Economic Outlook Meeting Housing Rebound and Outlook Prepared
Economic Outlook Meeting Housing Rebound and Outlook Prepared for Ron Galperin, Los Angeles City Controller February 2, 2015 Prepared by GU Krueger Housing. Econ. com 323. 428. 9461 Housing. Econ. com 1
Report Prepared for Ron Galperin, Los Angeles City Controller GU Krueger President and Founder of Housing. Econ. com (323) 428 -9461 GU Krueger is the President and founder of Housing. Econ. com, a housing and economic advisory firm for institutional investors, developers, builders, and state and local governments. His work ranges from project specific to strategic analysis of housing supply and demand. Before founding Housing. Econ. com, Mr. Krueger was a Senior Vice President and the head of IHP Capital Partners' (IHP) Market Research. Prior to joining IHP, he was Deputy Chief Economist with the California Association of Realtors. Mr. Krueger also worked as an industry economist for the Conference Board in New York City. He has served in an economic advisory role for various Mayors of Los Angeles, the California Department of Finance, and the California State Controller. He is Past President of the National Association of Business Economics, LA Chapter, and Past Chairman of the Economic Advisory Council of the California Chamber of Commerce. He received his academic education at the Free University of Berlin, West Germany, and the new School for Social Research, New York City. Housing. Econ. com 2
PART I NEW HOUSING MARKET SUPPLY AND DEMAND Housing. Econ. com
Los Angeles City Housing Permits 16, 000 New Home Sales 14, 448 Total Permits 14, 000 Multi-Family Single-Family 12, 000 11, 382 10, 000 11, 264 9, 205 9, 762 8, 362 8, 000 7, 361 7, 168 6, 700 6, 567 6, 080 5, 673 6, 000 5, 947 4, 109 4, 033 4, 000 2, 000 3, 031 3, 992 3, 894 2, 659 1, 849 2, 564 1, 809 1, 916 0 2, 607 2, 303 2, 052 2, 084 1, 695 1, 390 1, 275 752 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Housing. Econ. com 4 Sources: US Census, Metrostudy, Housing. Econ. com
Inventory and Demand for New Homes in Los Angeles 8, 000 Annual Sales 7, 000 Under Construction Inventory of Homes Models 6, 000 5, 000 4, 000 3, 000 2, 000 1, 000 Sources: Metrostudy, Housing. Econ. com 5 Q 3 14 Q 1 20 14 Q 3 20 13 Q 1 20 13 Q 3 20 12 Q 1 20 12 Q 3 20 11 Q 1 20 11 Q 3 20 10 Q 1 20 20 10 Q 3 Q 1 09 20 09 Q 3 20 08 Q 1 20 20 08 Q 3 Q 1 07 20 07 Q 3 20 06 Q 1 20 06 Q 3 20 05 Q 1 Housing. Econ. com 20 05 Q 3 20 04 Q 1 20 04 Q 3 20 03 20 20 03 Q 1 0
Total Supply in Los Angeles Unit Axis 25, 000 Years of Supply Axis 30. 0 Years of Supply at Current Sales Rate Future Units 20, 000 25. 0 Vacant Developed Lots Inventory 20. 0 15, 000 15. 0 10, 000 10. 0 5, 000 5. 0 0 0. 0 1 1 3 1 3 1 3 3 3 Q 03 Q 04 Q 05 Q 06 Q 07 Q 08 Q 09 Q 10 Q 11 Q 12 Q 13 Q 14 Q 0 20 20 20 20 20 20 Housing. Econ. com Sources: Metrostudy, Housing. Econ. com 6
PART II REJOICE: NEW HOME PRICES ARE HIGH! Housing. Econ. com
Downtown Los Angeles Housing. Econ. com Sources: Metrostudy, Housing. Econ. com 8
Housing. Econ. com Sources: Metrostudy, Housing. Econ. com 9
Housing. Econ. com Sources: Metrostudy, Housing. Econ. com 10
PART III RESALE ACTIVITY Housing. Econ. com
Los Angeles County Median Sales Price Versus Home Sales (SA) Price Axis $600, 000 Sales Axis 8, 000 Median Price Sales (SA) 7, 000 $500, 000 6, 000 $400, 000 5, 000 $300, 000 4, 000 3, 000 $200, 000 2, 000 $100, 000 $0 Jun-08 Housing. Econ. com 1, 000 Jun-09 Jun-10 Jun-11 Jun-12 Sources: Zillow, Housing. Econ. com Jun-13 Jun-14 0
City of Los Angeles Submarkets $1, 600, 000 $1, 400, 000 Westside $1, 200, 000 Lower Westside Los Feliz-Eagle Rock $1, 000 Mid-City South LA $800, 000 San Fernando Valley $600, 000 $400, 000 $200, 000 $0 Mar 2004 Mar 2005 Housing. Econ. com Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Sources: Zillow, Housing. Econ. com Mar 2011 Mar 2012 Mar 2013
Median Zillow Prices in the City of Los Angeles Submarkets $1, 600, 000 City of Los Angeles Westside Lower Westside Los Feliz-Eagle Rock Mid-City South LA San Fernando Valley $1, 400, 000 $1, 200, 000 $1, 000 $800, 000 $600, 000 $400, 000 $200, 000 $0 Jan 2005 Jan 2006 Housing. Econ. com Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Sources: Zillow, Housing. Econ. com Jan 2012 Jan 2013 Jan 2014
Housing. Econ. com Sources: CAR, Housing. Econ. com 15
PART IV RENTS Housing. Econ. com
Housing. Econ. com
Commercial Apartment Market in Los Angeles Housing. Econ. com 18
PART IV AFFORDABILITY Housing. Econ. com
Los Angeles County Housing Affordability 50% 45% 41% 39% 39% 40% 37% 36% 35% 43% 36% 35% 33% 31% 30% 28% Average 30% 27% 24% 25% 20% 47% 22% 19% 14% 15% 10% 11% 5% 0% 1990 1993 Housing. Econ. com 1996 1999 2002 2005 Sources: CAR, Housing. Econ. com 2008 20 2011 2014
Housing. Econ. com Sources: CAR, Housing. Econ. com 21
PART V RELIEVE VALVE Housing. Econ. com
Los Angeles County Net Domestic Migration 0 -25, 000 -50, 000 -75, 000 -100, 000 -125, 000 -150, 000 -175, 000 Since 2000 Net Domestic Migration Was 1. 3 Million or 94, 560 per Year. -200, 000 -225, 000 -250, 000 91 992 993 994 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013 014 1 2 2 1 1 1 1 2 2 2 19 Housing. Econ. com Sources: DOF, Housing. Econ. com 23
Non-Texas Metros Sending Residents to Austin, Texas the Most Between 2007 and 2011 Source: Bloomberg, US Census Housing. Econ. com 24
THE END Housing. Econ. com
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