Stability a sign of budding recovery?

By Buck Wargo

Tuesday, Nov. 16, 2010 | 2 a.m.

The housing market needs time to recover, but the new director of UNLV’s Center for Business and Economic Research says it’s showing signs of improvement.

Stephen Brown, who began his new job in September, said he is optimistic because gaming revenue and visitor volume have increased.

“I think the U.S. economic recovery is picking up momentum, and it’s likely looking back at this time period we’re going to say that Las Vegas was at the beginning of its recovery, although it’s hard to know at this time,” Brown said.

“There are some signs that we’re at the beginning of the recovery and I think the gaming industry is going to look pretty good once the U.S. economy gets moving again, but for the housing market it’s going to take a long time. It will take several more years.”

What does the center do?

The center’s main job is to keep track of economic conditions in Southern Nevada and disseminate information. We do that in part by collecting publicly available information and in part by our own surveys.

What’s going on with the housing market?

Housing prices have been stable for 16 to 18 months, and it’s stable on a couple of different measures. If you look at multiple-listing data, the average used house is selling for about the same price as it has the last 18 months. If you look at new-house sales, they’re falling but the price per square foot has remained the same.

What’s happening is the size of the house is getting smaller.

Do you not see the new-home market bouncing back soon?

No, I don’t think so. The market is overbuilt. There are a lot more houses than people who want to move here. It will take a lot of retirements and businesses coming here to boost the housing market.

Is the nation’s sluggish gross domestic product a concern?

Yes, it is. This is a very sluggish recovery we’re seeing nationwide, and the kind of measures the Fed is using are sort of like emergency medicine. We can’t lower interest rates any more. Quantitative easing is about all that’s left.

That has been in the news a lot lately. What is that exactly?

That is the Fed going into the market and buying government bonds with cash. It essentially turns the government’s deficit spending into more money in the economy. What it does is it increases the amount of money in the economy. The idea is that it will foster increased spending, but what it’s really doing right now is taking portfolios in banks that are held in government bonds and replacing them with cash. Unless the banks turn around and lend out the money, it doesn’t do much.

What can be done to diversify the Las Vegas economy?

The work I have seen on diversification suggests it’s largely more driven by markets than by government policy. Government policy can get in the way but it can’t do a lot to foster diversification. There are some things government can do, which is to make sure the universities have the right licensing policies to see that science and engineering are well funded. Here I am sitting in a university and recommending that they fund us, but universities are known for spinoffs to the private sector.

Where do you see the Las Vegas economy in the next five years?

There is still the overhang of all these people underwater in their houses that will continue to hinder the economy. I think gaming and tourism will pick back up. I think there will be some things that are a little different. The housing boom made people not just here in Las Vegas but nationwide wealthier and that feeling of wealth contributed to the growth of the gaming industry. There will be more moderate growth in the gaming industry than over the last 20 years. I think it will still be pretty strong growth, but it will be growth more of the lines of the national economic activity rather than gaming accelerating faster than the national economy.