Washoe County Economic Indicators-January 2015

Reno/Sparks MSA[1] Employment

Monthly Reno-Sparks MSA employment trends (year over year) have seen consistent positive employment growth since March 2012.  According to preliminary estimates from Department of Employment, Training, & Rehabilitation (DETR), November 2014 employment is 206,200, a 1.6% increase (3,300 jobs) over November 2013.  The November 2014 employment is higher than for any November employment total since 2008, but the November 2014 employment is 300 jobs less than the peak month (September) in YTD 2014.

The November 2014 employment level of 206,200 represents an increase of 21,400 jobs since the lowest level of employment post-2005 (January 2011, 184,800 jobs), but remains 21,900 jobs less than the region’s peak employment (December 2006, 228,100 jobs).

Industries with the largest employment gains between November 2014 and November 2013 include Professional & Business Services (3,200 jobs); Education & Health Services (500 jobs); State Government (200 jobs); Leisure & Hospitality (100 jobs); Transportation, Warehousing, & Utilities (100 jobs); and Financial Activities (100 jobs).

Industries with a reduction in jobs during this period are Wholesale (-300 jobs), Retail (-200 jobs); Manufacturing (-100 jobs), Construction (-100 jobs); Federal Government (-100 jobs), and Other Services (-100 jobs).

empl jan

Washoe County Gross Gaming Revenue

Despite the downturn in Washoe County gaming industry’s performance in recent years gaming remains an important employer and revenue generator.  Of the top 20 employers in Washoe County, eight are Casino Hotels.  Excluding government, school districts, and higher education, three of the top five employers are Casino Hotels.

After six years of gross gaming revenue decline between 2007 and 2012 (year over year), gaming revenues increased in 2013 by 3.5%.  Through November 2014, however, gaming revenue has declined 1.3% compared to the same period in the previous year, and down 0.2% year-over-year for the month.  Emphasizing the unpredictable nature of gaming revenue, the year-over-year change for October is +6.8%.

gam jan

Washoe County Taxable Sales

Washoe County taxable sales have now experienced 22 straight months of positive year-over-year growth since January 2013.  During this period taxable sales have increased between 3.6% (between August 2013 and 2014) and 13.1% (between December 2012 and December 2013), with six of the months posting gains in the double-digits including October 2014 (10.8%).

The industries with the largest taxable sales in Washoe County continued to report growth in sales between October 2013 and October 2014.  These include Food Services and Drinking Places with sales of $81.59 million (10.5%); Motor Vehicle and Parts Dealers with sales of $70.68 million (1.0%); and General Merchandise Stores with sales of $58.23 million (3.7%).

sale jan

Washoe County Single-Family Home Values and Sales

According to the Northern Nevada Regional MLS, the existing single-family median home value of $264,450 (November 2014) represents a 17.3% increase over November 2013, and a 0.6% increase over October 2014.  November’s median value of $264,450 is the highest median since April 2008 ($275,000), but is almost $100,000 less than the peak of January 2006 ($360,000).

Average appreciation rates for the Reno-Sparks region (calculated between 1990 and 2001) are 1% per quarter, or 4% per year.  At this average appreciation rate, the median home value in the 4th Quarter 2014 would have been $276,235.  As a result, the current home value of $264,450 remains under-valued by more than $10,000, although the comparison is somewhat skewed by the lack of homes currently sold in the higher price ranges compared to the mid-2000s.

According to the Northern Nevada Regional MLS, 470 existing single-family homes were sold in the Washoe County in November 2014, compared to 468 homes sold in November 2013 and 492 homes in October 2014.

Through November, a total of 5,391 single-family homes have been sold in 2014, compared to a slightly higher number of 5,522 during the same period in 2013.

The largest amount of existing single-family homes sold through MLS occurred in 2012 (6,016), almost double than those sold in 2007 (3,307) when the Great Recession began.

homes jan

Reno-Sparks MSA Commercial Market Vacancies

As vacancy data are reported quarterly, no new data has been published since our December blog.  As a result, the below entry is a copy of the December information for the 3rd Quarter 2014.

Using quarterly data available from Collier’s International Reno office, vacancy rates for office space are available starting in the 1st quarter 2002; vacancy rates for industrial properties are available starting 1stquarter 2006.  As data are shown using a 4-quarter moving average (4QMA), the below graph shows office vacancy rates starting 4th quarter 2002 and industrial vacancy rates starting 4th quarter 2006.

The office market vacancy rate peaked in the 3rd quarter 2010 with a 4QMA of 21.6%.  Office vacancy rates declined to a post-recession low of 18.0% in the 3rd quarter 2012 before climbing to 19.2% by the 3rdquarter 2013.  A year later, by the 3rd quarter of 2014, vacancy rates fell to a 4QMA level of 17.4%.

The industrial market vacancy rate peaked in the 2nd quarter of 2010 with a 4QMA level of 13.7%.  Rates fluctuated during the next few years before reaching a new peak in the 4th quarter of 2012 with a 4QMA level of 13.4%.  By the 3rd quarter 2014, 4QMA levels fell to 8.0%, compared to the 4QMA level of 11.8% a year prior, 3rd quarter 2013.  This is driven by the increased demand for industrial space and supported by increases in manufacturing employment.

Dec-comm

Again, we would like to thank the Center for Regional Studies at the University of Nevada, Reno for help with data and analysis.

[1] The Reno/Sparks MSA includes Washoe and Storey Counties.

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Washoe County Economic Indicators-December 2014

Reno/Sparks MSA[1] Employment

Monthly Reno-Sparks MSA employment trends (year over year) have seen consistent positive employment growth since March 2012.  According to preliminary estimates from Department of Employment, Training, & Rehabilitation (DETR), October 2014 employment is 205,300, a 2.0% increase (4,000 jobs) over October 2013.  The October 2014 employment is higher than for any October employment total since 2008, but the October 2014 employment is 1,200 jobs less than the September 2014 total.

The October 2014 employment level of 205,300 represents an increase of 20,500 jobs since the lowest level of employment post-2005 (January 2011, 184,800 jobs), but remains 22,800 jobs less than the region’s peak employment (December 2006, 228,100 jobs).

Industries with the largest employment gains between October 2014 and October 2013 include Professional & Business Services (2,500 jobs); Leisure & Hospitality (600 jobs); Education & Health Services (600 jobs); Retail (400 jobs); State Government (400 jobs); Construction (200 jobs); Transportation, Warehousing, & Utilities (200 jobs); and Financial Activities (100 jobs).

Industries with a reduction in jobs during this period are Manufacturing (-400 jobs), Wholesale (-300 jobs), Federal Government (-100 jobs), Local Government (-100 jobs), and Other Services (-100 jobs).

Dec-empl*It should be noted that DETR revised September 2014 job estimates from 210,508 as posted in our November blog to 206,500 as reflected in the above graph.

Washoe County Gross Gaming Revenue

Despite the downturn in Washoe County gaming industry’s performance in recent years gaming remains an important employer and revenue generator.  Of the top 20 employers in Washoe County, eight are Casino Hotels.  Excluding government, school districts, and higher education, three of the top five employers are Casino Hotels.

After six years of gross gaming revenue decline between 2007 and 2012 (year over year), gaming revenues increased in 2013 by 3.5%.  Through October 2014, gaming revenue has declined 1.3% compared to the same period in the previous year.  Emphasizing the unpredictable nature of gaming revenue, the most recent month-over-month change (October) is +6.8%.

Dec-gamingWashoe County Taxable Sales

*It should be noted that Nevada Department of Taxation had not released September 2014 taxable sales data as of the date of this blog.  As a result, we will again discuss August 2014 data.

Washoe County taxable sales experienced positive growth over a 20-month period since January 2013.  During this period taxable sales increased by as high as 13.06% between December 2012 and December 2013.  August 2014 sales increased by the lowest amount during this period of 3.58% over August 2013.

The largest taxable sales industries in Washoe County continued to report growth in sales between August 2013 and August 2014.  These include Food Services and Drinking Places with sales of $89.15 million in August 2014 and growth of 5.1%; Motor Vehicle and Parts Dealers with sales of $87.99 million and growth of 5.4%; and General Merchandise Stores with sales of $62.84 million and growth of 2.0%.

Dec-sales

Washoe County Existing Single-Family Home Values and Sales

According to the Northern Nevada Regional MLS, the existing single-family median home value of $262,750 (October 2014) represents a 22.2% increase over October 2013, and a 9.9% increase over September 2014.  October’s median value of $262,750 is the highest median since June 2008 ($263,000), but is almost $100,000 less than the peak of January 2006 ($360,000).

Average appreciation rates for the Reno-Sparks region (calculated between 1990 and 2001) are 1% per quarter and 4% per year.  At this average appreciation rate, the median home value in the 3rd Quarter 2014 would have been $273,574.  As a result, the current home value of $262,750 remains under-valued by $10,000, although comparison is somewhat skewed by the lack of homes currently sold in the higher price ranges compared to the mid-2000s.

According to the Northern Nevada Regional MLS, 492 existing single-family homes were sold in the Washoe County in October 2014, compared to 546 homes sold in October 2013 and 502 homes in September 2014.

Through October, a total of 4,921 single-family homes have been sold in 2014, compared to a slightly higher number of 5,054 during the same period in 2013.

The largest amount of existing single-family homes sold through MLS occurred in 2012 (6,016), almost double than those sold in 2007 (3,307) when the Great Recession began.

Dec-homes

Reno-Sparks MSA Commercial Market Vacancy

Having combined single-family home sales and values data into a single entry, we were left with room for another indicator.  Since we have been covering the residential real estate market, it made sense to also focus on the commercial market, especially in terms of market vacancies.

Using quarterly data available from Collier’s International Reno office, vacancy rates for office space are available starting in the 1st quarter 2002; vacancy rates for industrial properties are available starting 1st quarter 2006.  As data are shown using a 4-quarter moving average (4QMA), the below graph shows office vacancy rates starting 4th quarter 2002 and industrial vacancy rates starting 4th quarter 2006.

The office market vacancy rate peaked in the 3rd quarter 2010 with a 4QMA of 21.6%.  Office vacancy rates declined to a post-recession low of 18.0% in the 3rd quarter 2012 before climbing to 19.2% by the 3rd quarter 2013.  A year later, by the 3rd quarter of 2014, vacancy rates fell to a 4QMA level of 17.4%.

The industrial market vacancy rate peaked in the 2nd quarter of 2010 with a 4QMA level of 13.7%.  Rates fluctuated during the next few years before reaching a new peak in the 4th quarter of 2012 with a 4QMA level of 13.4%.  By the 3rd quarter 2014, 4QMA levels fell to 8.0%, compared to the 4QMA level of 11.8% a year prior, 3rd quarter 2013.  This is driven by the increased demand for industrial space and supported by increases in manufacturing employment.

Dec-comm

Again, we would like to thank the Center for Regional Studies at the University of Nevada, Reno for help with data and analysis.

[1] The Reno/Sparks MSA includes Washoe and Storey Counties.

Washoe County Economic Indicators-November 2014

Reno/Sparks MSA[1] Employment

Monthly Reno Sparks MSA employment trends (year over year) have seen consistent positive employment growth since March 2012.  September 2014 employment levels reached 210,508, a 5.6% increase (11,208 jobs) over September 2013.  The September 2014 employment level was higher than for any September employment level since 2008, and higher than any monthly employment since October 2008.

The September 2014 employment level of 210,508 represents an increase of 25,708 jobs since the lowest level of employment post-2005 (January 2011, 184,800 jobs), but remains 17,592 jobs shy of the region’s peak employment (December 2006, 228,100 jobs).

Industries with the largest employment gains between September 2014 and September 2013 include Professional Services (3,300 jobs); Retail (1,400 jobs); Construction (1,000 jobs); Transportation, Warehousing, & Utilities (700 jobs); Education & Health Services (600 jobs); Leisure & Hospitality (300 jobs); and Financial Activities (100 jobs).  Industries with a reduction in jobs during this period were Government (-900 jobs); Manufacturing (-400 jobs); and Other Services (-100 jobs).

Nov Inds-Employment

Washoe County Taxable Gaming Revenue

Despite the downturn in Washoe County gaming industry’s performance in recent years gaming remains an important employer and revenue generator.  Of the top 20 employers in Washoe County, eight are Casino Hotels.  Excluding government, school districts, and higher education, three of the top five employers are Casino Hotels.

After sixteen months of taxable gaming revenue growth between April 2013 and July 2014, gaming revenue declined in August and September 2014 (-0.8% and -0.6% respectively) on a monthly moving average basis.  The recent declines in taxable gaming revenue, however, are much less significant than the monthly declines between 2009 and 2011.

Nov Inds-Gaming

Washoe County Taxable Sales

Washoe County taxable sales experienced positive growth over a 20-month period since January 2013.  During this period taxable sales increased by as high as 13.06% between December 2012 and December 2013.  August 2014 sales increased by the lowest amount during this period of 3.58% over August 2013.  It should be noted that the significant decreases in taxable sales for the balance of the state is likely due to the complexion of a number of large construction projects in smaller counties across the state, which generated taxable sales through the purchases of construction materials.

Nov Inds-Sales

The largest taxable sales industries in Washoe County continued to report growth in sales between August 2013 and August 2014.  These include Food Services and Drinking Places with sales of $89.15 million in August 2014 and growth of 5.1%; Motor Vehicle and Parts Dealers with sales of $87.99 million and growth of 5.4%; and General Merchandise Stores with sales of $62.84 million and growth of 2.0%.

Greater Reno Sparks Single-Family Home Values

The existing single-family median home value of $248,000 (3rd Quarter 2014) represents a 12.7% increase over the same period in 2013, and a 3.3%  increase over the 2nd Quarter of 2014.  On a year over year basis, home values in the Reno-Sparks region have increased for the last ten quarters after decreasing for the previous 23 quarters from the peak of $350,000 in the 4th quarter of 2005.

Average appreciation rates for the Reno-Sparks region (calculated between 1990 and 2001) are 1% per quarter and 4% per year.  At this average appreciation rate, the median home value in the 3rd Quarter 2014 would have been $273,574.  As a result, the current home value of $248,000 remains under-valued by almost $26,000, although comparison is somewhat skewed by the lack of homes currently sold in the higher price ranges compared to the mid-2000s.

Nov Inds-Home Values

The greater Reno-Sparks region differs from Washoe County by eliminating Incline Village (Lake Tahoe) and rural parts of the county.  Existing home values are significantly higher in Incline Village.

Washoe County Single-Family Home Sales

According to the Northern Nevada Regional MLS, 501 existing single-family homes were sold in the Washoe County area in September 2014, compared to 502 homes sold in September 2013.  Through September, a total of 4,429 single-family homes have been sold in 2014, compared to a slightly higher number of 4,508 during the same period in 2013.

Nov Inds-Home Sales

On a monthly basis, the median value for single-family homes is up 6.2%(September over September) with the current value at $239,000.  After peaking at $360,000 in January 2006, the highest recent median value reached $250,000 in June, July, and August 2014.  September values declined slightly from this trend.

[1] The Reno/Sparks MSA includes Washoe and Storey counties.

Washoe County Economic Indicators-January 2012-Part 1

We are finally moving into 2012 with the majority of our data and the start of 2012 is not acting like an economic recovery.  This blog covers data for General, Tourism and Employment economic indicators, to be followed by the Real Estate indicators next week.

As always, data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before. For example, Visitor Count data, available for January 2012 (current period) is compared to December 2011 data (previous period) and January 2011 (same period previous year).

General

Data for population, assessed value and personal income is the same as in the previous reports.  Washoe County taxable sales increased by 34.6% between November and December 2011, though much of this increase is likely due to the holiday season.  What is more important is the 6% between December 2012 and 2011 taxable sales, indicating a growth in holiday spending over the previous year.

Taxable gaming revenue continues to decrease, falling by 6.2% between December and January.  Gaming revenue also fell between January 2012 and the same month in 2011, showing a continuing declining trend.  In further negative news, the consumer price index increased slightly between November and December 2011 and also compared to December of previous year, making our purchases a little more expensive.

Tourism

As bright as our tourism outlook was in December, we seemed to have expended our tourism attraction abilities by January.  Tourism data shows declines across all indicators, including visitor counts, available rooms, occupied rooms, room occupancy rates and average room rates when compared to the previous period (December 2011) and the same month last year (January 2012).  Let’s hope this is a one-time occurrence due to the lack of snow or other non-recurring conditions.

Note: Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Employment

Compared to the January 2011 (December 2010 for unemployment claims), the Washoe County January 2012 employment picture is much brighter.  While the labor force number decreased slightly, we had a significant decrease in the number of unemployed, unemployment rate and new unemployment claims.  The average weekly wage also increased from the same period last year from $816 to $849 (Q3 2011 to Q3 2010).

Compared to the previous period (December 2011), however, the number of unemployed, unemployment rate and new unemployment claims increased.  The average weekly wage was the only indicator that increased, though this indicator is lagging behind other indicators (latest available for third quarter of 2011).

Washoe County Economic Indicators-November/December 2011-Part 2

Residential

Washoe County’s residential real estate market has seen some positive changes, though the overall outlook is still bleak.  New home sales decreased in December 2011 compared to the previous month and the same period last year.  Existing home sales, however, increased by 75.7% from the previous December and 10.5% from the previous month.  Median single family and condo/townhouse closing price also increased, a 2.6% increase from November for single family homes and 5.8% for condos.  Days single properties remained on the market also increased for single family homes, but decreased for condos/townhouses.

Notice of defaults saw an increase between November and December 2011, as did notices of sales.  Trustees deeds and REO listings decreased during compared to the previous month and previous year.

Note: Notices of default data from the previous year should be disregarded as this data was impacted by restrictions placed on financial institutions regarding issuing these notices.  The number of notices of default is expected to grow as institutions figure out ways to continue issuing these notices.  This may also impact REO listings and notices of sale, as fewer notices of default are issued.  This does not represent the performance of the real estate sector, but rather the impact of these restrictions.

Commercial

The commercial real estate market performed well and poorly, depending on the sector.  The industrial property sector saw a decrease in vacancies, however, this decrease came as a result of reduced rental rates.  The office sector also saw some decrease in its vacancy rates, though not as significant as that for industrial properties.  Office retail rates grew slightly during this time.  Retail properties fared the worst in December.  Retail vacancy rates grew from the previous year and previous month, while retail rental rates declined, a combined negative impact on the sector.

Conclusion

The health of the Washoe County economy remains unclear.  Taxable sales and gaming revenue increased from the previous year, but not from the previous month.  This could be in part due to seasonality associated with the holiday period.  The tourist sector is a bright spot for Washoe County, with positive tourism numbers over the previous year.  This may be due to an improvement in the national economy.  Employment data also shows much improvement from the previous year.

Residential real estate indicators are also monthly positive, though there remains a slowdown in the new homes market.  On the commercial property side, industrial and office sectors are seeing some improvement, while the retail sector continues to struggle.  There is some hope for growth in this sector as taxable sales increase.

Overall, Washoe County is seeing more green numbers than in previous months, and if growth in these indicators continues, it will bode well for our recovery.

Washoe County Economic Indicators-November/December 2011-Part 1

Our last blog focused on data for October 2011.  Since then, both November and December data has become available.  Since the blog attempts to cover latest economic data available, we will skip November data and focus on December values, with the exception of taxable sales and taxable gaming revenue, data for which is available through November 2011 only.

As always, data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before. For example, Visitor Count data, available for December 2011 (current period) is compared to November 2011 data (previous period) and December 2010 (same period previous year).

General

Data for population, assessed value and personal income is the same as in the previous report; please see the October indicators for a detailed discussion.

County taxable sales decreased by 9.3% from October, but increased by 5.3% from November of previous year.  Taxable gaming revenue continued to decrease, falling between October and November of 2011, though revenue did increase by 1.4% from November of previous year.

Consumer price index increased by 2.75% between December 2010 and 2011, but fell slightly between November and December 2011.

Tourism

Washoe County’s tourism outlook as of December 2011 is bright, with all indicators showing positive growth.  Area visitors, available rooms, occupied rooms, resulting room occupancy rates, and average room rate increased between November and December 2011 and December 2010.

Note: Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Employment

The employment picture for Washoe County was less positive.  Labor force numbers continue to decline, the County’s labor force numbers decreased by 2.36% between December 2010 and December 2011.  While the number of unemployed workers has also declined significantly since December 2010, between November and December 2011, this number grew by 2.27%.  This resulted in an unemployment rate of 11.9%, which is 14.4% lower than in December 2010, but 2.3% higher than in November.

No new data for new unemployment claims and average weekly wage is available.

Please see next week’s blog for residential and commercial real estate market indicators and conclusions regarding the meaning of indicator changes.

Washoe County Economic Indicators-October 2011-Part 2

Continuing with Washoe County’s economic indicators for October 2011, we now look at residential and commercial real estate data.

Residential

Washoe County’s residential market has been heavily impacted by the recession.  With Nevada leading the nation in the number of foreclosed and distressed properties, Washoe County saw its share of lost home values and “underwater” properties.  While the rest of the nation may be recovering, latest Washoe County residential indicators show no improvement.

New home sales, however low; have declined over the last year, along with sales of existing homes.  With this also came a decline in closing prices for single family homes and an increase in the number of days both single family and multifamily properties spend on the market.  The only positive change was in the price of condos and townhomes which increased by 4% from September 2011.

It is difficult to draw conclusions regarding notice of default and REO listing data as this portion of the market has been subject to changing legislation, which may explain the significant decrease in the number of default notices.

Commercial

Washoe County’s commercial market has also been impacted by the recession, though it took longer for this impact to materialize.  Similar to the residential market, with little new construction, it is the existing properties that indicate the health of this market.

Washoe County’s office and industrial properties show a lower vacancy rate compared to the same quarter last year.  Industrial properties rental rate increased slightly from the previous year and previous quarter, which coupled with the decreasing vacancy rate, may be a good sign for the industrial market, provided this trend continues.

Some of the office property vacancy rate decrease may be attributed to the declining rental rate, which decreased slightly from the previous year and remained the same compared to the previous quarter.

For the retail component, vacancy rate increased between the first and second quarter of 2010, but remained lower than the rate during the same quarter in the previous year.  A decline in the rental rate for retail properties may be responsible for some of the vacancy rate change.

Conclusion

Overall, the employment and commercial real estate markets are two areas where Washoe County saw positive growth in October 2011.  Sustained positive employment growth can help ease areas of concern for Washoe County by increasing the amount of disposable income in the region and improving consumer confidence.  Visitation, purchasing and home purchase decisions will benefit from additional area and national income and confidence that the economy is improving.

Though far from a total recovery, long-term employment growth can be a step in the direction of improvement of the current economic situation.  It is likely, however, that major changes, including tax system and industry diversification may be needed to achieve a meaningful economic recovery in the future.