27 Oct Nevada cities show mixed results in economic metrics since recession
Years after the Great Recession ravaged the Nevada economy, could several cities across the state really find themselves among the most “dynamic” metro areas in the country?
According to a recent report from the real estate website Point 2 Homes, which ranked 150 U.S. cities using more than a dozen economic metrics, the answer is a definite“yes.”
Reno, Henderson and North Las Vegas all rank among the 25 most dynamic cities in the country, coming in at 16th, 22nd and 23rd, respectively — all as the state continues its long climb out of an economic hole leftover from the recession deeper and wider than nearly any other state in the U.S.
But are the state’s local economies really so strong? Some Nevada economists say not so fast.
The broad strokes
The Point 2 Homes report is based on 18 individual indicators, of which many are the traditional economic signposts found in myriad reports comparing state to state and city to city — changes in median income, gross domestic product, home prices and poverty, to name a few. But it also analyzes a few non-traditional indicators, including changes in the foreign-born populace, changes in the number of companies and changes in the number of internet subscriptions.
Nevada cities actually lagged in most of the traditional indicators. Of 150 cities, they ranked 56th in GDP growth, 81st in median income growth and 73rd in poverty decrease, on average.
Economists say some of those indicators, especially the now oft-maligned GDP, may not say much about the strength of any given economy. But John Restrepo, principal of Las Vegas-based RCG Economics, says growth in the median income, in particular, can often be one of the most reliable indicators of the bunch.
“[It’s] probably the one that has the least variation, in a way,” Restrepo said. “Whether it’s median personal, median household, median hourly wage — that does speak to the wealth of residents, their purchasing power, their well-being — all sorts of things.”
The numbers would be worse if not for Reno, which ranked 17th in GDP growth and 30th in poverty decrease — though for reasons unique to the Reno-Tahoe region. In particular, economists say rapid growth at the Tahoe-Reno Industrial Complex (TRIC), home to Tesla’s gigafactory, among others, has spurred economic diversification and led the city away from a longstanding reliance on the tourism and hospitality industry.
“That has really jump-started their economy,” UNLV economist Steven Miller said. “The gigafactory is very important up there, such that their reliance on leisure and hospitality has fallen dramatically.”
Miller said that decreased reliance on the leisure industry has roughly halved its share of total employment in the city, from near 30 percent to around 15 percent.
But among other indicators, both Henderson and North Las Vegas found themselves among the upper echelon of several non-standard metrics. For Henderson, it meant surging in population growth (5th), an increase in foreign-born population (7th), and the number of registered patents (9th), while North Las Vegas scored high marks in the decrease of vacant homes (5th), the increase in the number of companies (6th) and the increase in the number of companies (tied-9th with Henderson).
Still, each city also lagged far behind other, similarly sized cities in a handful of other metrics, including poverty (Henderson: 88th, North Las Vegas: 120th), building permits (both tied at 82nd) and internet subscriptions (Henderson: 120th, North Las Vegas: 118th).
Las Vegas proper, meanwhile, found itself firmly among the middle of the pack, ranking 16th among the 35 large cities included in the report’s sample and 54th overall. Like the other cities of Clark County’s single sprawling metro, Las Vegas found bright spots among an increase in locals with a higher education degree (9th), patent growth (9th) and a dip in vacant homes (11th) — and dim spots in median income (79th), internet subscriptions (131st) and school enrollment increase (113th).
Breaking down the housing market
Based on the data made available through the Point 2 report, the driving force behind Nevada cities’ high rankings are the state’s housing markets. In Reno, as the population has swelled to meet the market demand for jobs, home prices have risen to match. They have grown so far and so fast, in fact, that public perception of the growth has swiveled from a housing crunch to a housing crisis as development — especially of affordable housing — has sputtered alongside rapid price increases.
Data tracking housing prices across all transactions in Reno show prices exceeded their pre-recession peak in Q2 2018, and by July — the peak of the summer buying season — the Reno/Sparks Association of REALTORS marked an all-time high of $420,000.
“Housing appreciation cuts both ways,” Restrepo said. “It’s good if you have it, but becomes expensive once you’re trying to buy.”
The prices in Reno have pushed the city to the highest spot on the list of any in Nevada — 16th — with ranks of 7th in home price appreciation, 7th in an increase in building permits and 18th in the decrease of vacant homes.
In the South, the growth has been steady, if less pronounced. As of July, data from the Federal Reserve Bank of St. Louis show markets in Las Vegas and Henderson have largely recovered price losses incurred during the recession. By 2019, the median home price across the Las Vegas metro area had stabilized to about $300,000, according to reports from the Greater Las Vegas Association of REALTORS.
But key to any analysis of the state’s housing market is also the legacy of the housing bubble and the Great Recession that followed. No state was hit like Nevada, where cities and towns from Las Vegas to Fallon saw prices crash and foreclosures skyrocket — leading to a lower starting point than other U.S. metro areas.
Restrepo said that, though improvement is improvement, those low starting points may mean identifying percent-change-over-time won’t actually reveal much of the strengths of a given housing market.
“There’s so many moving parts — the socioeconomic structure, the diversity of the population in a community, the economic structures, location — so many things come into play here,” Restrepo said.
And with low starting points also comes the matter of different starting points, especially between economically divergent cities like North Las Vegas and Henderson.
“North Las Vegas was devastated [by the recession], much more than Henderson,” Miller said. “Not that Henderson didn’t have a lot of pain, they did, but North Las Vegas was really hit badly, and they had a lot longer way to come back than Henderson.”
There is also the matter of how population shifts spur growth in some cities and not others — and how very little of those shifts may have to do with policies in Nevada.
As housing prices have reached a breaking point in the mega-metropolises of California, Californians have fled en masse to cheaper markets — including Nevada. But identifying anything beyond just the broad strokes often takes more than a simple ranking.
“There’s different drivers of growth, depending on the community that’s receiving the growth, the proximity to markets, supply chain issues — it gets complicated,” Restrepo said. “That’s why sometimes looking at rankings between cities, until you understand some of the geographic, cultural and economic structural issues of a city, it’s hard to compare, let’s say, Vegas to some other cities in the midwest with the same population or similar growth patterns.”
Still, Las Vegas in particular has become one of several premier destinations for SoCal expats, with U.S. Census data showing roughly 85 percent of the city’s total out-of-state transplants coming from Los Angeles alone.
That exodus may also have an impact on other metrics, too, including the number of Nevadans with a college degree. Nevada cities saw a bump in the “growth of locals with higher education degrees” — Reno, Henderson and North Las Vegas scored ranks of 7th, 13th and 18th, respectively — even as enrollment and graduation rates at Nevada colleges and universities remained steady.
Much like housing, an increase in an already-low number may not tell the whole story. Nevada has long struggled to match other states in the region in terms of educational attainment, and as of 2018, just 24 percent of Nevadans held at least a bachelor’s degree. It’s the lowest share of any state in the Mountain West and seven percentage points shy of the national average of 31 percent.
“It kind of reminds me of when I was a kid, you know, the ‘most improved’ award,” Restrepo said. “It’s kind of a mixed award, cause the guys that have really improved, their percent-improvement is just not going to be that high.”
Disclosure: John Restrepo is the co-publisher of the Stat Pack website and Fact Pack newsletter, which are produced with help from The Nevada Independent Managing Editor Elizabeth Thompson’s media consulting firm.