Riverside Rising Economic Outlook for the Region April 2015 Beacon - PowerPoint PPT Presentation

Analysis. Answers Riverside Rising Economic Outlook for the Region April 2015 Beacon Economics, LLC Analysis. Answers.

California fact versus fiction “Looking back a few years (2009 / 2010) everyone was saying that CA would fail like Greece or Detroit, but things look different now. What has happened to turn things around?” California Hype:  High taxes, Over regulated  People / businesses fleeing Reality  Cyclical issues being confused with structural ones  Business Climate is not that important  Certain industries more vulnerable than others, but others doing great  State on top of growth again  Biggest issue is resistance to growth, particularly in coastal regions 2 Analysis. Answers.

Job Estimates Change Growth Year on Year Change California United States 3,212,000 2.4% Payrolls New York State 156,800 1.8% 4.0% California 498,000 3.2% 3.5% Texas 392,900 3.5% 3.0% Index Payroll Employment 2.5% 135 130 2.0% 125 1.5% 120 115 1.0% 110 0.5% 105 0.0% 100 Jan ‐ 11 May ‐ 11 Sep ‐ 11 Jan ‐ 12 May ‐ 12 Sep ‐ 12 Jan ‐ 13 May ‐ 13 Sep ‐ 13 Jan ‐ 14 May ‐ 14 Sep ‐ 14 Jan ‐ 15 Jan ‐ 95 Aug ‐ 96 Mar ‐ 98 Oct ‐ 99 May ‐ 01 Dec ‐ 02 Jul ‐ 04 Feb ‐ 06 Sep ‐ 07 Apr ‐ 09 Nov ‐ 10 Jun ‐ 12 Jan ‐ 14 Old Revised California Balance US 3 Analysis. Answers.

IE Employment Trends Nonfarm Employment Growth Y-o-Y Gr SA Data Mar-15 5.5 San Jose 1,044,900 5.3% Fresno 323,000 4.5% 5.0 Inland Empire 1,325,800 4.4% Year over Year (%, SA) 4.5 Orange Cnt 1,536,000 3.5% Santa Barbara 182,000 3.2% 4.0 Stockton 213,500 3.1% 3.5 Sacramento 909,400 3.0% San Diego 1,376,600 2.9% 3.0 Modesto 164,800 2.7% 2.5 Los Angeles 4,298,400 2.4% Bakersfield 260,600 2.4% 2.0 East Bay 1,080,700 2.3% Jan ‐ 13 Mar ‐ 13 May ‐ 13 Jul ‐ 13 Sep ‐ 13 Nov ‐ 13 Jan ‐ 14 Mar ‐ 14 May ‐ 14 Jul ‐ 14 Sep ‐ 14 Nov ‐ 14 Jan ‐ 15 Mar ‐ 15 Sonoma 194,700 1.7% Ventura 296,400 1.5% Inland Empire California 4 Analysis. Answers.

Local Jobs Mar-15 YoY Gr County Jobs Total, All Industries 1,340,800 4.2% 680000 Logistics 86,600 12.6% 660000 Administrative 94,200 11.1% Professional 43,700 7.4% 640000 Wholesale Trade 62,000 6.7% 620000 Construction 78,700 5.6% 600000 Financial Activities 44,700 5.4% Hospitality 153,000 5.3% 580000 Health Care 178,700 3.6% 560000 Other Services 44,600 3.5% 540000 Educational 20,300 3.0% Government 235,100 1.5% 520000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Manufacturing 90,900 1.1% Retail Trade 165,900 0.2% Riverside San Bernardino Information 11,200 -0.9% 5 Analysis. Answers.

Taxable Sales Riverside Taxable Sales Change Category 2013 YTD 2014 YTD (%) 8.5 Autos and 34.9 39.3 12.6 8 7.77 Transportation 7.56 Riverside County ($ Bill., SA) Building and 7.5 21.5 23.7 10.0 Construction 7 Business and 28.7 28.2 ‐ 1.7 Industry 6.5 Food and Drugs 12.1 12.8 5.5 6 Fuel and Service 5.5 28.6 29.6 3.6 Stations 5 General Consumer 50.2 52.4 4.4 Goods 4.5 Restaurants and 23.6 25.2 6.6 4 Hotels Q1 ‐ 06 Q4 ‐ 06 Q3 ‐ 07 Q2 ‐ 08 Q1 ‐ 09 Q4 ‐ 09 Q3 ‐ 10 Q2 ‐ 11 Q1 ‐ 12 Q4 ‐ 12 Q3 ‐ 13 Q2 ‐ 14 Total 220.8 235.6 6.7 6 Analysis. Answers.

Other Measure Business Activity Hotels Non Residential Permits 2013 2014 120000 Room Rate Palm Springs $164.0 $174.7 100000 Riverside $91.7 $97.5 Temecula $111.8 $116.5 80000 Occupancy Palm Springs 60.4% 62.0% 60000 Riverside 67.2% 69.7% Temecula 73.5% 77.7% Ontario Passenger Traffic (SA) 40000 450,000 20000 400,000 350,000 0 Jan ‐ 04 Apr ‐ 05 Jul ‐ 06 Oct ‐ 07 Jan ‐ 09 Apr ‐ 10 Jul ‐ 11 Oct ‐ 12 Jan ‐ 14 300,000 250,000 Jan ‐ 09 Jul ‐ 09 Jan ‐ 10 Jul ‐ 10 Jan ‐ 11 Jul ‐ 11 Jan ‐ 12 Jul ‐ 12 Jan ‐ 13 Jul ‐ 13 Jan ‐ 14 Jul ‐ 14 New Alterations 7 Analysis. Answers.

Business and Wages Establishments (Indexed) Weekly Earnings: Riverside 150 $780 $760 140 $740 $720 130 $700 120 $680 $660 110 $640 100 $620 $600 90 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $580 $560 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CA Riverside 8 Analysis. Answers.

The IE Economy Share LQ Rank City GMP 01-13 Gr Government 19.3% 7.1% 17 San Diego 186108 2.0% Retail trade 8.9% 3.2% 18 Denver 166150 1.9% Logistics 5.2% 2.4% Construction 5.3% 1.6% 19 Portland 159266 5.1% Real estate 15.5% 1.5% 20 Baltimore 158746 1.9% Other services 2.8% 0.7% 21 St. Louis 136519 0.6% Administrative 3.8% 0.7% 22 Charlotte 130318 2.9% Wholesale trade 6.6% 0.7% 23 Pittsburgh 122891 1.0% Health care 8.0% 0.7% Accommodation 3.2% 0.4% 24 Inland Empire 118693 1.6% Arts, entertainment 0.8% -0.2% 25 Indianapolis 117312 1.7% Educational services 0.6% -0.5% 26 Tampa 115263 1.6% Information 2.0% -3.5% 27 Cleveland 114448 0.6% Manufacturing 8.1% -3.8% 28 Cincinnati 111279 1.1% Finance 2.7% -4.2% 29 Kansas City 110278 1.3% Professional 3.3% -4.3% 9 Analysis. Answers.

Commuting Outbound Commuting Riverside Household Payroll Gap 35 350,000 Commute out of Home County (%) 30 300,000 25 250,000 20 200,000 15 150,000 10 5 100,000 0 50,000 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 10 Analysis. Answers.

The Commuter Base Median Homes Prices Who are the Commuters? 700,000 By Income Local Commuters 600,000 Under $20k 41.4% 24.0% 500,000 $20k to $50k 34.6% 34.3% 400,000 $50k to $100k 18.3% 31.9% 300,000 $100k plus 5.7% 9.8% 200,000 By Education Local Commuters 100,000 No High School 17.1% 13.2% ‐ High School 26.8% 22.8% Jan ‐ 11 May ‐ 11 Sep ‐ 11 Jan ‐ 12 May ‐ 12 Sep ‐ 12 Jan ‐ 13 May ‐ 13 Sep ‐ 13 Jan ‐ 14 May ‐ 14 Sep ‐ 14 Jan ‐ 15 Some College 35.6% 36.4% Bachelors Degree 13.1% 18.8% Los Angeles Orange Grad./Prof. Degree 7.3% 8.8% Riverside San Bernardino 11 Analysis. Answers.

Residential Real Estate Median Home Prices Existing Home Sales 550,000 14,000 500,000 12,000 450,000 10,000 400,000 Riverside (SA) 8,000 350,000 300,000 6,000 250,000 4,000 200,000 2,000 150,000 Q1 ‐ 05 Q1 ‐ 06 Q1 ‐ 07 Q1 ‐ 08 Q1 ‐ 09 Q1 ‐ 10 Q1 ‐ 11 Q1 ‐ 12 Q1 ‐ 13 Q1 ‐ 14 0 Q1 ‐ 05 Q4 ‐ 05 Q3 ‐ 06 Q2 ‐ 07 Q1 ‐ 08 Q4 ‐ 08 Q3 ‐ 09 Q2 ‐ 10 Q1 ‐ 11 Q4 ‐ 11 Q3 ‐ 12 Q2 ‐ 13 Q1 ‐ 14 Q4 ‐ 14 Riverside County California 12 Analysis. Answers.

10,000 12,000 14,000 16,000 18,000 2,000 4,000 6,000 8,000 0 Q1 ‐ 94 Q3 ‐ 95 Distressed Mortgages Q1 ‐ 97 Defaults Q3 ‐ 98 Q1 ‐ 00 Residential Real Estate Q3 ‐ 01 Analysis. Answers. Q1 ‐ 03 Foreclosures Q3 ‐ 04 Q1 ‐ 06 Q3 ‐ 07 Q1 ‐ 09 Q3 ‐ 10 Q1 ‐ 12 Q3 ‐ 13 Months of Supply 10 12 14 0 2 4 6 8 Jan ‐ 00 Jan ‐ 01 Jan ‐ 02 Riverside Housing Inventory Jan ‐ 03 Jan ‐ 04 Jan ‐ 05 Jan ‐ 06 Jan ‐ 07 Orange County Jan ‐ 08 Jan ‐ 09 Jan ‐ 10 Jan ‐ 11 Jan ‐ 12 Jan ‐ 13 Jan ‐ 14 13 Jan ‐ 15

Residential Real Estate Inland Empire Apartment Market Riverside County Permits 1,150 9 2,000 1,800 8 1,100 1,600 7 1,400 Vacancy Rate (%) Monthly Rent 1,200 1,050 6 1,000 5 800 1,000 600 4 400 950 3 200 0 900 2 Q4 ‐ 04 Q4 ‐ 05 Q4 ‐ 06 Q4 ‐ 07 Q4 ‐ 08 Q4 ‐ 09 Q4 ‐ 10 Q4 ‐ 11 Q4 ‐ 12 Q4 ‐ 13 Q4 ‐ 14 Rent Vacancy Residential Units 14 Analysis. Answers.

Supply Demand Imbalances 2013 Vacancy State Housing / Population State Owner Renter Both Imbalance Florida 2.5% 9.2% 4.9% 14.0% Texas 1.6% 7.9% 4.0% Illinois 1.8% 6.2% 3.3% 12.0% New York 1.6% 4.2% 2.8% 10.0% California 1.3% 4.2% 2.6% MSA 8.0% Miami 2.1% 7.4% 4.2% 6.0% Dallas 1.4% 7.2% 3.7% 4.0% Inland Empire 1.9% 6.5% 3.7% Chicago 1.9% 5.6% 3.2% 2.0% New York 1.6% 4.3% 2.9% 0.0% San Diego 1.4% 4.1% 2.7% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Washington, DC 1.0% 5.1% 2.5% Los Angeles 1.0% 3.7% 2.4% Share Population San Francisco 0.9% 3.0% 1.9% Share Residential Permits 15 Analysis. Answers.

Population Riverside County Population Population Growth 2.4 Population (Millions) 6.0% 2.2 5.0% 2 4.0% Annual Growth (%) 1.8 3.0% 1.6 2.0% 1.4 1.0% 1.2 0.0% 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 1 Riverside County California 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 16 Analysis. Answers.

Forecast Labor Market Forecast Residential Real Estate Forecast 1,700 16.0 450 14.0 400 14.0 1,600 12.0 Nonfarm Employment (000s, SA) 350 12.0 Unemployment Rate (%) 1,500 Median Price ($000s, SA) 10.0 300 10.0 1,400 Sales (000s, SA) 8.0 250 8.0 1,300 200 6.0 6.0 1,200 150 4.0 4.0 100 1,100 2.0 2.0 50 1,000 ‐ Q4 ‐ 04 Q1 ‐ 06 Q2 ‐ 07 Q3 ‐ 08 Q4 ‐ 09 Q1 ‐ 11 Q2 ‐ 12 Q3 ‐ 13 Q4 ‐ 14 Q1 ‐ 16 Q2 ‐ 17 Q3 ‐ 18 Q4 ‐ 19 ‐ ‐ Q4 ‐ 04 Q4 ‐ 05 Q4 ‐ 06 Q4 ‐ 07 Q4 ‐ 08 Q4 ‐ 09 Q4 ‐ 10 Q4 ‐ 11 Q4 ‐ 12 Q4 ‐ 13 Q4 ‐ 14 Q4 ‐ 15 Q4 ‐ 16 Q4 ‐ 17 Q4 ‐ 18 Q4 ‐ 19 Q4 ‐ 20 Nonfarm Employment Forecast Sales Forecast Median Home Price Forecast Unemployment Rate Forecast 17 Analysis. Answers.