Southwest

Demand for housing has begun to spill out of California and into the remaining region.

While not as severe as the housing shortage in California, home prices have begun to rise in cities like Salt Lake City, Las Vegas, and Phoenix. Fortunately, residential construction has risen alongside demand, with the whole region building homes at a breakneck pace.

Outside of California, Las Vegas has seen a lot of attention from companies looking to relocate outside of Silicon Valley. Thanks to its hot and dry climate, the Las Vegas area is ideal for the kinds of manufacturing that the US government is trying to encourage domestically, like semiconductors. Combined with the hospitality sector’s nearly constant need for new attractions, this is expected to continue to draw new residents, particularly as the cost of living on the West Coast soars to eye-watering levels.

The recent wildfires in Los Angeles displaced thousands of people and destroyed more than 15,000 structures. And while the full impact of the fires is still uncertain, short-term cost increases are inevitable. Taken together, our forecasts of the supply chain and labor pool predict a 3-5% increase in cost escalation through the first six months of 2025, prompting adjustments to internal projections from 3.6% to 6.6-8.6% annually.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.