If you’ve ever wanted to use affordable real estate as a recruiting hook, a new study gives you fresh fodder.
Seven of the country’s 10 least affordable housing markets are in California, and that’s a big recruiting edge for Las Vegas businesses, said Jed Kolko, chief economist of real estate website Trulia. But before you use housing to reel in new workers, think about how to help potential hires maneuver a system that favors cash investors. You also need to know when to bring up prices to a prospect.
Get your pitch right, and affordable mortgages and low rents could be a big hiring tool.
“Housing costs are a big part of the (relocation) equation. They’re a much bigger factor than taxes are,” Kolko said. “The gap in housing costs between California and Nevada is much bigger than the gap in the states’ tax burdens, and a lot more of your income goes to housing than to state and local taxes.”
Those disparate housing costs mean serious advantages for people who decamp California in particular and come to Nevada. Consider that you need 16 percent of the average Las Vegas monthly wage to pay a typical mortgage on an 1,800-square-foot home. But San Franciscans throw 55 percent of their monthly pay to that mortgage. In Los Angeles, the same mortgage consumes 41 percent of monthly income. That figure is 44 percent in Orange County, and 37 percent in San Diego and Oakland.
In Honolulu, another important feeder market for new locals, it takes 74 percent of the average monthly wage to cover a typical mortgage payment.
But there’s a catch: Local prices are great — as long as you can compete with hordes of cash investors. That’s no easy feat in a market where nearly 60 percent of buyers pay with cash. It’s almost impossible for mortgage-backed buyers to stand out to sellers, who prefer the quick turnaround of a cash deal.
“One of the biggest challenges we have when we’re recruiting candidates to Las Vegas is finding them suitable accommodations,” said Bill Werksman, managing partner of local staffing firm Resource Partners. “There may be a lot of homes going into foreclosure, but the supply of viable homes for purchase is still tight. It’s great to tell people the affordability level is there, but they still have to navigate the buying process. We’ve moved a lot of people here, and they all share the same comment: ‘It’s hard to find a great house that’s also a bargain.’ ”
That’s why experts recommend guiding new recruits into apartments at first. Werksman advises new residents to rent for six months. That lets them figure out their commuting patterns, learn which part of town they like best and get referrals on a real estate agent who can help them buy when they’re ready.
Fortunately for local employers, rents here are also a bargain compared with other markets. Trulia’s numbers show that a local earning the average income shells out 26 percent of his wage for monthly rent, compared with 46 percent in Los Angeles and San Francisco; 41 percent in San Diego; and 40 percent in Riverside-San Bernardino, Calif. What’s more, rents here are dropping, down 0.9 percent year over year. Jeff Jacobs, vice president of B&R Property Management in Las Vegas, said rents fell by about 30 percent in the real estate crash.
“If you’re relocating here for employment, your only option is to rent, given how tight the sales market is with investors chasing single-family inventory,” Jacobs said. “Buying a house is not an option if you’re moving to Las Vegas. You can buy new, but you have to wait for build-out. If you live in Southern California today, and you’re moving here to take a construction job, you’re renting either a single-family home or an apartment.”
Werksman said you should wait to bring up housing until it’s clear that both candidate and company are seriously interested in each other. At that point, drive your recruit around town to look at different neighborhoods, and talk to her about renting. Once she’s here and settled into her new job, the least you could do is refer her to a reputable real estate agent to help her buy, Werksman said.
Even if her prospects for buying right now aren’t clear, Las Vegas should enjoy a long-term pricing advantage over California markets, particularly coastal cities, Kolko said. Inventory here won’t stay tight forever; as prices rise, more owners will sell, and more builders will build. Eventually, investors will cash in, too. What’s more, housing along the California coast is still in demand thanks to the area’s weather and outdoor lifestyle, but they’re not making any more land. That means Las Vegas will have more affordable housing “as far out into the future as it’s possible to see,” Kolko said.
• In a separate report, Kolko called the June 7 national jobs report “surprisingly good” for housing. For starters, employment in residential construction in May was up 4.6 percent compared with May 2012. From its bottom in January 2011, the number of jobs in the sector gained 7.6 percent. Still, joblessness in the home-building industry was above normal, at 10.8 percent, though that’s about half of the 20.1 percent it peaked at in May 2010.
Nevada’s May jobs report won’t come out until June 21, but April’s numbers from the state Department of Employment, Training and Rehabilitation showed a 4.8 percent jump year over year in local construction jobs in April.
The national jobs report also pointed to increased hiring among young adults aged 25 to 34, with employment in the group ticking up from 75 percent to 75.5 percent. That’s important because it’s the prime age for housing demand, Kolko said, so more employed young adults should boost sales.
• Real estate research company Real Trends ranked local residential brokerage Prudential Americana Group as the nation’s 26th largest by number of transactions, and 39th biggest for sales volume.
• William Skupa and Gino Vincent of MINT Property Group arranged the sale of two medical office buildings at 1661 ad 1671 W. Horizon Ridge Parkway. The 5-year-old buildings total nearly 71,000 square feet of space. At a sales price of $5.5 million, that’s $78 per square foot.
• Conn’s Appliances signed a 10-year lease on 50,150 square feet at 3185 E. Tropicana Ave., in the Tropicana Centre. Penny Mendlovic of CB Richard Ellis represented Conn’s in the $3.1 million contract. Joseph Bonifatto and Frank Marretti of Colliers International, represented property owner Tropec LLC.
VBackup battery and power provider Nationwide Power Solutions will lease 56,297 square feet at 1060 Mary Crest Drive in the Pacific Business Center, in a seven-year deal worth $1.7 million. Colliers International’s Mike DeLew, SIOR, and Greg Pancirov, SIOR, represented Nationwide, while Garrett Toft and Kevin Higgins of Voit Real Estate Services represented property owner Northwestern Mutual Life Insurance Co.
• American Nutritional Corp. leased 74,100 square feet at 3120/3150 Sunrise Ave., in the Spectrum of Las Vegas. Gabe Telles of Colliers International and James Griffis of Griffis Realty represented the company in the $809,172 deal.
Contact reporter Jennifer Robison at firstname.lastname@example.org or 702-380-4512. Follow @J_Robison1 on Twitter.