2Q 2024 Reno-Sparks Residential Activity Report Now Available 

In light of continued high mortgage rates, residential real-estate activity in the second quarter was still . . . . active and interesting.  We added three multifamily projects totaling 1,105 units, and a 22-unit Habitat for Humanity single-family project.  All four developments are subsidized affordable-housing product.

On the market-rate side, we saw Woodland Village sell their last home after their sales began in the year 2000 (one new home sold for $98,495 in that year).  In the second quarter we also saw Stonebrook Village D2, Catalina at Stonebrook, and Kiley Ranch North Phase 6 Village 37c sell-out.

And stepping to the plate to replace the absorbed developments, Cold Springs 14, Merida at Stonebrook, Cordoba/Tavira at Stonebrook, Vista Enclave, and Lennar’s first foray in 5 Ridges sold their first homes in the second quarter.  Altogether, there were 49 developments with sales in the quarter.

In the economics sandbox, it was announced yesterday that preliminary revisions to new US job totals between March 2023 and March 2024 will include eliminating anywhere between 300,000 to 1,000,000 million new jobs from the 2.9M total previously estimated.  This “benchmarking” process occurs every year, but the estimated revision downward is higher than normal.  The main reason for the large discrepancy is because this employment measurement is based on surveys of employers.  BLS reports that prior to the pandemic, this survey had a 60% response rate, but the rate fell to 30% post-pandemic.  Poor survey response rates are also why the Census Bureau did not release their 2020 decennial census “long form” data.  Step carefully when using survey data in these post-pandemic times.

For more sand in your face, the econometric “Sahm Rule” was triggered with July unemployment rate reporting.  The Sahm Rule says we enter a recession when the three-month average U.S. unemployment rate rises by 0.50% or more from its 12-month low.  The Sahm Rule has correctly forecasted recessions since 1970, BUT the National Bureau of Economic Research (official designators of US recessions) has yet to agree we are in a recession, July’s US unemployment rate of 4.3% is still considered “full employment”, and unemployment rates are based on surveys (see above paragraph).  From JPMorgan: “We do not think a recession is imminent. Recent volatility will likely lead the Fed to deliver cuts faster than initially anticipated, but that does not mean the economy has fallen off the rails. That said, the narrative has not changed much.”  But expect the narrative to reach a fever pitch over the next 76 days.

Looking at local fundamentals, thru July the Reno-Sparks MSA is up 6,371 jobs compared to same period in 2023, led by Leisure & Hospitality, Construction, and Government.  As pointed out above, this employment measure is survey-based and will be revised downward as we close out the year.  Turning to non-survey employment (mandated unemployment insurance reporting), 1Q 2024 employment (most recent available) is up 3,400 jobs compared to 1Q 2023 in our MSA.  The caveat with this data is it excludes most sole proprietor, under-the-table, and undocumented employees.

Peeking at consumer behavior, especially discretionary spending, after 11 months into the fiscal year, NV’s taxable sales are up 4.4%.  A full 1% above inflation rates.  However, Washoe County sales decreased almost 2% over this period while Storey County sales increased a whopping 110% due to spending on Data Processing, Hosting, & Related Services.  Washoe County discretionary spending on food away from home is up 3.3% (aided by visitors), but furniture & electronics spending is down 4.5% over the 11 months.  Add the fact that Burning Man tickets are still available and the conclusion is that consumer spending is wobbly.

All in all, our region is still adding thousands of jobs in light of interest rates, bad survey data, ugly narratives, and tightening wallets.

As always, feel free to contact me with spot data/questions, or any other information needs.

Brian Bonnenfant
Project Manager
Center for Regional Studies
University of Nevada, Reno
(775) 784-1771