Clark County Monitoring Program | Q 2 2 0 0 8 I N D I C A T O R B R I E F
HIGHLIGHTS:
Economic
1. Casino Hotel & Gaming employs 18.7 percent
of the Las Vegas workforce
2. 10.1 million visitors came to Las Vegas during
the three month period ending May 2008
3. Hotel room inventory has increased 2.7 percent
4. 35 foreclosures a day were experienced during
the second quarter
5. Active foreclosures are up 8.8 percent when
compared to the same quarter previous year
Economic Overview
outhern Nevada is undeniably a market in transi- struction sector shed a total of 9,000 workers year-over- the active foreclosure count is up 8.8 percent. Anecdotal
S tion. A combination of poor economic conditions
locally and unstable national and regional housing
markets has forced the Las Vegas economy from
a period of rapid growth to one of rapid decline. South-
ern Nevada does, however, remain dependent on the
year, business and professional services (-3,700), financial
activities (-1,700), information (-600), and leisure and
hospitality (-1,400) all contributed to the fourth con-
secutive month of employment declines. Government
continued to lead the way in terms of employment gains,
reports by Realtors and others within the industry suggest
financial institutions are taking longer to process foreclo-
sures and/or potential short sales. As units work through
the foreclosure process it is likely that, despite recent de-
clines, they will add additional inventory to the 22,078
health and vitality of the region’s casino-hotels and gam- adding 3,900 positions during the past 12 months. It was residential resale units listed with Realtors at quarter’s end.
ing industry. Even with notable economic diversity in re- followed trade, transportation and utilities (+3,500) and The one bright spot in the residential sector is an in-
cent years, that core sector continues to directly employ services producing (+3,100) positions. Overall the econ- crease in the number of home sales. The number of units
173,500 workers, or 18.7 percent of the Las Vegas val- omy lost 6,200 jobs during the past 12 months off its listed as “contingent” and “pending” within the Multiple
ley workforce. It also generates more than $22 billion in June 2007 total. Listing Service continued to escalate through the second
gross revenue annually, substantially more than any other The Las Vegas Valley unemployment rate currently quarter of 2008, pointing to increased activity and lower
industry in the region. stands at 6.5 percent, which the highest reported unem- price points.
The tourism industry’s performance has also shifted ployment rate since January 2002 (a period heavily in- The number of new home sales for the second quar-
away from the feverish pace reported during the 2003 to fluenced by the 9-11 aftermath). In the short-term, the ter of 2008 has decreased by 42.3 percent when compared
2006 timeframe. According to data released by the Las Ve- slowdown in residential construction, which already has to the same quarter in the previous year. The median new
gas Convention and Visitors Authority (LVCVA), the num- caused many companies to cut back production, will home price has decreased from $314,317 to $258,990 in
ber of visitors to the Las Vegas valley totaled 10.1 million likely contribute to overall construction-related employ- the month of June, representing a 17.6-percent decrease.
during the trailing 3-months ending May 2008. This was ment declines. As employment shifts are anticipated to Alternatively, existing home sales have increased by 3.0
a 0.7-percent decrease when compared to the same three continue, the southern Nevada market will seek out a percent for the quarter, while sales prices have decreased
months of the previous year. Convention-related travel was new equilibrium. by 22.1 percent, from $280,000 to $218,000. As expect-
down 1.3 percent during the same three-month period. From a residential real estate perspective, elevated fore- ed, Clark County housing units permitted for the quar-
Also worth noting are airline volumes, which continued to closure and resale inventories, in addition to lower-than- ter have decreased, falling by 817 units to 4,721. This
perform below the prior year’s statistics (-4.9 percent). average market demand, have continued to put downward represents a 14.8-percent decrease for the quarter when
Although demand is waning, hotel room supply con- pressure on pricing for both new and resale homes. Ac- compared to the second quarter of 2007.
tinued to expand during the second quarter. At 136,700 cording to Home Builder Research, Clark County’s me- Much like a rollercoaster, the view from the bottom of
rooms, the total inventory was up 2.7 percent as com- dian new home prices stood at $257,831 during the sec- an economic cycle is always the scariest on the way down,
pared to the same month previous year. Average hotel ond quarter of 2008, representing a 17.5-percent decrease particularly when you can’t see the bottom. We anticipate
occupancies fell from 92.1 percent to 89.7 percent dur- from the same quarter previous year. Median resale home economic conditions to worsen in southern Nevada, re-
ing the same period. Historically, supply has created its prices fell by a more aggressive 20.2 percent during the gionally and nationally through most, if not all, of 2008.
own demand, and the expectation is that multi-billion same period, averaging $224,333 during the quarter. That said, a rapid recovery is not likely, much of the de-
investments such as Wynn’s Encore, MGM MIRAGE’s A principal factor contributing to price declines cline is merely a resetting of consumer spending to more
CityCenter, and Turnberry Associates’ Fontainebleau will are the elevated number of foreclosures. Southern Ne- sustainable levels. Although the residential construction
spur additional investment. That said, the delay of the vada reported 3,223 new foreclosures during the second sector appears to be reaching its trough, the commercial
Boyd Gaming’s Echelon project and the foreclosure of quarter of 2008, which represents a slight increase from segment may be just coming off its peak and poised for
Cosmopolitan by Deustche Bank AG are ominous signs the 3,147 foreclosures recorded during the same quarter a significant slowdown in late 2009 and 2010. The an-
that gaming companies and investors are both wary about previous year. Recent foreclosure activity equates to 35 ticipated upswing in the hospitality industry during the
the industry’s ability to weather the current storm. new foreclosures per day throughout the Las Vegas valley. 2009 to 2011 timeframe should be a stronger force. This
Total employment in the Las Vegas Valley reached The number of active foreclosures (or residential units in expectation notwithstanding, the cadence of these cycles,
927,000 during June 2008, representing a marginal de- the foreclosure process) also remained elevated at 4,936. the impacts of higher oil prices, and consumer confidence
crease of 0.7 percent from one year ago. While the con- When compared to the same quarter of the prior year, all warrant close monitoring.
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