The Reno Financial Advisory Board saw a presentation (national_regional economic outlook) on the national economy with a report on economic activity in the Reno and Sparks area. Information on jobs and housing bear on development in the area.
My takeaways …
Eugenia Larmore (consultant) reported on the national economy.
- The national economy is expected to slow down in 2019 but not to enter a recession. Growth is expected to slow down from 2.7% in 2019 to 2.0% in 2020 (adjusted for inflation).
- Expect existing home sales to fall 1.1% in 2019 and rise 4.0% in 2020.
- Expect new home sales to rise 3.4% in 2019 and 9.2% in 2020.
- Gaming revenue is down in Washoe County and Las Vegas, but meals and amenities (resort features) revenues are up.
Brian Bonnenfant (UNR Business School) reported on the Reno and Sparks area economy.
- Area employment peaked at 223,900 in 2007 falling to 189,100 in 2011, and rising to 241,167 in 2018. The net increase over 11 years was 17,267 jobs.
- Expect 9,000 new jobs to be created in 2019 for a total of 250,221. This maintains the roughly 4% annual increase since 2012.
- Home and apartment demand in 2018 were less than in 2016.
- Only 327 existing homes sold in January 2019 as opposed to 570 sold in January 2018. This is the lowest since February 2009.
- There are now 3,953 apartments under construction with another 7,418 approved.
- New apartment construction in 2018 was 2,216.
- New home sales were 1,572 in 2018.
- Affordability is the issue: $81,700 household income needed to afford the median existing home costing $367,000 (Q4 2018). Median household income is $75,268.
- Median home buyers are shopping for a townhouse or a condo.
- New home sales in 2018 had median prices rising from $420,000 to $510,000 falling to $480,000 in January 2019.
- Median existing-home price for homes sold in January 2019 was $360,000.
- Average apartment rents dipped to $1,292 in Q4 2018 down from a peak of $1,319 in Q2 2018.
- While the labor force is growing about 4% per year, school enrollment is flat since 2016.
- Residents moving within Washoe County (50,000) are greater than the new residents moving from other areas (27,500) in 2018.
Labor and Employment
- Manufacturing (mostly TRIC) showed the biggest increase in jobs: 3,183 (2017/2018). Average manufacturing wages are $28.72/hour.
- Manufacturing employment is expected to continue to grow the fastest in 2019 followed by construction.
- Total employment breaks down in the following order: Leisure & Hospitality, Professional Services, Government, and Education. Manufacturing ranks seventh.
My assessment of the information is that the real estate market is cooling entering 2019.
- Existing home sales turned down.
- Existing home prices are flat or down.
- Rents went down.
- New home prices are down.
It may just be a dip, but it may be time to pause development and absorb the many homes and apartments that are being built or are approved to be built. This report does not support the argument that the area has a desperate need for new housing. New condos or townhouses are likely to be the most popular. TMRPA reports there are 15,000 new homes and apartments in the area which are approved but not yet built.
Steve, thanks for that incredibly detailed analysis of local housing & economic outlook!
Sent from my iPhone
Thank you for doing the work and breaking down the stats.
Thank you, Steve! I found your report very informative…keep up the good work for our community! Susan
Thanks for the report analysis. I hope no further projects will be approved at this time. Remember the 25% foreclosure rate in Las Vegas during the last recession? Let’s avoid that by not over building.