While it lacks the steeliness of Atlantic City in New Jersey and the convenience of Indian-owned casinos sprinkled throughout the country, Las Vegas is a tourist destination like no other. Las Vegas is America's biggest gambling destination, but it's not the gamblers who are set to make money in the next few years. Those in the construction, housing and office space sectors may see their pockets fill up as the economy continues to pick up in Nevada.
Dwindling Gambling Revenues
In 2017, Las Vegas casinos took in almost $6.5 billion. By comparison, Atlantic City took in $2.4 billion. However, those revenues are dwindling. According to data from the Nevada Gaming Control Board, Vegas Strip casinos saw gambling revenue fall 3.2% in from 2016 to 2017. Revenue for Baccarat, a popular casino card game, was down by 30% over the same period, and competition from Macau and Asian gaming markets are partly to blame. So, what is keeping Las Vegas afloat?
A Potential Boom in Housing and Construction
Conor Sen, an opinion writer with Bloomberg, expects that Las Vegas will experience a housing and construction boom starting in 2018. Now that the housing bust and 2008 financial crisis is firmly in the past, economic activity is heating up in a city that saw its exuberance severely chastised. Unemployment was at 14% in 2010, but it was only 4.5% as of July 2018.
Home prices, as measured by the S&P/Case-Shiller Home Price Index, fell by over 60% from their 2006 peak during the crisis, and home prices are still 30% percent below their peak, which implies a market poised for growth. According to The Greater Las Vegas Association of Realtors announced, the number of houses for sale has fallen by 30%, and prices are steadily increasing. From August of 2017 to August of 2018, the median price range for homes in Las Vegas went up by 13.5 percent.
Construction is also booming, and the issuance of building permits for single-family homes is at a 10-year high and expects them to be up about 10% this year and 9% in 2019. John Restrepo, principal at RCG Economics, ranked Las Vegas 34th in the nation for investment opportunities,40th, for development opportunities and 27th for homebuilding opportunities based on the Urban Land Institute.
A shortage of construction workers is boosting wages in this sector, and average hourly earnings for Las Vegas construction workers increased by 8.2 percent from 2016 to 2017.
A Growing Office Space Market
Restrepo also sees increasing demand for office space. “The office market could be on the precipice of really growing quite a bit in the next couple of years if we can get projects built on schedule and for affordable rents," said Restrepo. Office construction is being hampered by land restraints and construction labor costs, but if these are overcome, it could stimulate the economy even more.
The Bottom Line
If you plan to make your living in the gambling industry, now may not be the best time to move to Las Vegas. A better bet is to enter the construction or real estate sectors, which are rapidly gaining traction in Southern Nevada and seem poised to lift off.