Housing bust withered California's economy, job market

Nov. deadline looms for
emergency BP oil claims

New home construction contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

by Broderick Perkins
© 2010 DeadlineNews.Com


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Deadline Newsroom - When housing went down in the Golden State it took Californian jobs and a chunk of the economy with it.

The bust has cost the Golden State hundreds of thousands of jobs, and $54 billion in economic output.

According to "The Economic Benefits of Housing," study by the California Homebuilding Foundation, an economic research and consulting group, every newly constructed single-family home generates 3.24 jobs during construction and supports another 1.2 jobs, and each dollar spent building a home generates another 80 cents in total economic activity.

With deep fissures in the housing market, an economic cornerstone, new home construction alone contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

In Monterey County, in 2008, builders constructed 456 new homes and only 194 in 2009. Monterey's new home construction generated 811 jobs in 2008 but only 372 last year. New home construction generated nearly $140 million in economic output in 2008 in Monterey County, but only about $64 million in 2009.

At the peak statewide, the 205,000 new homes permitted accounted for almost 3 percent of the state's total economic output. That fell to 0.4 percent in 2009, when only 35,000 new homes were permitted statewide, the study says.

Even at the peak, the number of new homes permitted fell below the 220,000 that the state Department of Housing and Community Development said are needed annually to meet normal population growth.

It's not just the direct economic effects of the new home building industry's construction efforts.

Toss in a range of related services including remodeling, repair, brokerage, property management and financing and the industry generates more than $347 billion of economic output and supports nearly 1 million jobs statewide, according to the study.

Nearly 11 percent of California's total economic output is from the entire housing industry, ranking it first among the state's leading output industries. Even after the downturn the industry's economic output outpaces wholesale and retail trade; professional scientific and technical services and information.

While the output contributes to all counties, benefits are highest in the largest regions, including Los Angeles, Orange and San Diego Counties.

The study was designed to reveal the significance of the housing industry on two levels:

• The full range of economic impacts of new housing construction, including support industries and consumption of expenditures generated through the multiplier or ripple effect.

• The still greater significance of the entire housing industry including residential real estate, financing, maintenance and repair, additions and alterations, construction, homeowner expenditures, property manage and all other aspects of the entire stock of owner- and renter-occupied housing.

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San Francisco Bay Area greenbelt development debated

Assassination poll web's best, worst

The Association of Bay Area Governments (ABAG) wants to limit greenbelt development to only 900 acres per year for the San Francisco Bay Area -- barely enough for a single subdivision. Conservationists say the amount of acreage is too high.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The Association of Bay Area Governments (ABAG) wants to limit greenbelt development to only 900 acres per year for the San Francisco Bay Area -- barely enough for a single subdivision.

Conservationists, on the other hand, say the amount of acreage -- about the size of Golden Gate Park -- is high. They say there's no reason to disturb the greenbelt with more development, because there are ample infill locations better suited for the area's growth needs.

ABAG's biennial "Projections and Priorities 2009," for the first time, sets forth a land use performance target to restrict green field development to 900 acres for the entire nine-county Bay Area -- among other targets. The report also includes targets for reduced driving times, traffic congestion, the share of income spent on housing and transportation, and others.

ABAG is an association of elected officials from member cities and counties who examine regional issues like housing, transportation, economic development, education, and environment. The association describes itself as "the official comprehensive planning agency" of the Bay Area region.

Every other year since 1970, the association's biennial Projections series has provided long-term forecasts and projections of population growth, transit trends and housing and job needs.

"Model results are relied on by transportation and air quality agencies, local government, and private industry," according to ABAG's documents.

However, the 2009 greenbelt land use target likely won't find its way into policy any time soon.

The Metropolitan Transportation Commission (MTC) does incorporate ABAG's data in its planning, but "Transportation 2035 Change In Motion" was published before ABAG's 2009 report. The report incorporated ABAG's older 2007 land use projections.

The MTC, the transportation planning, coordinating and financing agency for the nine-county San Francisco Bay Area, says its next plan is four years away.

Local jurisdictions also say ABAG's projections and new targes aren't carved in stone.

Santa Clara County, for example, has pretty much closed the door on greenbelt building. An official there says while ABAG data is examined by planning officials it doesn't result in land use, zoning and general plan issues in Santa Clara County.

Home builders haven't specifically challenged the greenbelt target, but if the target became policy it would severely restrict development, housing or otherwise.

San Jose's Silver Creek Valley Country Club, for example, sits on about 1,500 acres and has 1,538 homes, a golf course, country club facilities and other open space.

ABAG says from 2000 to 2010, much more greenbelt, an average 4,000 acres, is developed every year.

ABAG itself says its targets are not binding, however, rather than just projections ABAG decided to include the greenbelt land use target, and others because times are changing.

Rapid population growth in general and among the aging population, higher energy costs, and climate change dictate the need for regional performing targets -- numerical outcomes -- to show how policy choices impact the quality of life.

ABAG plugs the target numbers into models to get a better grasp on not just general assumptions or projection estimates, but something closer to reality -- specific goals.

"The results suggest that accomplishing the targeted outcomes and ensuring a better, or at least the same, quality of life into the future will require a significant departure from previous planning strategies and policies," the report says.

But for each target the report also includes a more likely projection. While the greenbelt target is at 900 acres, the ABAG forecast is for 1,950 acres to be developed year, still below the annual greenbelt development in the past decade.

The Greenbelt Alliance thinks 900 acres is 900 acres too much.

According to the alliance's "Grow Smart Bay Area Infill Research" some 25,000 sites are available throughout the Bay Area for infill development that would eliminate the need for any green belt development.

Comprised of some 17,000 acres, these properties can provide the region with an additional 304,000 homes and 637,000 jobs, according to the alliance's study.

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© 2008 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
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Bleak new home sales data dash forecasts

More headaches for housing: New home sales fell to the lowest level on record in December and added to the growing surplus of unsold properties and pressure for lower prices.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The housing hangover took another pounding in December, as new home sales fell to the lowest level on record and added to the growing surplus of unsold properties.

Sales of new one-family houses in December 2008 were at a seasonally adjusted annual rate of 331,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development.

The numbers were lower than 70 Bloomberg News survey forecasts ranging from 345,000 to 412,000.

An estimated 482,000 new homes were sold in 2008 This is 37.8 percent below the 2007 figure of 776,000 and the fewest since 1982.

The housing report also revealed, even with lower sales, builders couldn't clear inventory fast enough. The number of homes for sale fell 10 percent to a seasonally adjusted 357,000, the fewest since Sept. 2003.

Sluggish sales will likely pile more downward pressure on home prices and prolong the housing slump beyond 2009. The median sales price of new houses sold in December 2008 was $206,500, the lowest in five years and down from $227,700 a year earlier.

From John Burns Real Estate Consulting, a research report, "Unlocking the Housing Market Recovery" says stabilizing home prices is central to an economic turnaround.

"It's clear that the general economic environment and the housing market woes are intertwined," said John Burns, CEO of the company.

New-home purchases now account for less than 10 percent of the market, but are a better indicator than existing sales because they are based on done-deal contract signings.

Previously-owned homes, which include an untold number of foreclosures that haven't yet made it to market, are compiled after the close of escrow to reflect contracts weeks or months old.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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SoCal Wildfire Recovery Update

Since last year's wildfires in Southern California destroyed 2,200 homes, home owners have found relief from some unexpected places.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - What does the housing slump, home builders and Garth Brooks have in common?

They've all provided benefits for Southern California's 2007 wildfire victims.

Since last year's wildfires in Southern California killed 10 people, charred 800 square miles and destroyed 2,200 homes, home owners have found relief from some unexpected places.

With Southern Californian's slumping housing market sending builders back to the drawing board, homeowners have found subdivision builders willing to take on single-site projects.

Mick Pattison, head of Barratt American said the slow down in home building has freed up builders to help wildfire victims quickly rebuild lost homes. He also said the misfortune of others was also creating jobs for construction workers.

The Associated Press reported homeowners have accepted offers from developers offering new custom homes at a discount. Home owners are also using insurance money to buy existing tract homes in locations other than original home sites.

California law, enacted after wildfires in 2003, allows fire victims to use their full policy coverage amount to build or buy elsewhere.

Insurance companies have moved quickly too, already paying out $1.27 billion for wildfire damage. That's more than half the $2.26 billion in total claims filed.

The Northridge, CA-based Community Assisting Recovery nonprofit reported insurance claims processing speed was the fastest ever following a wildfire in the Golden State's southern region.

Insurance company complaints are few with less than two dozen related to underpayment by insurers. That's far fewer than complaints filed after the 2003 fires.

Reconstruction is fastest in hardest hit San Diego County where losses from wildfires reached nearly $1.2 billion. Some $1.1 billion in claims have been paid, according to
California's Department of Insurance.

Putting songs in the hearts of wildfire victims, country-western giant Garth Brooks recently put his retirement on hold and performed a series of concerts in Los Angeles' Staples Center. He pledged more than $3 million to the wildfire relief effort.

Brooks, from Oklahoma, said he's experienced grass fires and was familiar with the devastating effects of wind and fire but was moved to perform the benefit because he'd never witnessed anything like the Southern California Fires.

San Bernardino County suffered $276 million in losses; Los Angeles County, more than $101 million; Orange County, more than $29 million; Riverside County, $9.2 million and Ventura nearly $3 million.

The wildfires resulted in 37,117 insurance claims filed.

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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