Las Vegas Sun

June 2, 2015

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Slow growth could mean high home vacancy rates for years

The comparisons are much easier when you look at where our economy has been, and at least some signs are trending upward. But one thing remains certain: It could be as long as a decade before the estimated 66,000 vacant apartments and single-family units in Clark County are filled to pre-recessionary levels, and that could mean continued uncertainty for the regional economy.

To be certain, a 36.8 percent jump in Las Vegas convention attendance this past January helped drive a 6 percent increase in taxable sales throughout Clark County, a positive sign for the recession-weary region.

McCarran International Airport, Strip resorts and nearby businesses were the beneficiaries of the convention bump, but it will take consecutive quarters of sustained growth for those numbers to filter throughout the valley's neighborhoods.

“We’re not that much off the trough,” said Stephen Brown, director of the Center for Business and Economic Research at UNLV, which compiled the figures.

The former top economist with the U.S. Federal Reserve Bank branch in Texas notes that there has been some job creation in the region’s top industry, with Station Casinos’ post-bankruptcy hiring of 1,000 workers, half of whom will be full time. But many more people in Southern Nevada’s gaming and lodging sector remain underemployed, working fewer than 30 hours a week, a large percentage barely taking home enough money to pay their bills.

The U.S. employment numbers for March offered good news. A total of 216,000 jobs were created nationally for the month, or slightly more than the monthly average of 211,000 since December, potentially a good sign for the regional economy, which is dependent upon free-spending consumers who feel good about their financial prospects.

Nationally, weekly unemployment claims have declined from about 450,000 to 385,000, still a troubling figure, but the downward trend offers some optimism.

The Nevada unemployment rate dropped to 13.6 percent in February, its lowest level since August 2009 when it stood at 13.5 percent. The Las Vegas unemployment stood unchanged at 13.7 percent for the month.

Clark County notes there are 66,000 vacant single-family homes and apartments in the greater Las Vegas area. That number could continue to grow if the foreclosure crisis deepens, further curtailing consumer spending at a wide range of retail stores and restaurants throughout the valley.

The annual household formation rate, which reflects when an individual goes out on his or her own to establish a home, is growing at just 0.5 percent annually. It would have to grow at a rate closer 8 percent annually to fill those homes within five to 10 years. During the peak years it grew at annual rate of 4 to 5 percent.

“You’re not going to see those houses soaked up very quickly,” Brown noted.

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