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By JENNIFER
ROBISON
REVIEW-JOURNAL
As New Orleans re-emerges in coming weeks from the storm surge that
claimed it, the destruction left behind will be vast, said a report
from the National Association of Home Builders. The Washington,
D.C., trade group released numbers Friday predicting that a "large
share" of the 200,000-plus homes in the Crescent City will be beyond
repair, in addition to thousands of homes in other cities along the
Gulf Coast. That compares with 28,000 homes destroyed by Hurricane
Andrew in 1992, and 27,500 units destroyed by last year's hurricanes
Jeanne, Ivan, Frances and Charley, the association said.
Analysts say that catastrophic damage could ripple across the
country toward Southern Nevada, affecting the availability and cost
of housing in the Las Vegas Valley. "It's really difficult to look
at the opportunities presented by someone else's tragedy. You have
to feel sorry for all of the people and the human damage," said
Steve Bottfeld, an analyst with local consumer-research company
Marketing Solutions. "However, if we're going to speak in economic
terms, then Las Vegas is going to receive some benefits."
In two to three months, thousands of displaced Gulf Coast residents
could migrate to high-growth markets such as Las Vegas in search of
work, said Joe Reel, an economist with the Nevada Department of
Employment, Training and Rehabilitation.
Bill Hoover, division president of home builder Pageantry Cos., said
increasing numbers of retirees might also flock to the valley. And
those new residents will need places to live.
Bottfeld said the influx of labor could especially boost the
valley's more affordable housing submarkets. Condominium conversions
-- which have a median price below $200,000, compared to a median of
more than $300,000 for new single-family homes -- are "already doing
extremely well and will do even better," Bottfeld said. Midpriced
single-family homes in suburban communities such as Centennial Hills
and Green Valley would also be popular among the newcomers, he said.
Plus, the northeastern quadrant of the valley -- long one of the
city's most affordable sections -- could "come more alive," he said.
Bottfeld said short-term housing, such as extended-stay hotels,
could also see an upturn in business.
"Another impact is that investors stuck with houses they couldn't
flip will finally find people to rent them," Bottfeld said. Hoover
agreed: "A lot of the rental inventory we have would be absorbed
relatively quickly." Hoover added that the potential demand could
drive up local housing prices, which appreciated 27 percent in the
second quarter compared with a year ago, according to a Thursday
report from the Office of Federal Housing Enterprise Oversight.
Housing needs could also strain the city's apartment supply, which
is already tightening due to slowed construction and a thriving
condominium-conversion sector.
Spencer Ballif, senior vice president of the Las Vegas office of
commercial brokerage CB Richard Ellis, said the apartment vacancy
rate is about 4.5 percent. Local builders will add 2,800 units this
year, down from the 10-year average of 5,200 units a year.
"New construction is down significantly at a time when we have
record job growth, relatively flat wage increases and housing costs
that make homeownership unobtainable for a lot of people," Ballif
said. "It's created the perfect storm for rising rental rates,"
which he said would increase 7 percent to 10 percent this year.
Introduce a noticeable number of Southeastern evacuees into the
equation, and the market "will just get tighter and tighter," Ballif
said. "There's not going to be a ton of new supply."
Bottfeld said any relocation trend from the Southeast to the
Southwest would likely continue for six months to nine months, and
then slacken as rebuilding along the Gulf Coast begins to generate
jobs. Some of those jobs will be in construction, and Bottfeld said
that could drain labor from an already tight local construction work
force. That in turn would make labor more expensive -- a cost that
builders would tack on to their home prices. But Hoover said any
potential work force loss would be "slight"; it's just as likely
that construction workers in the Southeast will move to Las Vegas
looking for work, he said. The economic-impact report from the
National Association of Home Builders said previous natural
disasters have not led to big surges in home building in affected
areas, because reconstruction doesn't usually begin for many months
and occurs over a number of years.
Katrina's effect on prices for construction materials -- also key
contributors to the cost of a home -- will be mixed, the
association's report said. In the short and medium terms, costs of
some commodities will fall. Demand for concrete will decline
initially as previously planned projects along the Gulf Coast are
canceled or delayed. Plus, Katrina blew down thousands of trees on
tree farms in the Southeast, a region that houses a significant
number of wood-production plants. Farmers will need to harvest those
felled trees quickly, which could lower lumber prices in the
intermediate future. However, New Orleans is the nation's top port
for imports of cement and other building materials. The
association's economists predicted that the diversion of shipments
to other ports would disrupt supplies, as would land transportation
problems resulting from damaged roads and railroads.
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