Housing Bust’s Aftershocks Hit West
Las Vegas and Phoenix have taken such a hit from the housing crash and recession that they're dragging down much of the Rocky Mountains region and masking more stable economies in Denver, Salt Lake City and Albuquerque, says a report out today.
"The West is a microcosm of the rest of the country," says Robert Lang, co-author of the research by Brookings Mountain West, a partnership of the Brookings Institution and the University of Nevada-Las Vegas. "It has its highs and lows. It has metros slowly recovering and others that remain dead in the water."
Boise, capital of Idaho, a state that boasted the nation's fastest-growing economy two years ago, finds itself in as dire a spot as Las Vegas and Phoenix. The three are among the most troubled metropolitan areas in the nation, the report says. All three depended heavily on the real estate industry, with about 13% of their non-farm jobs in construction and real estate.
"If you had an economy based in education and energy, you fared better than if you had one based on technology or housing or migration or growth for growth's sake," says Lang, a sociology professor at the University of Nevada-Las Vegas.
Metro areas with an educated workforce are doing better. "Education levels provided something of a protection against the worst crisis," says Mark Muro, a Brookings fellow and study co-author.
Denver, Boulder, Colorado Springs and Fort Collins - Colorado cities where the share of adults with a bachelor's degree ranges from 33.5% to 54.5% - all are weathering the downturn better, he says. Albuquerque and Tucson have benefited from robust health and social-services sectors.
No such luck for Boise, where fewer than 29% of adults have an undergraduate degree. Idaho's largest city suffered many blows, says Michael Ferguson, the state's chief economist.
Semiconductor manufacturer Micron Technology closed its memory chip-making operations and cut employment from 10,000 at its peak to 5,000 today. A local forest product manufacturer took a beating when construction stalled.
Supermarket chain Albertsons moved workers to Boise to centralize operations, fueling a boom in housing construction. The company was later sold, and management moved to Minneapolis, leaving hundreds of homes behind, Ferguson says. "We may have bottomed out on our employment decline, but a few months ago we were in free-fall mode," he says.
Housing values have dropped so dramatically in the hardest-hit metros that they're bound to attract people as soon as those who want to move can sell their homes, Lang says. But, he adds, "I would encourage Phoenix and Las Vegas to diversify their regional economies to build some resilience against the next bust."