California: Housing Bellwether or Not? GSU Economic Forecasting Conference November 19, 2014 Robert A. Kleinhenz, Ph.D. Chief Economist,, LAEDC
Outline Economic Comparisons: California Georgia Los Angeles - Atlanta Housing Market Conditions Atlanta, L.A., San Francisco, San Jose Conclusion: California s Leading Role?
Georgia & California
Population- State and Metro Millions 45 40 38.3 35 30 25 20 26.4 19.7 19.6 18.4 15 10 5 12.9 12.8 11.6 10.0 9.9 9.8 6.2 0 Source: Census Bureau, 2013 Figures
Gross Product- State and Metro Billions of 2009 Dollars 2,500 2,000 2,051 1,500 1,000 776 500 0 425 288 Source: Census Bureau
Gross State Product GA & CA follow US Annual % Change California Georgia U.S. 5% 4% 3% 2% 1% 0% -1% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-2% -3% -4% -5% Source: BEA
Nonfarm Jobs GA outpaced CA 1990 = 100 160 140 120 100 80 60 40 20 0 CA GA US 133 121 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: BLS
15% California, Georgia U-Rates Above US U.S. CA GA 10% 5% 0% Source: US BLS, CA EDD
CA Adding Jobs Faster than U.S. 4% 3% CA GA US 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Source: US BLS, CA EDD
Comparing Atlanta and Los Angeles
Los Angeles County - Gateway to America s Largest Consumer Market Los Angeles Metropolitan Area Los Angeles County* Orange County Riverside County San Bernardino County Ventura County Population: 18.5 Million California Population: 38.3 Million Southern California Los Angeles Metro Area + San Diego County Population: 21.2 Million * If LA County were a state, it would be larger than 43 other states in US. Source: CA Department of Finance, Demographic Research Unit
Population Millions 20 18 16 14 12 10 8 6 4 2 0 18.4 6.2 10.0 5.5 3.9 0.45 LA-LB-Ana-Riv- Oxnard CSA Source: Census ATL-Athens- Clarke County-- Sandy Springs CSA LA-LB Metro Area (LA County) Atlanta-Sandy Springs-Roswell, GA Metro Area City of LA City of Atlanta
Compare Industries: Atlanta & L.A. 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% GOODS Atlanta LA SERVICES Source: BLS, Sept 2014
Job Trends by Industry L.A. Year-to-Year Percentage Change in Nonfarm Jobs, Sept. 2013 to Sept 2014 Construction Mining and Logging Professional and Business Services Information Education and Health Services Retail Trade Transportation and Warehousing Leisure and Hospitality Other Services Government Financial Activities Wholesale Trade Durable Goods Nondurable Goods -6.2% -0.6% -0.7% -1.3% 4.5% 4.1% 2.5% 2.3% 2.1% 2.1% 1.7% 0.4% 8.8% 7.7% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% Source: BLS
Job Trends by Industry Atlanta Year-to-Year Percentage Change in Nonfarm Jobs, Sept. 2013 to Sept 2014 Construction Transportation and Warehousing Leisure and Hospitality Nondurable Goods Wholesale Trade Professional and Business Services Durable Goods Financial Activities Retail Trade Information Education and Health Services Government Mining and Logging Other Services -2.5% 4.1% 3.5% 3.5% 3.4% 3.4% 3.0% 2.7% 2.2% 2.1% 1.5% 0.9% 0.6% 0.0% -4% -2% 0% 2% 4% 6% 8% Source: BLS
Housing Market Analysis
600 500 400 300 200 Home Sales & Median Prices Sales, Thousands, SAAR California Existing, single-family homes Price, Thousands $700 $600 $500 $400 $300 $200 100 0 Home Sales Median Home Price Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 $100 $0 Source: California Association of Realtors
Median Prices Existing Single-Family Homes Metro Area 2014.Q3 YTY % Change Anaheim/Orange Cnty, CA $697,000 3.9% Atlanta, GA $167,500 10.0% Los Angeles $481,900 7.3% Riverside-San Bern., CA $275,700 10.7% San Diego, CA $517,800 6.8% San Francisco, CA $744,400 7.0% San Jose, CA $860,000 6.8% Source: National Association of REALTORS
Affordability Existing Single-Family Homes Metro Area 2014.Q3 Qualifying Income* Affordability Index* Anaheim/Orange Cnty, CA $697,000 $130,555 67.8 Atlanta, GA $167,500 $31,374 251.6 Los Angeles $481,900 $90,265 79.9 Riverside-San Bern., CA $275,700 $51,641 128.8 San Diego, CA $517,800 $96,989 80.9 San Francisco, CA $744,400 $139,433 72.6 San Jose, CA $860,000 $161,086 70.1 Source: National Association of REALTORS *annual 2013
Household Income by County HH Income 2008-2012 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 $56,241 Los Angeles, CA $75,566 $63,373 $73,802 Orange, CA San Diego San Francisco, CA $90,747 Santa Clara (San Jose), CA $57,664 Fulton, GA Source: Census
California s Leading Role?
Home Prices 1995-2014 350 Atlanta Los Angeles San Diego San Jose 300 250 200 150 100 50 0 1995.1 1996.1 1997.1 1998.1 1999.1 2000.1 2001.1 2002.1 2003.1 2004.1 2005.1 2006.1 2007.1 2008.1 2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 Source: FHFB
Nonfarm Jobs Atlanta vs SD, San Jose Annual % Change LA Atlanta SD San Jose 8 6 4 2 0-2 -4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-6 -8-10 -12 Source: BLS
Building Permits 120 ATL SD LA 100 80 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Census
CA Housing Demand & Supply 250000 New HHs Permits 200000 150000 100000 50000 0-50000 199119931995199719992001200320052007200920112013201520172019
Building Permits 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 GA Single Family CA Single Family 2013 YTD 2014 YTD +9.3% 5.5% -6.5% +5.0% +4.7% GA MultiCA Multi Family Family GA Total +5.3% CA Total Source: Census Bureau
Conclusion Housing volatile: new over existing, coastal over inland Home prices highly correlated with income as well as: demographics, employment growth, density, scarcity of land, land use regulations, entitlement/permitting costs National trend with LOCAL variation
California: Housing Bellwether or Not? Thank You!