A wise person once said that we can learn from our past. With this in mind, I found information on new home construction in the Las Vegas area from 1939 to 2010. Looking at the graph is like looking back at the brief but colorful history of our area.
Hoover Dam, started in 1931, was the first major population push for the area. Completed in 1935, many of the thousands of workers who worked on the dam decided to stay. The 1940’s saw the defense industry locating facilities here, bringing with it an influx of civilian workers as well as military personnel. Home financing rules were relaxed in order to meet the needs of this vital, growing population. The Cold War, starting in the early 1950’s, stimulated increased interest in the defense industy. In addition, the Strip began morphing into the glittering haven it is today with the construction of several casinos. As more casinos were built in the area for the next several decades, the population continued growing as well.
The mid 1980’s saw unprecedented growth in the Las Vegas area. In the 10 year period between 1985 and 1995, the Las Vegas population grew a stunning 97.6%!
This unbridled growth continued into the early 2000’s, culminating in the real estate bubble of the mid 2000’s followed by the bubble burst and accompanying mortgage crisis. By 2010 the real estate market had taken such a terrible hit that new home construction had come to a screeching halt.
Now, let’s look at the graph below, which represents new home construction trends. We see a slow but steady increase in new home construction up through the 1940’s, with a sudden upswing in the 1950’s (which is the start of the Cold War as well as a solidifying time for the Las Vegas Strip as a gambling mecca.) Growth continues at a rapid but fairly consistent rate until the 1990’s when we saw the explosive growth. If we could separate the 2000s out into 2000-2005 and 2005-2010, we would see that the dramatic growth continued through most of the first five years, with a sudden and precipitous fall in the second half.
As this graph shows, real estate (and new home construction in particular) tends to mirror what is happening in the economy. When times are good, the demand for new homes goes up. When times are bad, the demand drops. This is why new home construction is often viewed as an indicator of the health of an economy. But more than that, it can be seen as a mirror of the times. And you thought new homes were just about wood, stucco, drywall and roofing tile!
For more information on the history of Las Vegas, visit www.lasvegasnevada.gov