Reno MSA Economic Outlook Presentation

Brian Bonnenfant, Center for Regional Studies at UNR, and I did a presentation this morning for the Northern Nevada Network.  The presentation focused on an overview of the economic performance of the Reno MSA, including a look at historical economic indicators, including taxable sales, gaming revenue, visitors, single family home sales, home prices, employment, wages, and more.  The presentation also considered future population and employment projections and issues in the region associated with this growth.  A copy of the presentation is included below:

Reno MSA Economic Outlook Presentation

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.

Washoe County Economic Indicators-October 2011-Part 1

After a bit of a break, EEC’s economic indicators for Washoe County are back.  As in previous posts, the indicators are for Washoe County (unless otherwise indicated as NV or US).  Indicators include general, tourism, employment, and residential and commercial real estate areas.  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 October 2011 (current period) is compared to September 2011 data (previous period) and October 2010 (same period previous year).

General

General Washoe County indicators show a decrease in population from 2010, which is in part due to the outmigration of unemployed workers from the area in search of employment.  This decrease is lower than the 3.5% drop in population from 416,632 in 2009 to 402,001 in 2010.

State personal income increased from the same period last year (third quarter of 2010), but fell slightly between the second and third quarters of 2011.  Taxable gaming revenue continues to decrease, falling between October 2010 and 2011 and September to October 2011.  Assessed values also decreased from the previous year (fiscal year 2010-11).

Consumer price index increased between October 2010 and 2011 and September to October 2011.  This increase means that goods and services are becoming more expensive, which coupled with a decreasing personal income has a negative impact on local households.  This, however, did not stop local purchasing, as taxable sales in Washoe County increased by almost 15% from October of previous year and almost 6% from September 2011.

Tourism

Washoe County’s tourism outlook as of October 2011 was also less than encouraging.  Visitor counts, occupied rooms and resulting occupancy rates were down both from the same period last year and the previous period (September 2011).  The number of available rooms increased slightly between September and October, but this increase had an insignificant impact on the tourist market.  The average room rate did increase slightly from October 2010, but fell by a large amount from its September 2011 level.

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

Employment in October was a bright spot in Washoe County’s economy.  While Washoe County lost some of its labor force (this could be related to outmigration of County residents), the number of unemployed persons and the resulting unemployment rate fell considerably since October 2010.  Similarly, new unemployment claims statewide also decreased from August of the previous year.

Another positive change was the growth in the average weekly wage, which increased by 1% from the second quarter of 2010 and 2.4% from the first quarter of 2011.

Washoe County’s real estate market has also experienced some significant changes during this period.  These indicators will be discussed in the next post, along with a summary of all economic indicators.

Washoe County Economic Indicators-Tourism

Washoe County’s economy depends heavily on tourism.  Visitors to the area gamble, eat, drink, shop and visit entertainment venues in the area, spending money that would not otherwise exist in the economy.  In addition to generating revenue for local businesses, tourists create jobs and public sector revenue in terms of room tax, sales tax, and gaming tax revenue.

*Previous period refers to the same period in the previous year.  For example, June 2011 data is compared to June 2010 data.

Given the importance of tourism for the Washoe County economy, the above indicators are not a sign of economic recovery.  All tourism-related indicators showed a decline compared to the same period the previous year.  Washoe County saw fewer visitors and, therefore, occupied rooms, which in turn led to lower occupancy rates and a decline int he average room rate.