela will call for measures to cut production. Similar efforts earlier this year were unsuccessful, as members opted to preserve market share by maintaining production, which has preserved the global state of oversupply and resulted in low oil prices. If OPEC members agree to limit production, crude oil prices could again rise as demand moves into balance with supply.”
 
employment permit
A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. It compares monthly job growth to the number of housing permits issued during the same month. The E-P Ratio for Clark County fell 0.1 points to 1.5 in May on a 12MMA basis. When compared to May 2015 the E-P Ratio dropped 1.2 points from 2.7. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is level indicates a stable market.

Southern Nevada Economic Trends = a Mixed Bag

Real estate-driven metrics are trending positive, but tourism-driven metrics are not.
Stat Highlights

Inidicator

Positive

 

Employment Index

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County held at 97.3 from April to May. When compared to May 2015, the Index is up 1 point in May 2016. The index had been steadily increasing by 0.1 points for the previous 7 straight months, while the headline unemployment rate had been decreasing by 0.1 percentage-points over the same period of time, but this month both hit the pause button. The Index peaked at 99.8 in November 2006.
 

Job Growth

The 12MMA of Clark County’s headline unemployment rate didn’t change in May, remaining at 6.4% after 7 straight months of improvement. Compared to May of the previous year, the headline unemployment rate decreased by 1.0 point. The rate reached its lowest level in October 2006 when it was just 4.0%.
Job growth in the Las Vegas MSA was down 0.1 percentage-points to 3.0% (12MMA) in May 2016. The region’s YOY job growth rate fell by 1.3 percentage-points from 4.3% in May 2015. Job growth has declined in 9 straight months, similar to the decline in new jobs at the national level. According to Brookings, this is mainly due to a decline in demand for unskilled labor.
 

Yoy construction

Construction jobs in the Las Vegas MSA numbered 53,292 in May 2016 (12MMA), up 5,625 jobs (11.8%) since May 2015. Construction jobs represented 6.0% of the job-base at the end of May, near the national average. The current number of jobs in construction is still well below the November 2006 peak of 108,833 when the industry accounted for 11.4% of all jobs. This is not necessarily a bad thing since Construction is not considered a “primary industry” and can be volatile.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebound. Jobs in this sector have now grown for 46 straight months.
 

Visitor Volume

On a 12MMA basis, Clark County visitor volume fell slightly in May to 3.54 million. When compared to May 2015, the YOY visitor count was up 2.9% in May 2016. So far this year visitor totals are relatively close to the totals for the previous year with 17.7 million from January through May of 2016 compared to 17.5 million over the same period last year. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 

Convention attendance

Monthly Clark County convention attendance decreased by 0.09% in May compared to April (on a 12MMA basis) to 503,299. However, compared to May 2015 convention attendance increased considerably – by 13.6%. The monthly peak attendance of 532,943 occurred in May 2007. This May’s attendance represented 94% of the peak.
Convention attendance has increased significantly over the last 10 months, nearly equaling the growth of the previous 5 years in that short time. This can be attributed to a stronger national economy and business investments in marketing. The previous peak in YOY growth, now eclipsed, occurred in February 2006 when convention attendance rose by 10.5%.
 

hotel Rev

The 12MMA hotel revenue per available room (RevPAR) in Clark County was $107.32 in May, a decrease of $0.90 (-0.84%) from April. Compared to May 2015, RevPAR was still up $5.70 (5.6%). RevPAR had been increasing steadily for the previous 8 months straight until seeing a decline this month. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has generally been around 3.0% or more since the start of 2011.

Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.

 

Gaming Rev

May’s 12MMA gaming revenue (net of baccarat) of $693.0 million was a decrease of 0.22% from April, but was still up 1.2% compared to May 2015. This ended the 12-month streak of YOY growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007. The previous 12 months before May 2016 were the 1st consecutive months of such growth since May 2012 (13 months).
The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for 2 reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 

Home Sales

According to Home Builders Research, total (new and resales) Clark County home sales (closings) in May, which numbered 4,336 (12MMA), jumped 8.7% compared to May 2015. Resales saw a 7.9% YOY increase to 3,747, while new homes sales increased 14.2% to 588. This was the 11th straight month of increasing YOY new home sales after 14 months of declines.
 

Median Home Price

Per Home Builders Research, the 12MMA median home price (new and resale) in May was $212,861, a 9.6% jump over May 2015. The peak of $305,333 occurred in February 2007.
The median new home price in May was $314,730, up 5.2% from the previous year. The peak of $327,066 occurred in February 2007. The current new home price has recovered to 96% of its pre-recession peak.
The median resale home price was $196,582 (69% of peak) in May, a 10.2% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for May was $290,343.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In May 2015, the YOY price increase from 2014 was 6.2%. This is 3.4 percentage-points less than the 2016 figure. The annual peak of 35.8% growth occurred in February 2005.
 

30 year fixed rate

The 12MMA 30-year fixed rate mortgage in the Western Region fell 0.03 points to 3.80% in June. The 10-year peak of 6.4% occurred in October 2006. This rate should remain relatively low.
 

Case-Shiller

The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 145.2 in April, an increase of 6% compared to April 2015. The index peaked at 233.2 in December 2006. The greatest annual change (44.5%) in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
 

Multi-indicator

Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 60.7 in April, a rise of 12.6% compared to April 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This growth was significantly less than the 20.5% increase recorded between April 2014 and 2015, much like with the Case-Shiller index. The index peaked at 148.3 in July 2006. The greatest (44.7%) change in the index occurred in May 2014 and the fastest decline (-51.2%) occurred in December 2009.
The MIMI index measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
 

Apartment market

The Las Vegas Valley’s 12MMA apartment vacancy rate declined to 7.9% in Q2, 2016. This is a 0.1 percentage-point drop compared to Q1, 2016 and 0.8-point drop compared to Q2, 2015. It looks like apartment vacancies are slowly recovering. Over the last 9 years, the apartment vacancy rate peaked at 10.8% in Q2, 2010. It bottomed out at 5.1% in Q1, 2007. The region’s apartment market could be moving toward a supply-constrained market in some areas if this downward vacancy trend continues.
 

Current commercial mortgage

The prime rate remains at 3.5%. The 10-year treasury bond rate declined to 1.88%. The 90-day LIBOR increased to 0.46. The Life Company, CMBS and Agency rates saw decreases. These rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 

Taxable retail sales

Taxable retail sales in Nevada and Clark County continued to rise thanks to increased visitation as well as local resident and business spending, but the YOY change is slowing as the local economy normalizes. Sales hit $3.24 billion in April, up 4.4% compared to April 2015 on a YOY basis using a 12MMA. This year’s taxable sales total through April was approximately $12.6 billion, while in 2015 the total over the same period was approximately $12.3 billion. Taxable sales in Clark County are on pace to exceed the previous year’s total.
Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
 

Average weekly earnings

The Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in May increased by approximately $3 from April to $734 and is $27 (3.7%) higher than in May 2015. On an inflation-adjusted basis, earnings continue to improve as well, increasing by 3.1% in May 2016 compared to May 2015 to $647 (in 2007 dollars). Still, Las Vegas’ average weekly wage remains $104 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
 

average weekly hours

On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in May remained at 33.1 and was down 0.2 points from May 2015. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.4% as of Q1, 2016.
 

regular unleaded fuel

As of July 12, the price of regular unleaded fuel increased by $0.06 from $2.46 a month ago, a modest change. When compared to the previous year, the average price per gallon for regular unleaded gasoline declined significantly by 23.0%, from $3.28 to $2.52.
According to AAA, “While retail gas prices may continue to slide through the month of July, there are a number of factors that could cause prices to rise again. This includes an increase in the global price of crude oil due to disruption in supply, stronger than expected economic indicators or geopolitical tensions overseas; as well as domestic factors like refinery issues, production cuts due to lower prices, stronger than anticipated demand or hurricanes that impact distribution and production.”
 

electric meter hookups

Electric meter hookups’ 12MMA in May reached 787,940. Total hookups were up 1.9% over May 2015. The annual growth rate has been increasing slowly over the last 9 months and has been at least 1.5% since June 2014. This hints at increased population growth and household formations in the Valley. The annual peak growth rate occurred March 1990 at 10.5%.
 

Employment-Permit ration

A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. It measures monthly job growth to housing permits issued during the same month. The E-P Ratio for Clark County remained at 1.6 in May on a 12MMA basis. When compared to May 2015 the E-P Ratio dropped 1.1 points from 2.7. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is level indicates a stable market.
 

Three Key Las Vegas Housing Market Charts

From new home sales and inventory to net sales by price to active housing projects, we’ve got housing stats covered for the Las Vegas Valley.
Stat Highlights

LV numbers

LV numbers 2

 

LV rcg

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.1 points between March and April to 97.3 and has been steadily increasing by 0.1 points a month for 7 straight months. When compared to April 2015, the RCG Employment Index is up 1.1 points in April 2016. The index continues edging upward as the Valley’s “headline” jobless rate continues to drop. The RCG Employment Index peaked at 99.8 in November 2006.
 

LV job

The 12MMA of Clark County’s headline unemployment rate has declined by 0.1% for 7 months straight, including this latest month of record, April 2016, when it reached 6.4%. Compared to the previous year of April 2015, the headline unemployment rate has decreased by 1.1%. The rate reached its lowest level in October 2006 when it was just 4%.
Job growth in the Las Vegas MSA is down 0.2 points to 3.1% (12MMA) in April 2016. The region’s YOY job growth rate fell by 0.3 points to 2.3% and is down nearly 2 points from 4.2% in April 2015. Job growth has declined in 8 of the last 12 months, similar to the decline in new jobs at the national level. According to Brookings, this is mainly due to a decline in demand for new unskilled jobs.
 

LV construction

Construction jobs in the Las Vegas MSA numbered 52,775 in April (12MMA), gaining 5,600 jobs (11.9%) since April 2015. Construction jobs represented 5.9% of the job-base at the end of April, near the national average. The current number of jobs in construction is still way below the November 2006 peak of 108,833 when the industry accounted for 11.4% of all jobs. This is not necessarily a bad thing since Construction is not considered a “primary industry” and can be volatile.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebound. Jobs in this sector have now grown for 45 straight months.
 

LV visitor

On a 12MMA basis, Clark County visitor volume remained unchanged in April compared to March, at 3.56 million total. When compared to April 2015 the visitor count is up 3.6% in April 2016. This year is starting off stronger than the last, considering 2016’s visitor total is 14.2 million through April, compared to 13.7 million over the same period in 2015. Southern Nevada’s visitation numbers should continue on an upward trajectory for the time being. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 

LV Convention

Monthly Clark County convention attendance increased 1.25% in April compared to March (on a 12MMA basis) to 503,727. This represents a considerable 13.2% rise compared to April 2015. Over a 12-month period ending in April, total convention attendance was 6,028,212. The monthly peak attendance of 532,943 occurred in May 2007.
Convention attendance has shot up over the past 9 months, nearly equaling the growth of the previous 5 years in that short time. This can be attributed to a stronger national economy and business investments in marketing. The previous peak in YOY growth, now eclipsed, occurred in February 2006 when convention attendance rose by 10.5%. It appears that the current trend of increasing attendance will continue.
 

LV hotel revThe 12MMA hotel revenue per available room (RevPAR) in Clark County is $108.22 in April, an increase of $1.00 (0.93%) from March. RevPAR is up $7.07 (7.0%) compared to April 2015 and continues to grow steadily. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has been around 3.0 or more since the start of 2011.

Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
 

LV gaming

 
April’s 12MMA gaming revenue (net of baccarat) of $694.5 million is a decrease of 0.48% from March, but is up 2.6% compared to April 2015. This makes 12 months of YOY growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007.
These 12 months are the 1st consecutive months of such growth since May 2012 (13 months). The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for 2 reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 

LV home sales

Total (new and resales) Clark County home sales (closings) in April, which numbered 4,282 (12MMA), jumped 8.6% over April 2015. Resales saw a 7.9% YOY increase as well to 3,704, while new homes sales increased 13.6% to 578. This was the 10th straight month of increasing YOY new home sales after 14 months of declines.
 

LV median home

According to Home Builders Research, the 12MMA median home price (new and resale) in April was $211,125, a 10.1% jump over April 2015. The peak of $305,333 occurred in February 2007.
The median new home price in April was $313,908, up 5.9% from the previous year. The peak of $327,066 occurred in February 2007. The current new home price has recovered to 96% of its pre-recession peak.
The median resale home price was $194,832 in April, a 10.7% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for April was $288,264.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In April 2015, the YOY price increase from 2014 was 5.5%. This is 4.6 points less than the 2016 figure. The annual peak of 35.8% occurred in February 2005.
 

LV 30 yr

The 12MMA 30-year fixed rate mortgage in the Western Region fell 0.02 points to 3.83% in May. The 10-year peak of 6.4% occurred in October 2006. This rate should remain relatively low, but may start to increase as the Fed is signaling another rate increase within the next quarter.
 

LV case-shiller

The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 144.5 in March, an increase of 6% compared to March 2015. The index peaked at 233.2 in December 2006. The highest (44.5%) annual change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These trends are similar to those reported by Home Builders Research.
 

LV multi-indicator

Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 60 in March, a rise of 12.1% compared to March 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This growth was significantly less than the 23% increase recorded between March 2014 and 2015, much like with the Case-Shiller index. The index peaked at 148.3 in July 2006. The highest (44.7%) change in the index occurred in May 2014 and the trough (-51.2%) occurred in December 2009.
The MIMI index measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
 

LV housing

The Housing Opportunity Index (“HOI”) for the Las Vegas MSA rose for the 4th quarter in a row in Q1, 2016 after 8 quarters of decline. It went from 64.2 in Q4, 2015 to 65.1 in Q1, 2016 on a 4-quarter moving average basis. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 62.9.
The U.S. index decreased from 63.8 to 63.4 from Q4, 2015 to Q1, 2016. Housing prices appear to be stabilizing and if the employment situation continues to improve, we may see the index rise in the future.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in Clark County, assuming standard mortgage underwriting criteria.
 
LV current
The prime rate remains at 3.5%. The 10-year treasury bond rate declined from 1.88% to 1.81%. The 90-day LIBOR remained 0.44. The Life Company, CMBS and Agency rates saw decreases. These rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 

LV Taxable retail

Taxable retail sales in Nevada and Clark County continue to rise, thanks to increased visitation, as well as local resident and business spending, but the YOY change is slowing as the local economy normalizes. Sales hit $3.23 billion in March, up 4.7% compared to March 2015 on a YOY basis using a 12MMA. This year taxable sales total approximately $9.40 billion through March, indicating Clark County is on pace to exceed the 2015 total of $38.6 billion.
Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region
 

LV weekly

Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in April increased by approximately $2 to $731 compared to March and is $26 (3.7%) higher than in April 2015. On an inflation-adjusted basis, earnings continue to improve as well, increasing by 3.2% in April compared to April 2015 to $646 (in 2007 dollars). Still, Las Vegas’ average weekly wage remains $105 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
 

LV worked

On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in April remained 33.1 and fell 0.1 points from April 2015. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.4% as of Q1, 2016.
 

LV fuel

According to AAA, as of May 31, the price of regular unleaded fuel increased by $0.01 from $2.43 a month ago, an insignificant change. When compared to the previous year, the average price per gallon for regular unleaded gasoline declined drastically by 26.3%, from $3.31 to $2.44.
The price of gas has remained steady over the last 3 months, based on information coming out of Saudi Arabia. Gas prices should remain relatively low with OPEC nations hurting for revenues and US producers slightly increasing output.
 

LV electric

Electric meter hookups’ 12MMA in March reached 785,970. Total hookups were up 1.9% over March 2015. The annual growth rate has been increasing slowly over the last 8 months and has been at least 1.5% since June 2014. The annual peak growth rate occurred March 1990 at 10.5%. This hints at increased population growth and household formations in the Valley.
 

LV employment

A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County rose slightly by 0.1 points to 1.6 in March on 12MMA basis. When compared to March 2015 the E-P Ratio dropped 1.3 points from 2.9. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is level indicates a stable market.
 

LV submarket

The chart above describes housing sales per project compared to housing inventory for the six Home Builder Research (“HBR”) submarkets as of May. HBR data show that relative to each submarket, the East submarket has high sales and is running low on inventory. North Las Vegas projects also have relatively high sales volumes, as well as a healthier level of inventory. Henderson, Southwest and South submarkets show relatively moderate sales with moderate inventories. In the Northwest, however, we see that low sales accompanied by a glut of available new homes.
 

LV msa

Las Vegas MSA net new home sales, by price range, show that units in the $200s are selling the best with 365 sales in May. However, more expensive homes in the $300s are also selling relatively well, registering 232 sales in May. Even more expensive homes — those in the $400s (84 sales) and $500k to $750k (40 sales) — both outsold inexpensive sub-$200k homes, which logged just 37 sales. High prices homes going for $750k and more sold 8 units. These trends are largely due to the lack of product below $200k (due to high construction costs) and buyer preference for units in the middle and upper price ranges.
 

LV active

Active new home developments in the region have continued to increase, from 201 in May 2015 to 245 in May 2016. This is a Y-O-Y increase of 21.9%. Housing sales have picked up and, according to housing prices provided by HBR, the housing market is near equilibrium.

Las Vegas Faces Growing Concentration of Poverty

Las Vegas is among a host of major metropolitan areas dealing with a growing problem: concentrated poverty. Defined by neighborhoods with at least 40 percent of residents living below the poverty line, poverty concentration is arguably a far more important economic statistic than the concentration of individual wealth or the overall poverty rate. This is because highly impoverished neighborhoods create feedback loops of negative outcomes.
The data show that these outcomes include increased crime, poorer mental and physical health, decreased educational performance, and a lack of economic mobility. Furthermore, rising crime rates along with the social issues resulting from mental health challenges and poor education affect the entire neighborhood, not just its most impoverished residents.
A recent CityLab report found that parts of Nevada have the lowest life expectancy rate for poor residents living in the Western U.S., along with parts of Wyoming, as shown in this map:

Geography

A Brookings Institution analysis of the latest U.S. Census data indicates that neighborhood poverty concentration, already on the rise starting in the 1990s, accelerated in the wake of the recession. While suburbs are now home to the largest and fastest-growing poor population in the country, historically disadvantaged communities are faring the worst. According to the Brookings study, the national poverty rate rose by 3.2 percentage points between 2000 and 2010-14. The study also revealed a surprising fact:

If that growth had been shared evenly across places—imagine every census tract experienced the same percentage point increase in its poverty rate—then we might have expected just over 800 neighborhoods to cross the 40 percent threshold to become extremely poor over that time period. Instead, more than 2,700 tracts [did].

Las Vegas

Most of the Las Vegas MSA’s raw numerical growth in poverty has occurred in the suburbs, outpacing the poverty rates in the urban cores in the City of Las Vegas, City of Henderson, and City of North Las Vegas by almost 40 points in the 2000s. Despite that suburban growth, the poverty rate still remains highest in the urban areas, as shown in these graphs from Brookings:

LV metro

The greater Las Vegas metro area has also seen a jump in the percentage of its poor living in tracts with 40 percent or greater poverty rates over the last decade. The map below shows the same upward trend in nearly all the neighboring major metros in the Southwest U.S.:

poverty

Despite the increase, Las Vegas is ranked 53rd among the 100 largest metro areas for the percentage of poor people living in neighborhoods of concentrated poverty, at 12.3 percent. Being roughly in the middle of the pack means we outperform many of our neighbors while lagging behind others.
The graphic below shows (in dark red) the areas of concentrated poverty in the Las Vegas MSA:

poverty rates

Source: The Brookings Institution

In 2000, the Las Vegas MSA had just one tract with a poverty rate above 40 percent. Now, four Southern Nevada neighborhoods have a majority of their residents living in poverty. The tract bordered by Charleston Blvd., Mojave Rd., Stewart Ave., and Eastern Ave. has the unfortunate distinction of having the most concentrated poverty in Southern Nevada:  56.6 percent, or almost 6 in 10 residents, have incomes below the poverty line. (In dollars, that’s less than $11,880 a year for an individual or $24,300 for a family of 4.)

Regional Overview

In California, Fresno comes in 2nd place nationally with concentrated poverty at 43.8 percent. Bakersfield and Stockton-Lodi also make the top 20 at 6th and 18th, respectively. Nearby Riverside-San Bernardino- Ontario comes in just above Las Vegas at 50th, with the Los Angeles metro area just below at 56th.
San Diego-Carlsbad seems to be on the right track, with their 8.5 percent rate putting them in 77th place. Finally, of the 100 largest metros, the Ventura and San Jose areas are the only two with no neighborhoods at or above 40 percent poverty, earning them 99th and 100th places (and 0 percent rates.)
Arizona has two metro areas on the list of 100, both of which are in the top 20 for poverty concentration. Phoenix-Mesa-Scottsdale is 11th nationally with a concentrated poverty rate of 26.5 percent, and Tucson is in 15th place. By contrast, Utah’s metro areas are in the bottom third of the list. Provo-Orem comes in at 70th at 10.5 percent, Ogden-Clearfield is 87th at 5.5 percent, and Salt Lake City is 98th with just two percent of its poor population in concentrated neighborhoods.
It’s no coincidence that the poverty rates are so high in many of these Southwest and Mountain West states, since they were the epicenter of the housing collapse.
It is also important to note that these poverty-dense neighborhoods are disproportionately populated by racial and ethnic minorities, who were more severely affected by the Great Recession because of relatively lower education levels and the associated lower wages and incomes.
Nationally, African Americans are about five times more likely to live in poor neighborhoods than their white counterparts, and Hispanics are more than three times as likely to do the same:
poverty race
 

Conclusion

Because the above-mentioned same demographic groups are now leading Southern Nevada’s population growth, a failure to address the poverty issue will almost certainly result in corresponding decreases in economic, social and physical well-being. Federal, state, and local strategies to address poverty are likely in need of refinement or expansion or both.
While Nevada ranks 13th for the “headline” poverty rate reported by most media outlets, the state jumps to third in the rankings using the more data-driven supplemental poverty measure. This figure includes factors including the local cost of living and the existence (or lack) of a social safety net of assistance for those in poverty.
With just 17 affordable housing units for every 100 extremely low-income renters, Nevada ranks last in the nation for that metric. Is availability the answer? Perhaps not by itself, but a recent study of people displaced from demolished housing projects in Chicago found that those who were forced to move into less impoverished areas (with the help of vouchers) had significantly improved their economic outcomes.
As Nevada’s elected officials, non-profits, and citizen aid groups consider solutions to alleviate poverty, the numbers clearly call for a multi-faced focus. This is the economic and social challenge of our time. If not adequately addressed, it will have long-term repercussions for Nevada’s economic vitality.

Higher Fuel Prices Are Southern NV’s Only Negative Trend

The average price per gallon for regular unleaded gasoline in the Las Vegas MSA shot up by $0.50 per gallon, or 25.6%, between February 29 and March 30, but it is the only Southern Nevada economic metric not trending positively.
Clark County’s headline unemployment rate was down 0.9 percentage-points in February compared to a year ago. The region’s growth rate is still good but declined slightly (0.2 points) to 3.4% in February, down one point compared to the 12 months ending in February 2015. (This is not necessarily a negative, as jobs continue to grow faster than population.)
Construction jobs in the Las Vegas MSA numbered 51,733 in February, representing a spike of 5,425 jobs (11.7%) compared to February 2015. Construction activity continues to pick up steadily as housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 43 straight months.
Average weekly earnings (not inflation-adjusted) in the Las Vegas MSA in February rose to $730, a 4.0% increase over February 2015. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.6% in February compared to February 2014, to $645 (in 2007 dollars).
For more stats and trends, see below.
Stat Highlights

TSP April

tsp number april

 

rcg april

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.2 points between January and February to 97.1 and is up 1 point compared to February 2015. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. It peaked at 99.8 in November 2006.
 

job april

The 12MMA in Clark County’s headline unemployment rate declined 0.1% in February compared to January, but it was down 0.9 percentage-points compared to February 2015. The rate’s lowest level in the last 10 years was 4%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.2 points to 3.4% in February, down 1 point compared to the 12 months ending in February 2015. The most recent spate of growth peaked at 4%, and has declined for nine of the last 10 months. This is not necessarily a bad sign as jobs continue to grow faster than population.
 

employment april

The most recent population estimates from Clark County Comprehensive Planning were released for 2015. They show that the region’s employment-to-population ratio for last year rose 0.5 percentage-points over 2014. The current E-P ratio is now 0.9% below the 2008 peak.
 

construction april

Construction jobs in the Las Vegas MSA numbered 51,733 in February (12MMA), representing a spike of 5,425 jobs (11.7%) compared to February 2015. Construction jobs represented 5.8% of the job-base at the end of February. Construction employment peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 43 straight months.
 

visitor april

On a 12MMA basis, Clark County visitor volume rose by 0.4% in February compared to January, to 3.55 million. The rolling annual total was 42,312,216 visitors at the end of 2015. February’s visitor count was up 3.4 percent compared to February 2015. Southern Nevada’s visitation numbers should continue on a generally upward trajectory for the time being. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 

convention april

Monthly Clark County convention attendance increased 1% in February compared to January (on a 12MMA basis) to 487,768. This represents a 10.3% rise compared to February 2015. This equates to a 12-month total of 5,462,967. The monthly peak attendance 532,943 occurred in May 2007. The peak in YOY growth occurred in February 2006 when convention attendance rose by 10.5%. The general trend appears to be increasing.
 

hotel aprilThe 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $0.63 (0.59%) in February compared to January to $106.80. RevPAR is up $4.38 (4.3%) compared to February 2015 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has been around 3.0 or more since the end of 2010.

Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
 

gaming april

February’s 12MMA gaming revenue (net of baccarat) of $700.1 million is an increase of 5.4 million from January, and is up 3.9% compared to February 2015. This makes 10 months of Y-O-Y growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007.
These 10 months are the first consecutive months of such growth since May 2012 (13 months). The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for two reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 

home april

Total (new and resales) Clark County February home sales (closings), which numbered 4,250 (12MMA), spiked by 12.6% above February 2015. Resales saw a 12.4% Y-O-Y jump as well to 3,683, while new homes sales increased 13.6% to 567. This marked 8 straight months of increasing Y-O-Y new home sales after 14 months of declines.
 

median april

According to Home Builders Research, the 12MMA median home price (new and resale) in February was $209,284, a 10.2% jump over February 2016. The peak of $305,333 occurred in February 2007.
The median new home price in February was $312,249, up 6.8% in the last 12 months. The peak of $327,066 occurred in February 2007. The current new home price has recovered 95% of its pre-recession peak.
The median resale home price was $193,166 in February, reflecting a 10.9% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for February was $290,000.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In February 2015, the Y-O-Y price increase from 2014 was 6.4%. This is 3.8% less than the 2016 figure. The annual peak of 35.8% occurred in February 2005.
 

case april

The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 143 in January, an increase of 5.9% compared to January 2014-2015. This was about half of the 11.6% increase recorded between February 2014 and 2015. The index peaked at 233.2 in December 2006. The highest (44.5%) annual change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These increases are similar to those reported by Home Builders Research.
 

msa april

Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 58.4 in January, a rise of 11.7% compared to January 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This rise in growth was about one-third of the 29.1% increase recorded between January 2014 and 2015, much like with the Case-Shiller index. The index peaked at 148.3 in July 2006. The highest (44.7%) change in the index occurred in May 2014 and the trough (-51.2%) occurred in December 2009.
The MIMI index measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
 

housing april

 
The Housing Opportunity Index for the Las Vegas MSA rose for the third quarter in a row in Q4, 2015 after eight quarters in decline. It went from 61.9 last quarter to 64.2 on a moving quarter basis. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 61.9.
The U.S. Index also increased from 63.7 to 63.8 during the same period. Housing prices appear to be stabilizing, and the improving employment situation may be helping raise the index, as well.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in Clark County, assuming standard mortgage underwriting criteria.
 
mortgage april
After the Fed’s December action, the prime rate increased a half-point to 3.5%. The 10-year treasury bond rate declined after two months of slight elevation. It is now, as of April 1, at 1.70, down from 1.77% one month before. The 90-day LIBOR remained at 0.44. Lender rates saw little movement. Still, these rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 

retail april

Taxable retail sales in Nevada and Clark County continue to rise, thanks to increased visitation, as well as local resident and business spending. But, the YOY change is slowing as the local economy normalizes. Sales hit $3.21 billion in January, up 5% compared to January 2015 on a 12MMA basis. The total for 2015 was $37.6 billion. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
 

earnings april

Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in February rose to $730, a 4.0% increase over February 2015. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.6% in February compared to February 2014, to $645 (in 2007 dollars). However, Las Vegas’ average weekly wage is still $106 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
 

hours april

On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in February remained unchanged at 33.3 and declined 0.1 from February 2015. This is the second consecutive negative YOY change in average weekly hours. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.9% as of Q4.
 

fuel april

According to AAA, as of March 30, the average price per gallon for regular unleaded gasoline declined notably by 12.5%, from $2.80 a year ago to $2.45. However, this year between February 29 and March 30, the price of gasoline shot up by $0.50 per gallon, or 25.6%.
With Iran’s surprise return to the oil markets after the lifting of embargos due to compliance with the nuke deal, more cheap crude has flooded into the market, depressing already low prices. After this shock to the market, fuel prices should level off compared to a year ago. The price of oil is currently in limbo, depending on whether the Saudis decide to cut production or continue to keep prices low. For the time being, we expect gas prices to hover near that of a year ago.
 

electric april

Electric meter hookups’ 12MMA in December reached 781,941. Total hookups were up 1.8% over December 2014. The annual growth rate has been slowly increasing over the last 5 months and has been at least 1.5% since June 2014. The annual peak growth rate occurred March 1990 at 10.5%. This hints at increased population growth and household formations in the Valley.
 

permits april

A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County was 1.6 in January on 12MMA basis, compared to 3.4 in January 2015. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is declining indicates that a downturn may be approaching. We await the annual job number recalibration to see if this trend bears out.

Southern Nevada Trends Mostly Sunny

December’s year-end data shows Southern Nevada trending positive in sixteen out of 20 metrics. The 12-month moving average of Clark County’s headline unemployment rate remained unchanged in December 2015 over the prior month, but was down 0.9 percentage-points compared to December 2014.
Construction jobs in the Las Vegas metro area numbered 51,500 in December (12MMA), representing a spike of 6,425 jobs (14.3%) compared to December 2014.
Total (new and resales) Clark County December home closings, which numbered 4,210 (12MMA), were up 11.9% from December 2014. According to Home Builders Research, the 12MMA median home price (new and resale) in December was $206,906, a 9.9% jump over December 2014. (Southern Nevada’s peak of $305,333 occurred in February 2007.)
Scroll down for charts and analysis, and don’t hesitate to contact RCG Economics Principal John Restrepo with questions.

Stat Highlights

TSP LV feb

LV feb numbers

 

LV rcg feb

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.1 points between November and December to 96.8 and is up 1 point compared to December 2014. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. The Index peaked at 99.8 occurred in November 2006.
 

lv job feb

The 12MMA in Clark County’s headline unemployment rate remained unchanged in December at 6.9% compared to November, but it was down 0.9 percentage-points compared to December 2014. The rate’s lowest level in the last 10 years was 4.0%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.1 points to 2.9% in December, down 1 point compared to the 12 months ending in December 2014. The most recent spate of growth peaked at 3.9%, and has declined for nine of the last 10 months. This is not necessarily a bad sign as jobs continue to grow faster than population.
 

lv u3 feb

Nevada’s U-6 unemployment rate fell to 13.9% in Q4, 2015, down 0.9 points since Q3. The U-3, or headline rate, declined by 0.2 points to 6.9%. While these figures are improving, they are still very weak compared to the U.S. as a whole. The Nevada U-6 rate is 1.1 points behind the second-worst state, Arizona. In terms of the U-3 rate, Nevada continues to rank last, tied with West Virginia and Washington D.C.
 

lv construction feb

 
Construction jobs in the Las Vegas MSA numbered 51,500 in December (12MMA), representing a spike of 6,425 jobs (14.3%) compared to December 2014. In December, construction jobs represented 5.8% of the job-base. Construction jobs peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
Construction activity continues to pick up as housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 41 straight months.
 

lv visitor feb

On a 12MMA basis, Clark County visitor volume rose by 0.26% in December compared to November, to 3.53 million. The rolling annual total was 42,312,216 visitors at the end of 2015. December’s estimate was up 2.9 percent compared to December 2014. Southern Nevada’s visitation numbers should continue on a generally upward trajectory for the time being. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 

lv convention feb

Monthly Clark County convention attendance increased 1.3% in December compared to November (on a 12MMA basis) to 475,859. This represents a 9.9% rise compared to December 2014. This equates to a 12-month total of 5,710,303. The monthly peak attendance 532,943 occurred in May 2007. The peak in YOY growth occurred in February 2006 when convention attendance rose by 10.5%. The general trend appears to be increasing.
 

lv hotel febThe 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $0.27 (0.25%) in December compared to November to $105.21. RevPAR is up $3.98 (3.9%) compared to December 2014 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has been around 3.0 or more since the end of 2010.

Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
 

lv gaming feb

December’s 12MMA gaming revenue (net of baccarat) of $694.0 million was unchanged compared to November, but up 3.3% compared to December 2014. This makes 8 months of Y-O-Y growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007.
These 8 months are the first consecutive months of such growth since May 2012 (13 months). The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for two reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 

lv home feb

Total (new and resales) Clark County December home sales (closings), which numbered 4,210 (12MMA), spiked by 11.9% from December 2014. Resales saw an 11.7% Y-O-Y jump in December to 3,646, while new homes sales increased 12.9% to 564. This marked 6 straight months of increasing Y-O-Y new home sales after 14 months of declines.
 

lv median feb

According to Home Builders Research, the 12MMA median home price (new and resale) in December was $206,906, a 9.9% jump over December 2014. The peak of $305,333 occurred in February 2007.
The median new home price this past December was $311,038, up 6.9% in the last 12 months. The peak of $327,066 occurred in February 2007. The current new home price has now recovered 95% of its pre-recession peak.
The median resale home price was $190,541 in December, reflecting a 10.6% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for December was $280,123.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In December 2014, the Y-O-Y price increase from December 2013 was 9.0%. This is fairly close to the December 2014-2015 figure. The annual peak of 35.8% occurred in February 2005.
 

lv case feb

The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 141.7 in November, an increase of 6.0% compared to November 2014. This was about half of the 15.6% increase recorded between November 2013 and 2014. The index peaked at 233.2 in December 2006. The highest (44.5%) annual change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These increases are similar to those reported by Home Builders Research.
 

lv multi feb

Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 57.2 in November, a rise of 12.1% compared to November 2014. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This rise in growth was about one-third of the 34.6% increase recorded between November 2013 and 2014, much like with the Case-Shiller index. The index peaked at 148.3 in July 2006. The highest (44.7%) change in the index occurred in May 2014 and the trough (-51.2%) occurred in December 2009.
The MIMI index offers a different look at the housing market. It measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
 

lv apartment feb

The Las Vegas Valley’s 12MMA apartment vacancy rate declined to 8.3% in Q4, 2015. This is a 0.1 percentage-point drop compared to Q3, 2015 and 0.7-point drop compared to Q4, 2014. It looks like apartment vacancies are slowly recovering. During the last 9 years, the apartment vacancy rate peaked at 10.8% in Q2, 2010. It bottomed out at 5.1% in Q1, 2007. The historical trend rate (9-year average) is 9.2%. The region’s apartment market could be moving toward a supply-constrained market if this downward vacancy trend continues.
 

lv  commercial feb

Commercial vacancy rates in the Las Vegas Valley continued to generally improve in Q4, 2015. The Industrial market rate increased to 4.7% in Q4. However, on a 4-quarter moving average basis, it dropped to 5.2%, 0.4 percentage-points below Q3, 2015. The Spec Office vacancy rate improved for the 3rd straight quarter, decreasing 0.1 points to 18.4%. It fell on a 4-quarter moving average basis from 18.8% in Q3 to 18.7% in Q4. The Anchored Retail rate went up by 0.1 points to 10.3% in Q4, 2015. The moving 4-quarter average Retail rate also rose 0.1 points to 10.4%.
Many office and retail properties that are well-designed and well-located are thriving. But there are others that were poorly conceived, poorly designed and poorly located that still languish, and these are the majority of the projects that are keeping the overall vacancy numbers up.
 
lv mortgage feb
After the Fed’s December action, the prime rate increased a half-point to 3.5%. The 10-year treasury bond rate declined after two months of slight elevation, down from 2.27 to 1.97%. The 90-day LIBOR remained at 0.43. Lender rates generally stayed the same, except for an increase in the Agency rate. Still, these rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 

lv taxable feb

Taxable retail sales in Nevada and Clark County continue to rise, thanks to increased visitation, as well as local resident and business spending. Sales hit $3.20 billion in November, up 6.1% compared to November 2014 on a 12MMA basis. This equated to a yearly total of $34.8 billion with one month to go. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
 

lv average feb

Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in December rose to $728, a 4.0% increase over December 2014. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.9% in December compared to December 2014, to $645 (in 2007 dollars). However, Las Vegas’ average weekly wage is still $106 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
 

lv weekly feb

On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in December increased 0.1 hours to 33.3 and was unchanged from December 2014. This is the first non-negative (zero and above) YOY change in average weekly hours in 26 months. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.9% as of Q4.
 

lv fuel feb

According to AAA, as of February 8, the average price per gallon for regular unleaded gasoline declined by 5.0%, from $2.33 a year ago to $2.21. Between January 8 and February 8, the price of unleaded plummeted by $0.31 per gallon, or 12.3%.
With Iran’s surprise return to the oil markets after the lifting of embargos due to compliance with the nuke deal, more cheap crude has flooded into the market, depressing already low prices. After this shock to the market, fuel prices should level off compared to a year ago. The price of oil is currently in limbo, depending on whether the Saudis decide to cut production or continue to keep prices low. For the time being, we expect gas prices to hover near that of a year ago.
 

lv permit feb

A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County was 1.0 in December on 12MMA basis, compared to 1.3 in November 2014. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is declining indicates that a downturn may be approaching. We await the annual job number recalibration to see if this trend bears out.

While Reno-Sparks Recovery Leads, Las Vegas No Slouch

Stat Highlights

LV Jan

LV numbers Jan

 ***

LV recg jan

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County remained unchanged between October and November at 96.7 and is up 1.1 points compared to November 2014. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. The peak of 100 occurred in December 2005.

 ***

LV job growth jan

The 12MMA in Clark County’s headline unemployment rate declined 0.1 points in November to 6.9% compared to October, and it was down 1.1 percentage-points compared to November 2014. The rate’s lowest level in the last 10 years was 4.0%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.1 points to 3.0% in November, down 0.9 points compared to the 12 months ending in November 2014. The most recent spate of growth peaked at 3.9%, and has declined for eight of the last nine months. This is not necessarily a bad sign as the economy nears equilibrium. Additionally, the region’s job growth rate is still about twice the population growth.

 ***

LV construction jobs Jan

Construction jobs in the Las Vegas MSA numbered 51,067 in November (12MMA), representing an increase of 6,467 jobs (14.5%) compared to November 2014. In November, construction jobs represented 5.9% of the job-base. Construction jobs peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
Construction activity continues to pick up housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 40 straight months.

***

LV visitor jan

On a 12MMA basis, Clark County visitor volume rose by 0.29% in November compared to October, to 3.52 million. It was up 3.0 percent year-over-year. Southern Nevada’s visitation numbers should continue on a generally upward trajectory for the next several months. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.

 ***

LV Convention jan

Monthly Clark County convention attendance increased 2.9% in November compared to October (on a 12MMA basis) to 467,432. This represented an 8.3% rise compared to November 2014. The peak attendance 532,943 occurred in May 2007. The peak in YOY growth occurred in February 2006 when convention attendance grew by 10.5%. The general trend appears to be slowly increasing.

 ***

LV Hotel Jan

The 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $0.85 in November compared to October to $104.94. RevPAR is up 4.1% compared to November 2014 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The rate of growth has increased for three months straight.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.

 ***

LV gaming Jan

November’s 12MMA gaming revenue (net of baccarat) of $693.9 million was up 1.0% compared to October and up 3.4% compared to November 2014. That makes seven months of Y-O-Y growth of at least 1.5%. Peak revenue of $834.4 million occurred in October 2007.
This is the largest number of consecutive months of such growth since the 13-month period ending May 2012. The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for two reasons: constrained disposable income and changing spending patterns, especially among adults under 35.

 ***

LV home jan

Total (new and resales) Clark County November home sales (closings), which numbered 4,108 (12MMA), rose by 9.8% from November 2014. Resales saw a 9.4% Y-O-Y jump in November to 3,551, while new homes sales increased 12.7% to 557. This marked five straight months of increasing Y-O-Y new home sales after 14 months of declines.

***

LV home price JAn

According to Home Builders Research, the 12MMA median home price (new and resale) in November was $204,470, a 9.0% jump over November 2014. The peak of $305,333 occurred in February 2007.
The median new home price this past November was $309,452, up 6.2% in the last 12 months. The peak of $327,066 occurred in February 2007. The current new home price is now nearly recovered 95% of its pre-recession peak.
The median resale home price was $187,471 in November, reflecting a 9.5% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for November was $277,873.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In November 2014, the Y-O-Y price increase from November 2013 was 10.6%. This is fairly close to the November 2014-2015 figure. The annual peak of 35.8% occurred in February 2005.

***

LV 30 Jan

Mirroring the growth in home sales over the last year, the 12MMA 30-year fixed rate mortgage in the Western Region was up to 3.81% in December, the first time since June 2014 that the rate increased. The 10-year peak of 6.40% occurred in October 2006. This rate should remain relatively low, but may start to increase after the Fed’s rate increase in December.

 ***

LV Case-shiller Jan

The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 141.1 in October, an increase of 6.2% compared to October 2014. This was about one-third of the 17.2% increase recorded between October 2013 and 2014. The index peaked at 233.2 in December 2006. The highest (44.5%) change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These increases are similar to those reported by Home Builders Research.

 ***

LV Market jan

The 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 56.7 in October, an increase of 12.8% compared to October 2014, ranking Las Vegas 100 of the 100 rated metros. This rating was about one-third of the 36.7% increase recorded between October 2013 and 2014, much like the Case-Shiller index. The index peaked at 148.3 in July 2006. The highest (44.7%) change in the index occurred in May 2014 and the trough (-51.2%) occurred in December 2009.
The MIMI index offers a different look at the housing market. It measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.

***

LV current jan

After the Fed’s December action, the prime rate increased a half-point to 3.5%. The 10-year treasury bond rate has increased in the last month, from 2.15% to 2.27%. The 90-day LIBOR also increased from 0.39 to 0.43. Lender rates generally increased, as well. Still, these rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge:  excess capacity, especially in the office market, plus only moderate job growth.

***

LV taxable jan

Taxable retail sales in Nevada and Clark County continue to rise, thanks to increased visitor as well as local resident and business spending. These sales hit $3.18 billion in October, up 6.2% compared to October 2014 on a 12MMA basis. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.

***

LV earnings jan

Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in November rose to $725, a 3.7% increase over November 2014. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.6% in November compared to November 2014, to $643 (in 2007 dollars). Las Vegas’ average weekly wage is still $108 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.

***

LV worked Jan

On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in November held steady at 33.2 hours for the sixth straight month, but was down 0.2 hours from the 33.4 recorded in November 2014. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and slowing growing average hours worked have accompanied a dropping headline unemployment rate. At this point in the recovery, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, the U-6 unemployment rate (includes discouraged and part-time workers) in Nevada remained the nation’s highest at 14.8% as of Q3.

***

LV fuel jan

According to AAA, as of January 6, the average price per gallon for regular unleaded gasoline increased by 4.8%, from $2.43 a year ago to $2.54. Between December 6 and January 6, the price of unleaded declined by $0.01 per gallon, or 0.3%, which is essentially unchanged.
Fuel prices appear to have leveled off compared to a year ago after the U.S. oil boom drove prices to lows unseen in years. After the surge in production of OPEC oil over the last year to drive down prices, Y-O-Y prices have leveled off. The price of oil is currently in limbo, depending on whether the Saudis decide to cut production or continue to keep prices low. For the time being, we expect gas prices to hover near that of a year ago.

***

LV electric jan

Electric meter hookups’ 12MMA in November reached 780,749. Total hookups were up 2.1% over November 2014. The annual growth rate has been fairly steady recently, but appears to be slowly increasing, as the growth rate has hit the 2% mark in three out of four months. The annual peak growth rate occurred March 1990 at 10.5%. This hints at increased population growth and household formations in the Valley.

***

LV permit jan

A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County was 2.2 in October on 12MMA basis, compared to 2.7 in October 2014. According to the general consensus, an E-P Ratio above 2.0 that is declining indicates that the local housing market is approaching a peak.

Las Vegas Tops List of Fastest Growing Knowledge Economies

The shifts from hunter-gathering to the age of agriculture, and from widespread farming to the Industrial Revolution, marked major transitions in human history and economic well-being. Now in the digital age, we are in the midst of another such transformation:  into a so-called knowledge economy with an emphasis on the production and use of data and information.
The term “knowledge economy” was first coined in the 1960s to describe a shift from traditional economies to those in which the dissemination and use of knowledge are central. As academic institutions and companies engaging in R&D sprang up left and right — along with computer programming firms that developed everything from new software to better search engines to improved supply chain efficiencies – America began the shift toward an economy in which the brokers of know-how became integral to how we live, work, and earn. Information and communication technologies have become the mecca of economic progress, and every state in the union longs to have its own Silicon Valley of internet-based start-ups and innovative small businesses.
According to the World Bank, knowledge economies are defined by four qualities:

– institutional structures that provide incentives for entrepreneurship and the use of knowledge
– skilled labor availability and good education systems
– Internet and communications infrastructure and access
– An innovation landscape that includes academia, the private sector, and civil society

The 2012 World Bank Knowledge Economy Index ranked the world’s nations based on these pillars. Topping the list were Sweden, Finland, Denmark, Netherlands, and Norway. Rounding out the top 10 were New Zealand, Canada, Germany, Australia, and Switzerland. Ireland was #11 followed by the United States, which in the 2000 Index ranked 4th.
Recently, City Lab, in conjunction with the Martin Prosperity Institute, decided to take a look at the current state of the U.S. knowledge economy and creative class, which consists of tech workers, designers, artists, entertainers, and professionals in the fields of education, healthcare, and law. According to the report, which examined 51 metros across the U.S., this group today comprises roughly a third of the nation’s workforce and accounts for about half of all wages and salaries.
The map below shows the geography and concentration of the creative class back in 2000. Notice the light blue patch at the southern end of Nevada.
Class
The City Lab/Martin Prosperity Institute table below shows the 10 metros where the creative class made up the highest and lowest concentrations of the workforce in 2000. San Jose (aka Silicon Valley) topped the list, followed by D.C., Boston, Austin and Raleigh.
top class
At the bottom in 2000? Las Vegas, Riverside, Miami, Louisville, and Memphis.
bottom class
Fast forward to 2014.
San Jose still tops the list, followed by D.C., Boston, and San Francisco, all of which were also on the 2000 list. Some cities have moved up; others, like Austin, ticked down. Seattle is still in the mix, but Raleigh has fallen out of the top ten. Newcomers to the list include Denver and Minneapolis-St. Paul.
top city class
Note that the top ten U.S. metros had a significantly higher percentage of the creative class in 2014 than they did back in 2000, with the top two metros – San Jose and Washington D.C. – surpassing 40 percent.
The bottom of the 2014 list is also similar to the one for 2000, including Las Vegas, Riverside, Memphis, Orlando, Louisville, and Miami. That said, the percentage of the creative class in these metros has also increased.
bottom city class
The following map charts the percentage change in the creative class from 2000-2014.
city class
As our headline indicated, Las Vegas, which still ranks last in the creative class among 51 metros, has seen the most growth – a gain of more than 40 percent.
Next in line for growth are:

– Indianapolis with 24 percent
– Portland with 23 percent
– Salt Lake City with 22 percent
– Cincinnati with 21 percent

Milwaukee and Cleveland chalked up respectable 15-plus percent gains.
Of the leading creative class metros, only San Jose showed comparable gains to these cities. San Francisco saw only a 10 percent increase, and Boston saw only 9 percent growth.
The City Lab report concludes that the U.S. creative class—which tends to provide the highest paying jobs—appears to be growing across the board, with six metros including Las Vegas registered gains of 20 or more percent, another 11 showing gains of 15-20 percent, and 18 more with gains of 10-15 percent.
Welcome to the new age, Las Vegas, and may the odds be ever in our favor.

New Southern Nevada Metrics

Stat Highlights

lv dec

lv dec numbers

 

dec rcg

The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.1 points between September and October to 96.7 and is up 1.2 points compared to October 2014. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. The peak of 99.8 occurred in December 2005.
 

dec growth

The 12MMA in Clark County’s headline unemployment rate declined in October to 7.0% compared to September, and it was down 1.1 percentage-points compared to October 2014. The rate’s lowest level in the last 10 years was 4.0%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.1 points to 3.1%, and was down 0.7 points compared to the 12 months ending October 2014. The most recent spate of growth peaked at 3.9%, and has declined for seven of the last eight months. This is not necessarily a bad sign since the growth slows as the economy nears equilibrium. Additionally, the region’s job growth rate is still about twice the population growth.
 

dec construction

Construction jobs in the Las Vegas MSA numbered 50,442 in October (12MMA), representing an increase of 6,175 jobs (13.9%) compared to October 2014. Construction jobs 12MMA peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
In October, construction jobs represented 5.8% of the job-base. Construction activity continues to pick up housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 39 straight months.
 
dec visitor
On a 12MMA basis, Clark County visitor volume rose by 0.48% in October compared to September, to 3.51 million. It was up 2.8 percent year-over-year. We are confident that Southern Nevada’s visitation numbers will continue on a generally upward trajectory for the rest of the year. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
 
reno dec visitor
 
Clark County convention attendance increased 1.1% in October compared to September (on a 12MMA basis), to 452,666. The peak attendance of 532,943 occurred in May 2007. This represented a 4.3% rise compared to October 2014. The peak in YOY growth occurred in February 2006 when convention attendance grew by 10.5%. The general trend appears to be slowly accelerating.
 
dec hotelThe 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $1.47 in October compared to September to $104.09. RevPAR is up 3.7% compared to October 2014 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The rate of growth has been generally slowing over the last year.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a gaming resort’s total hotel room revenue by the room count and the number of days in the period being measured.
 
dec gaming
October’s 12MMA gaming revenue (net of baccarat) of $687.0 million decreased 0.16% compared to September ($688.1 million), but was up 2.4% relative to October 2014. That makes six months of Y-O-Y growth of at least 1.5%. The peak revenue of $834.4 million occurred in October 2007.
These are the first consecutive months of such growth since May 2012 (13 months). The net baccarat revenues are largely comprised of slot revenues, which generally reflect typical gaming spending of average Americans. However, slot revenues continue to remain lackluster for two reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
 
dec home
Total (new and resales) Clark County October home sales (closings), which numbered 4,106 (12MMA), rose by 9.7% from October 2014. Resales saw a 9.4% Y-O-Y jump in October to 3,558, while new homes sales increased 11.3% to 548. This marked four straight months of increasing Y-O-Y new home sales after 14 months of declines – a good sign for new housing subdivisions.
 
dec median
 
According to Home Builders Research, the 12MMA median home price (new and resale) in October was $202,989, an 8.8% jump over October 2014. The peak of $305,333 occurred in February 2007.
The median new home price this past October was $307,252, up 5.4% in the last 12 months. The peak of $327,066 occurred in February 2007.
The median resale home price was $186,799 in October, reflecting a 9.6% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for October was $275,327.
The combined rate of home appreciation for new and resale homes has slowed considerably during the last year. In October 2014, the Y-O-Y price increase from October 2013 was 12.5%. The peak of 35.8% occurred in February 2005. The annual housing appreciation rate has slowly picked back up after most recently bottoming out at 5.5% growth in April 2015.
 
dec 30 yr
Mirroring the growth in home sales over the last year, the 12MMA 30-year fixed rate mortgage in the Western Region was unchanged at 3.80% in November. The 10-year peak of 6.40% occurred in October 2006. This rate will remain relatively low as the Federal Reserve continues to try to stimulate consumer and business spending and demand, but may start to slowly increase.
 
dec home price
 
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 140.4 in September, an increase of 6.3% compared to September 2014. This was about one-third of the 18.8% increase recorded between September 2013 and September 2014. The index peaked at 233.2 in December 2006. The highest (44.5%) change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These increases are similar to those reported by Home Builders Research.
 
dec housing
The Housing Opportunity Index for the Las Vegas MSA rose for the second quarter in a row in Q3, 2015 after eight quarters in decline. It went from 61.6 last quarter to 61.9 on a moving quarter basis. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 61.1.
The U.S. Index also increased from 63.6 to 63.7 during the same period. Housing prices appear to be stabilizing, and the improving employment situation may be helping raise the index, as well.
 

dec mortgage

The prime rate remains at 3.25%. The 10-year treasury bond rate has increased in the last month, from 2.07% to 2.15%. The 90-day LIBOR also increased to 0.39. Lender rates generally increased, as well. Still, these rates remain historically low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
 
dec retail
Taxable sales in Nevada and Clark County continue to rise, thanks to increased visitation and consumer spending. Taxable retail sales hit $3.17 billion in September, up 6.2% compared to September 2014, on a 12MMA basis. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted).
Retail sales figures are now higher than the pre-recession highs of 2006-2007 and continue to be encouraging for future state and county budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
 

dec earnings

Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in October rose to $722, a 3.4% increase over October 2014. On an inflation-adjusted basis, earnings are starting to improve, as well, up 3.2% in October compared to October 2014, to $641 in 2007 dollars. It is still $110 (15%) less than the inflation-adjusted peak of $751 occurred in August 2007. The trough occurred in 616.47.
 

dec hours

On a 12MMA basis, the number of weekly hours worked in Las Vegas (Clark County) in October held steady at 33.2 hours for the fifth straight month, but was down 0.2 hours from the 33.4 recorded in October 2014. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and slowing growing average hours worked have accompanied a dropping headline unemployment rate. At this point in the recovery, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, the U-6 unemployment rate (includes discouraged and part-time workers) in Nevada remains the nation’s highest at 14.8%.
 

dec fuel

According to AAA, as of December 8, the average price per gallon for regular unleaded gasoline dropped by 11.0%, from $2.86 a year ago to $2.54. Between November 8 and December 8, the price of unleaded also declined, by $0.24 per gallon, or 8.6%. We expect gas prices to remain less expensive compared to last year through the end of 2015. This is the consumer “raise” that keeps on giving.
 
dec employment
A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County was 2.7 in September on 12MMA basis, compared to 6.9 in September 2014. According to the general consensus, an E-P Ratio above 2.0 that is declining indicates that the local housing market is approaching a peak.