Economic growth in Nevada is accelerating faster than the U.S., economic analysts at the University of Nevada, Las Vegas Center for Business and Economic Research, said Thursday, but housing remains tight and the state trails woefully in advanced industry.
“The Southern Nevada economy is on the uprise,” Ryan Kennelly, an economic analyst at the center, said at the 2015 Midyear Economic Update Biannual Conference. “It will continue to be one of the fastest-growing economies in the nation. Every year has been slightly stronger than the last and that’s something that we see forecasted in the next two years as well.”
Stephen Brown agreed, saying Nevada, driven by Las Vegas, has re-emerged as a leader in economic growth in the past few years and is doing far better than the U.S.
But Brown, who is stepping down as the center’s director to assume full-time duties as an economics professor at UNLV, told an audience of more than a hundred business professionals at the Sands Expo and Convention Center that his outlook on the state of the U.S. was “pessimistic.”
“The national recovery from the Great Recession has been bumpy and sluggish,” Brown said. “Restrictions on financing have contributed to that weakness by limiting investment.”
Brown, who will be replaced by UNLV economics professor Stephen Miller on Wednesday, said the Las Vegas housing market is similar to that of the U.S.
“The U.S. housing market remains tight and when the housing market is this tight, the prices continue to rise,” Brown said.
Other factors affecting U.S. home prices include banks not offering loans and millennials deferring starting families, which equates to them not buying homes, Brown said.
Median home prices in Las Vegas peaked in 2006, right before the Great Recession, Kennelly said. Prices for new homes were around $350,000, while prices for existing homes were around $280,000.
Home prices have not stabilized since the Great Recession, with new homes at $300,000 and many existing homes priced around $180,000.
“That’s a $120,000 gap,” Kennelly said. “That’s way too big of a gap. As that gap closes, more construction will start to happen.”
Kennelly said that while most of the main industries that drive revenue in Nevada are growing, construction and real estate are “lagging behind.”
But Michael A. Del Gatto, principal architect and vice president of Carpenter Sellers Del Gatto architecture firm, said the recovering economy bodes well for his business, which has seen a lot more activity, including public-sector projects, in the past few years and has even made many new hires, he said.
“We’re a canary in a coal mine,” he said. “As architects, we’re working with clients to draw plans. We have to do our job before construction can follow. When we’re busy, we know that construction can be busy soon.”
DC Building Group President Bryce Clutts agreed. He said that although his firm saw a slight decline in the first quarter, he expects his numbers to rise throughout the year.
“It’s turning the corner and we’re seeing more bid and bid opportunities,” he said. “It’s starting to see a buzz. If they’re designing projects in the first quarter, we’re building projects in the second quarter.”
Although Las Vegas has driven the state’s economic growth, the city still falls behind others in several industries.
The leisure and hospitality industry grew steadily and will continue to grow with the scheduled openings of several properties in Las Vegas, Kennelly said.
But, Las Vegas’ leisure and hospitality industry still trails Orlando, Fla., said Robert E. Lang, a professor of sociology at UNLV, co-director of Brookings Mountain West and director of the Lincy Institute.
“Orlando is our main competitor and is systematically beating us,” Lang said.
Lang said Las Vegas also falls behind in advanced industry, ranking 97 out of 100, trailing Phoenix; Tucson, Ariz.; and Ogden, Utah; among many others.
“If Puerto Rico were a state, Nevada will be far behind it,” Lang said.
Contact Review-Journal writer Michelle Iracheta at 702-387-5205. Find her on Twitter at @cephira.