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Will California Energy Crisis Impact Southern Nevada Real Estate Market?

June 25, 2001

Third Quarter 2001

What impacts California almost always notably impacts Nevada. The majority of Southern Nevada tourists and relocating and expanding businesses come from California. This is also where the Silver State"s burgeoning population of new residents, home owners and investors migrates from. Californians have been flocking to Nevada for years to take advantage of our pro-business environment and favorable tax climate. So what impact will California's recent power crisis have on Southern Nevada's real estate market?

"The ability of a builder or developer to supply electricity to a new subdivision or commercial project is becoming as important an issue as providing roads, water, schools and other infrastructure." That comment from Stan Ross, chairman of the University of Southern California's Lusk Center for Real Estate. "The availability of electricity could be a deal breaker in some projects."

The issue has been cause of great concern for California real estate executives, business and political leaders who bemoan the state's per-capita spending on infrastructure. According to Realty Times, California currently ranks in last place among the 50 states, creating an environment where real estate investors are reluctant to set up shop if a given area doesn't supply its own power.

Here in Nevada, Governor Kenny Guinn recently announced an energy plan that halts electrical deregulation, which would keep Nevada Power Co. from selling its power plants, though would not necessarily keep power rates from rising. Guinn has noted that as long as California is in need of power, the state will work to outbid its neighboring states for additional power.

What type of impact California's power woes may have on Southern Nevada's real estate market is not yet clear. However, experts predict California business investors will likely continue to see Southern Nevada as a viable market for investing.