The long road
What a difference five short years can make.
In 2011, Northern Nevada was still firmly in the crushing grip of the Great Recession. Some historians say the recession that rocked America to its financial foundations started in December of 2007 and ended in mid 2009, but Northern Nevadans scoff at that timeline.
No, it took far longer for Nevada to shake the yoke of the recession — but boy how it has.
A look back at employment statistics from the Department of Unemployment, Training and Rehabilitation for April of 2011:
• Statewide unemployment was 12.5 percent.
• Unemployment in the Reno-Sparks and Carson City areas was 11.7 percent.
• Nevada’s total workforce stood at 1.31 million, with 164,000 people out of work.
• More than 214,000 people were employed in Reno-Sparks, with 25,000 people seeking employment.
• Construction employment in Reno-Sparks was 8,500 people, with another 10,600 employed in manufacturing jobs.
• Retail employment in the Truckee Meadows was 20,400 people.
• Business and professional services employment in Sparks and Reno was 23,900 workers.
• Leisure and hospitality employment in the Truckee Meadows was 34,500 people.
Today, those numbers are distant memories. A look the same employment statistics from April of 2016:
• Statewide unemployment was 5.8 percent (down 1.1 percent from the same month in 2015).
• Unemployment in Reno-Sparks was 5.4 percent, and 6.7 percent in Carson City.
• Nevada’s total workforce was 1.43 million, with 83,800 people out of work.
• More than 232,800 people were employed in Reno-Sparks, with 12,600 seeking work.
• Construction employment in Reno and Sparks was 13,300 people, with another 12,600 employed in manufacturing jobs.
• Retail employment in the Truckee Meadows was 23,600 people.
• Business and professional services employment in Sparks and Reno was 30,600 workers.
• Leisure and hospitality employment in the Truckee Meadows was 36,700 people.
Clearly, the regional economy has more than recovered; it’s booming, led by sharp rebounds in industrial and residential development, as well as dozens of new manufacturing companies and a few big-name data center businesses (Apple, Switch). And of course, there’s that battery and electric car-maker out at Tahoe Reno Industrial Center.
“We’re back in a full demand cycle and our supply side is challenged,” said Rob Hooper, executive director, Northern Nevada Development Authority.
Hooper said everything, from industrial space to housing to skilled workers, is in short supply.
“Carson City is a preferred destination, but unfortunately it has the least industrial space,” he said.
NNDA is working to recruit two companies right now, one looking for 450,000 square feet and the other seeking 175,000 square feet, whose only option is to build.
“They’re just two of 200 companies in the pipeline,” he said.
Since 2011, more than 100 new companies have decided to call the Truckee Meadows home.
Mike Kazmierski, president and chief executive officer of Economic Development Authority of Western Nevada, says the impressive turnaround in the regional economy is mostly the result of a community-wide focus to spur job growth and job retention.
Kazmierski took the helm at EDAWN in late 2011, and the economic development organization quickly began to aggressively target manufacturing firms and data centers. It also hit the road to tout the benefits of doing business in northern Nevada with site selectors from all corners of the country.
Results soon followed. EDAWN executives went from hosting four site visits per month to 10 now — and with an 80-percent retention rate, job growth quickly followed. Kazmierski expects the region will add more than 3,200 new jobs this year — without the added kicker of Tesla employment.
“We continue to see dramatic increases in job growth,” he says. “We have helped turn the image of Reno-Sparks into a business destination. We have really become a choice location for more and more companies.”
“We are working with 150 prospects, and we are on the short list for more than 8,000 jobs — that is dramatic growth for this region,” he adds.
As anyone who has looked up home values on Zillow or Trulia over the past five years knows, job growth is hardly the only thing different about then and now. Our housing market has nearly returned to the frothy prices seen in 2005 and 2006 before the real estate crash. And anyone who bought a home in the Truckee Meadows in 2011 is in tall cotton today.
The median home price in Carson City has gone up from $161,000 in April, 2011 to $242,000 in the same month this year, according to Zillow, an online real estate site.
“I guess we’re seeing a resurgence in prices. The market is way, way improved and now we’re having appraisal problems, the house prices are going up faster than they’re appraising,” said Avis Cherry, president, Sierra Nevada Association of Realtors, and an agent with Charles Kitchen Realty.
Cherry said springtime, in particular, was active, but there has been softening in the Carson City residential home market since then. Few entry level homes are available and homes at all price points are staying on the market longer than they did earlier in the year.
“We’re starting to see a little slowdown, a little correction because prices have gone up too quickly,” she said.
In May of 2011, there were 496 home sales, which is a 10-percent gain from May of 2010. The median sales price in Washoe County was $149,700. The median sales price in Reno was $144,000, while in Sparks it was $151,000.
What a difference five years makes.
In May of 2016, there were 584 home sales. The median sales price in Washoe County was $310,000, a 9-percent gain from the same month in 2015. The median sales price in Reno for May of 2016 was $326,296, while in Sparks it was $286,000.
For Reno, those figures are a 126-percent gain in home values, and for Sparks, it’s an 89-percent increase. Countywide, home prices rose 107 percent in the five-year span from 2011 to 2016.
Bill Process, president of the Reno-Sparks Association of Realtors, says patience is key for the regional housing market. Prices will remain high as long as new home inventory remains low. The regional housing market will stabilize, he says, but it will take some time.
Reno-Sparks was slammed so hard by the recession, Process adds, that the housing market dropped much further than it should have. Five years later, pricing finally is beginning to stabilize with single-digit year-over-year growth.
“The numbers we see now don’t totally alarm me,” Process says. “If they continue to go up we will have issues, but we are starting to see some stability over last year.”
Though the median price of more than $300,000 is an eye-popping number, it’s the result of more higher-priced home sales. Oftentimes, Process notes, current sales are from buyers who bought at the bottom and now are cashing in.
“A lot of people bought at 50 cents on dollar, and they have done a bunch of rehab work and are making a $100,000 or even doubling their money,” he says. “We are seeing a lot of quality homes on the market.”
Clearly Northern Nevada has rebounded. But are we in the midst of controlled, sustainable growth, or is the region’s growth path more like that unpredictable, out-of-control green goo bouncing everywhere in the movie “Flubber?”
Kazmierski thinks it’s the former, especially as far as the regional housing market is concerned.
“We have more demand than our supply can even reasonably provide in the next five years,” he says. “Demand is only going to increase. Tesla, Switch and Panasonic have not even really started hiring, and other companies that are up and running have just started hiring.
“We are a long way from a bubble in the housing sector.”
Time will tell where the next five years takes us.
Story by Northern Nevada Business Weekly and Nevada Appeal staff.