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September 21, 2014

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Measuring population in moving boxes

Fewer people need them of late, another indicator of slowing growth

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Sam Morris

Dean Warner loads boxes into his warehouse at Moving Box Rentals that were left over from Steve Saltzman closing his business for a move to Los Angeles last week.

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Dean Warner loads boxes into his warehouse at Moving Box Rentals that were left over from Steve Saltzman closing his business for a move to Los Angeles last week.

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Beyond the Sun

Early last week, as he prepared to move back to California, Steve Saltzman sold a competitor what was left of his once thriving enterprise — at a going-out-of-business price.

Seven years ago Saltzman had come to the valley at just the right time. The housing market was booming, and he hit on the idea of packaging sets of cardboard boxes with tape, a tape gun and a marker, then selling them for $55 each to real estate agents who gave them to clients after a home sale.

“I was selling 100 to 150 a week,” Saltzman said, then laughed at the recollection of how much money had once been rolling in. “It was a great business.”

But now, he added, fewer people are moving here and many fewer are buying homes.

“I can’t make it selling 20 of these a week,” he said as he unloaded stacks of cardboard from a rental truck.

His Real Estate Box Company.com is a casualty of what may prove to be a watershed year in the valley’s storied growth.

May was the first month in 12 years that fewer than 5,000 people traded in driver’s licenses from elsewhere for Nevada licenses in Clark County, according to Keith Schwer, director of the Center for Business and Economic Research at UNLV, who has kept tabs on population growth for years.

The May total of 4,612 is also nearly 23 percent less than the figure for the same month of 2007, the largest such decline since at least as far back as January 2005.

In short, the May figure was “abysmally low,” said Jeremy Aguero, principal of Applied Analysis, which does economic analysis for private and public entities.

Schwer was one of the first to publicly note that about 5,000 people were moving here each month — back in July 1990. That number increased quite a bit as the years passed. The monthly average since January 2004 has been 6,604 people — even after factoring in the downturn of more recent months.

But it’s that downturn — and what the average going forward will be — that troubles those who study the numbers and those in the “without growth, the Las Vegas Valley withers” camp.

“There are decreases occasionally, but what we’ve seen is a long trend up — and now we’re seeing a trend down,” Schwer said last week.

Keep in mind that with the driver’s license exchanges, we’re really talking about only one half of the growth equation, the addition portion of it. The other half involves subtraction: the number of people moving away.

Through a complicated formula, Schwer calculated that since 2001, the number of people leaving the county each year has been about 40 percent of the number who moved into the county.

This year, however, that outgoing tally could be higher, Aguero said, based on “anecdotal evidence of higher out-migration.”

The anecdotal evidence is being felt as a reality within the Clark County School District. The district is expecting its number of students to grow by about 1.7 percent in the fall; in prior years, the district’s enrollment growth has regularly topped 4 percent.

More evidence of the decline comes from national movers such as U-Haul. In 2005, the company helped move 3 percent more families into the Las Vegas area than it moved out. The next year, however, the company moved 3 percent more out of Las Vegas than it moved in. In 2007, it moved an equal number out of and into the Las Vegas area. And for 2008, through the first week of May, the company moved 0.9 percent more families into Las Vegas than it moved out, but it moved 3.4 percent more out of the state than it moved in.

The manager of Moving Box Rentals on Polaris Avenue, the company that bought Saltzman’s inventory, said she has seen a shift since about the end of April.

“It seems like a lot fewer people are coming into Las Vegas in just the last three months, and a lot more are going out,” Savannah Frascella said.

Her livelihood depends on selling and renting moving boxes as well as providing movers and unloaders, and she has seen a sharp drop in business. Rented box sales — indicative of people who are going to move within the area, not out of it — are way down. The company is now offering “Special Housing Slump Prices,” with some rental prices cut by as much as 25 percent.

In the past two months, Frascella lamented, the company helped on only about six “unloads.” “That is just so low,” she said.

None of this, as Schwer sees it, is a statistical blip.

“People move here for two reasons: economic opportunity and amenities. And jobs have dominated that equation for years. Now we’re not creating jobs. Unemployment is rising.”

The drop in the growth rate couldn’t come at a worse time, as the mortgage crisis and fuel prices continue to gouge Clark County’s economy. The decline also portends a continuation of bad times, since an axiom about the local economy is that without growth, Las Vegas dies.

The reason is simple: After hotels and hospitality, said fiscal analyst Guy Hobbs, the former financial director for Clark County, the largest segment of the local economy is construction. Construction workers, typically paid more than the median salary, rely on growth to find work. When fewer people move here — because they can’t find jobs — fewer homes are built and fewer construction workers find jobs. Some of them leave. A Sun story this year revealed that droves of Hispanic residential construction workers had left or were planning to leave town.

Combine all that with the way “we’ve developed a dependency on that growth through our tax system,” Hobbs added. Sales tax revenue makes up 33 percent of the state’s general fund, and about 20 percent of the state’s sales tax revenue comes from construction material sales.

Southern Nevada isn’t the only region seeing a slowdown in growth, of course. The Phoenix area, like Clark County, has been one of the fastest-growing regions in the country for several years running. But the Arizona Department of Commerce has noticed a sudden drop in the number of out-of-state driver’s licenses being exchanged for Arizona licenses. From 1999 to 2005, the number of licenses turned in had increased by an average of about 11 percent each year. But over three years beginning in 2005, the average increase was only 0.05 percent. In 2007, 14,156 fewer out-of-state driver’s licenses were turned in to Arizona’s DMV than in 2006.

There, like here, population counts are important not only to help planners, but because state governments receive federal funding based on population. State distribution of funding depends on local population numbers.

“A reduction in growth is tied to a number of things in our economy,” Hobbs said, adding that the drop of a few thousand people in Clark County in a year’s time isn’t going to make that big of a difference immediately.

“If we were having this conversation 18 years ago, 5,000 or 6,000 people was a much larger percentage of the total than it is today, when you’re talking about 2 million people being here.”

Schwer points to the economy in California as the main culprit in the decline. Dealing with their state’s own housing crisis, Californians aren’t finding it easy to find the home buyers who can enable them to move.

Even though fewer are migrating here, however, U-Haul still counts more people moving to Nevada from California than from any other state. In 2007, 61 percent of the people who used U-Haul to move into Nevada came from California (56 percent of those who moved out of Nevada went to California.) In the first five months of 2008, the percentages were almost the same, 61 percent of those migrating to Nevada came from California and 60 percent of those moving out of Nevada went to California.

Last week, Saltzman was counting down the hours until he joined the latter category.

As he finished dismantling his little cardboard empire, he took consolation in no longer being tethered to the valley. “Just one more day, and I’m back in Orange County,” he said.

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