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2017-05-04 Mid Year Luncheon
2017-05-04 Mid Year Luncheon
64.5%
65% 63.4%
60%
Peak: 60.2%
55%
53.7%
53.8%
50%
45%
53.8%
Nevada
Rhode Island
Tennessee
Maryland
Missouri
Oklahoma
Kansas
Montana
New Mexico
Arkansas
Homeownership Rate
Wisconsin
Kentucky
Nebraska
Pennsylvania
South Carolina
South Dakota
Alabama
California Ranked the 2nd Lowest
Mississippi
Iowa
Wyoming
Idaho
Indiana
Utah
Vermont
New Hampshire
Minnesota
Maine
Michigan
Delaware
West Virginia
Homeownership Rates Declined the most
for Younger Generations
California
80%
65 &Above
70%
45 64
60%
50% Overall
40% 35 44
30%
Under 35
20%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SERIES: Homeownership Rates
SOURCE: U.S. Census Bureau, American Community Survey
Rise with Income
Homeownership Rate by Income
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Less than $10,000 to $20,000 to $30,000 to $40,000 to $50,000 to $60,000 to $80,000 to $100,000 to $120,000 or
$10,000 $19,999 $29,999 $39,999 $49,999 $59,999 $79,999 $99,999 $119,999 more
U.S. LA/Long Beach Metro San Francisco Metro Inland Empire
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
-
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
SOURCE: Moodys Analytics
With California Becoming More Diverse
Racial/Ethnic Composition in CA, 1980-2040
60% 59.7%
57.1% 52.8%
56.1%
50.0%
52.1%
50% 47.3%
47.9%
51.3%
44.2%
45.9%
40%
41.0%
30%
2000 2005 2010 2015 2020 2025 2030 2035 2040
Fast Slow Avearge
70% CA US
58%
60%
MEDIAN-PRICED
50%
HOME
40%
30%
31%
20%
10%
0%
$500,000
T: Mar-09
$245,230
$400,000 -59% from
peak
$300,000
$200,000
$100,000
$-
30%
20%
10%
0%
-10%
-20%
$74,270
$80,000 $71,790
$60,000
$49,810
$40,000
$29,810
$20,000
$0
Retail Chefs and Firefighters Elementary Computer Police and Registered Software Min. Inc
Salespersons Head Cooks School Programmers Sherriff's Patrol Nurses Developers Required to
Teachers Officers (Applications) Buy a Med.
Home
$1,600 $80,000
$1,200 $60,000
$800 $40,000
$400 $20,000
$0 $0
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
INTEREST RATE INTEREST RATE
20%
10%
0%
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
INTEREST RATE
150
$1,600
140 135.9
$1,400 $1,337
130
$1,200
120
$1,032
$1,000 110
100
$800
8%
CA turnover rate trend
7%
6%
5.1%
5%
4% 4.5%
3%
2%
1%
0%
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
SERIES: Percent of existing single-family homes being sold
SOURCE: Census Bureau, American Community Survey, Moodys Analytics, C.A.R.
Years Owned Home Before Selling
12 All Sellers
10 Long-Time Homeowners are not
10
moving as in the past because:
8
Demographic shift
6
Low rate on current mortgage
4 Low property taxes
Capital gains hit
2
Where can I afford to go?
0
15% 14.2%
12.4% 12.0%
11.0% 10.7%
10% 9.0% 8.9%
7.3%
5.7%
5%
1.9%
0.9% 0.8%
0%
1978 & Earlier 1979 to 1984 1985 to 1989 1990 to 1994 1995 to 1999 2000 to 2005 2005 to 2009 2010 to 2013
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Year-to-Date Through July
150000
100000
50000
1,335,256
With housing needs increasing at a
rate of 180,000 every year, California
SOURCE: CA HCD
Barriers and Constraints to Housing
Development (cont.)
SOURCE: CA HCD
Why the Production Shortfall?
Shortage of Land:
Production shortfall greatest in cities where need is most critical
High land costs usually mean more units being Include labor, building material and
built on each plot of land, but not the case in government fees, all higher in CA than other
CAs coastal metros states
During the 2000s housing density of a typical Development fees are higher in California
neighborhood in CAs coastal metro rose only than the rest of the country. A 2012 national
4%, considerably less than the 11% average survey found that the average development
increase in the comparison group fee levied by California local governments
(excluding water-related fees) was $22,000
The new housing unit in the comparison group per single family home, as compared to the
was also 40% more dense than that built in CA. $6,000 per single-family home in the rest of
the country.
SERIES: Homeownership Rate
SOURCE: CA Legislative Analyst Office
Gap Between Price and Costs Has Widen
Because of Stringent Housing Regulations
NIMBYism:
Desire to preserve existing character of community
Dislike for multifamily, higher density development by residents
and officials
Quality of life concerns
Fear of crime and other negative aspects associated with
density
Case Study: Restrictive Zoning in L.A.
Los Angeles Zoned Residential Capacity
50
Inland Empire Modesto
40
30
East Bay
Napa
Sonoma
20 Santa Clara Marin
Santa Cruz
San Francisco MD
10
0
0 2 4 6 8 10 12 14 16 18
Housing Deficit
SERIES: Nonfarm Job Growth, New Housing Permits, Existing Median Prices
SOURCE: CA EDD, C.A.R., Construction Industry Research Board
How Do High Housing Cost Affect
Californians?
+1,372 -434
-3,808 +543
-112,955 -53,829
-6,082 +20,045 -1,407
+36,248 +23,083
-7,422
-6,427
+12,098
+27,641-4,825 +10,429
-157,161 +574
-46,339 +28 +25,151 +7,794
-58,281 -8,016
-15,610 -809
-5,913 -16,965
Texas -124,064
Nevada -92,367
Arizona -74,038
Oregon -70,354
Washington -32,598
Colorado -31,432
Idaho -28,056
Utah -25,147
Georgia -16,403
Georgia
100
California
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Within the same county 38% 41% 37% 45% 47% 42% 49% 49% 46% 44% 44% 40%
In another county in
23% 18% 24% 17% 21% 21% 19% 18% 20% 21% 20% 21%
California
In another state 31% 28% 29% 27% 19% 20% 20% 22% 19% 22% 22% 25%
Out of US 1% 2% 1% 1% 2% 1% 1% 1% 0% 1% 1% 1%
Don't Know/Not sure 7% 11% 9% 10% 12% 16% 10% 10% 15% 13% 13% 13%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
-1.9 Over 65
-28.1 51-65
-45.3 41-50
-14.3 26-40
-55.7 18-25
-4.7 Under 18
You have expensive real estate, tight labor supply, union issues, environmental
regulations and geographic constraints. No ones really thinking, Oh, its perfect for
large, heavy scale manufacturing. It doesnt quite add up. (An aerospace analyst
had this comment on the Boeing decision to stop producing the C-17 military cargo
jet at its Long Beach facility)
Employees Choose to Substitute Transportation
Costs for Paying Higher Housing Costs
Inhibited by
Fiscal interests of local government
Residents who disdain further development, especially multi-
family
Unfavorable legal/business environment for development in
general & multi-family in particular
Solutions
Production Gap is Primary Source of CAs Housing Problems