Rapid growth in Nevada expected for another year, says economist
November 30, 2005
MINDEN – Nevada will continue to grow faster than any other state in the nation, an economist with U.S. Bank said Wednesday at a joint business breakfast meeting.
Nevadans should look out for rising costs with any disruption in the energy sector, and expect housing appreciation to slow down.
John Mitchell, western region economist with U.S. Bank, told about 150 members of the Northern Nevada Development Authority, Carson Valley Chamber of Commerce and Business Council of Douglas County that the country is entering its fifth straight year of economic expansion, and in most cases, Nevada has headed the nation in growth.
“Everywhere I go people are talking about home prices,” he said, while pacing about the room without using notes. “Keep in mind that this is not just a U.S. phenomenon. This is happening lots of places because of the low interest rates. Every state increased. Nevada had the most rapid home price appreciation in the U.S.”
Nevada home prices appreciated 28 percent in the second quarter over the previous year, Mitchell said. In comparison, the national rate was 13 percent and California had a 25 percent housing price appreciation.
Nevada has the most rapid population growth in the country, which was illustrated by 6 percent employment growth over the year to October. Carson City had a total job growth of 2.5 percent in the same time.
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Mitchell said this can be attributed to Nevada’s affordable costs “versus the other side of the hill,” though he cited a California public policy report that minimizes business leakage from California. According to the report, 96 percent of moves are within the state, and only a small number leave California for greener pastures.
“But of those that left, Nevada got the most,” Mitchell said.
From 1992 to 2002, Nevada was the destination of 1,545 firms. Arizona came in second with 1,095, according to the California Institute for Public Policy.
All of this was good news to Jack Andersen, chairman of the business and technology division of Western Nevada Community College. Andersen said he sees a bright side even when job growth slows.
“I think the economy is going to stay up,” Andersen said after the meeting. “When the job market starts to depreciate we start to see enrollment at the college go up. We had a 5 percent growth in enrollment this fall semester. We hope it will grow more for our next semester.”
The economist said he has some concerns about home prices: They’re so high, the market is bound to weaken soon.
Mitchell said many Americans have used their homes like an automatic-teller machine. They refinanced or tapped into a home equity loan at a much faster rate in 2004 than in 2000.
“Taking income out of a house isn’t disposable income,” Mitchell said. “Yet people spend it like it’s disposable. That’s why you have a negative savings rate.”
The savings rate is calculated by subtracting disposable income from consumption. In the end, this will contribute to the decline in home price appreciation, he said.
n Contact reporter Becky Bosshart at firstname.lastname@example.org or 881-1212.