Santa Clarita Economic Report 2013
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The 2013 Santa Clarita Valley Real Estate and Economic Outlook Volume 13 • Number 1 February 2013 This publication was prepared by: The California Economic Forecast Mark Schniepp, Director 5385 Hollister Avenue, Box 207 Santa Barbara, California 93111 (805) 692-2498 [email protected] Visit our website at: www.californiaforecast.com3 Copyright ©2013 by the California Economic Forecast Reproduction of this document or any portion therein is pro- hibited without the expressed written permission of the Cali- fornia Economic Forecast. All queries regarding this publica- tion should be directed to the California Economic Forecast. 12 SANTA CLARITA VALLEY 2012 Table of Contents Executive Summary 14 The Forecast 24 Demographics 38 Employment 46 Residential Real Estate 60 Commercial Real Estate 74 New Development 82 Quality of Life 94 Acknowledgements 106 2012 REAL ESTATE AND ECONOMIC OUTLOOK 13 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 The National Economy The Housing Market New Development Forecast Summary 2013 REAL ESTATE & ECONOMIC OUTLOOK 14 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 Executive Summary The recovery is here to stay Mark Schniepp February 17, 2013 The National Economy slowdown in exports, and less inventory building by companies. The nation’s The U.S. economy admirably weathered the manufacturing sector was also weak. storm created by the political drama over the fiscal cliff. There was not much fallout The economy will not fall backward this quarter, for investors as the stock market rallied in despite higher taxes. In general, the stock December, and again in January. Employment market was relieved to see the fiscal cliff gains held steady through the end of 2012 and avoided, at least for the moment. Congress into the new year. Consumer spending has must still deal with the sequestration spending exceeded expectations especially, car sales cuts and the expiration of spending authority, which remain particularly impressive. which potentially could shut the federal government down. It’s unlikely that a worst Nevertheless, gross domestic product case scenario would prevail. The dazzling surprisingly contracted during the October run-up of the stock market in recent weeks suggests that economic growth will accelerate December period of 2012, dropping 0.1 in the second or third quarter. percent. That’s a sharp slowdown from the 3.1 percent growth rate in the July-September quarter and the first contraction since 2009 percent Real Gross Domestic Product Growth / U.S. Q2. The decline was driven by the biggest change 2008 Q4 - 2012 Q4 cut in defense spending in 40 years, a clear 4 2 0 thousands Vehicle Sales / U.S. of sales, SAAR December 2008 - December 2012 16 -2 Cash for Clunkers 15 -4 14 -6 13 12 -8 2008 2009 2010 2011 2011 2012 11 The fourth quarter estimate of GDP growth was a 10 surprise contraction of 0.1 percent, slowed by cuts 9 in defense, weaker exports, and sluggish growth in 8 company inventory building. Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 2013 REAL ESTATE & ECONOMIC OUTLOOK 15 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 Dow Jones Industrial Average Median Home Selling Price / U.S. index February 15, 2012 - February 15, 2013 seasonally adjusted annualized rate dollars 14,000 December 2008 - December 2012 190,000 13,750 185,000 13,500 180,000 13,250 175,000 13,000 170,000 12,750 165,000 12,500 160,000 12,250 155,000 12,000 150,000 Feb-12 Apr-12 May-12 Jun-12 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Right now, consumer sentiment is rising sharply Santa Clarita Valley: again, in line with both the stock and housing Can we call the recovery markets. an economic expansion ? The Housing Recovery is both This year the economic recovery in the region will Genuine and Accelerating transition into a clear expansion in business activity. And despite slower U.S. economic The latest home sale figures confirm that the growth, the recovery in the Santa Clarita Valley housing recovery is on track. Rising home prices continues to accelerate. The labor market is now are actually increasing the demand for homes as creating jobs at the fastest pace since 2006. buyers expect prices to continue rising. Average wages are higher, home sales are also rising, homeowner distress is evaporating, Existing-home sales are running at their fastest the business visitor industry has firmed, and pace since the first half of 2007. Moreover, for technology industries are thriving. the calendar year 2012, sales are up 9 percent from 2011, the fastest acceleration since 2003. In a summary, here’s the short list of recent Months of supply was very low in December at accomplishments: only 4.4 months, and the median home price was up by 11.5 percent, year-over-year. New • Material job creation occurred in 2012, with 12 housing supply and pricing look exceptionally of 13 private labor market sectors reporting strong, but the continued decline in listings gains in employment. in the resale market is driving some of that improvement. 2013 REAL ESTATE & ECONOMIC OUTLOOK 16 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 jobs Non-Farm Job Creation / Santa Clarita Valley in 2013, utilization of empty office space will created 2002 - 2012 continue to increase this year. 8,000 6,000 In the industrial market, net absorption for the 4,000 year was negative and the vacancy rate rose 2,000 slightly to 3.0 percent. The biggest concern is the 0 lack of new industrial supply which will keep the market tight. Lease rates are poised to rise this -2,000 year. Future new construction will be more -4,000 expensive but more will have to be started soon. -6,000 -8,000 The 2013 outlook for the local economy mirrors 02 03 04 05 06 07 08 09 10 11 12 the general state outlook. The state’s outlook There has been strong positive job creation in the has been revised upward to include a more Santa Clarita Valley. During 2012, an estimated 3,200 significant rebound in the new and existing jobs were created, representing the fastest pace of job housing markets this year. Continued job creation gain since early 2006. in the state during 2013 means more income and greater demand for products and services. • Homeowner distress is rapidly in decline. Fourth quarter defaults and foreclosures were 40 to 50 percent lower than year ago levels. There are more short sales. • Existing home sales are rising again, despite inventory concerns. The local labor market finally created a percent Industrial Vacancy Rate / Santa Clarita Valley vacant & meaningful number of new jobs during 2012. available 2002 Q4 - 2012 Q4 The unemployment rate fell to 6.3 percent for 12% the year. Eleven of the thirteen labor market 10% sectors in the private sector added jobs in 2012. 8% The labor market is poised to grow more consistently in 2013. 6% 4% In the office market, utilization of available space is gradually improving. Vacancy rates fell from 23 2% percent in 2011 to 16 percent in 2012. As the 0% 02 03 04 05 06 07 08 09 10 11 12 labor market continues to create office-using jobs Source: Jones Lang LaSalle 2013 REAL ESTATE & ECONOMIC OUTLOOK 17 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 Economic Activity in The Santa Clarita Valley percent percent change 1998 - 2012 vacant 2002 Q4 - 2012 Q4 10 30% 8 25% 6 4 20% 2 15% 0 10% -2 -4 5% -6 0% -8 2002-4 2004-4 2006-4 2008-4 2010-4 2012-4 98 00 02 04 06 08 10 12 Source: Jones Lang LaSalle Job Growth Office Building Vacancy Over 3,200 non-farm jobs were created in the Valley economy Vacancy in the office market declined sharply during 2012. during 2012. The rate of growth was 4.3 percent----the fastest Employment gains in the office sector sharply drove the in 6 years. The professional and business services sector, the demand for more office space. Net absorption for the year was leisure and hospitality sectors, and the manufacturing sector just under 200,000 square feet, the most since 2007. are principally responsible. units permitted 1996 - 2012 thousands December 2008 - December 2012 4,500 of dollars 390 4,000 3,500 370 3,000 2,500 350 2,000 330 1,500 1,000 310 500 0 290 96 98 00 02 04 06 08 10 12 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 New Residential Building Median Home Selling Price The new housing sector was still struggling through the end of Selling values for single family homes were sharply higher 2012. Only 407 units were authorized through the permitting in the last quarter of 2012. Price appreciation was just less process during the year. Most housing projects that are than one percent for the entire year, but nearly 15 percent approved are on hold, but are likely to start up soon. in December 2012, compared with December 2011 values. Homeowner distress is abating in the region and home prices are rising as a result. 2013 REAL ESTATE & ECONOMIC OUTLOOK 18 EXECUTIVE SUMMARY SANTA CLARITA VALLEY 2013 The Housing Market prospective homebuyers back into the market. The uptick in sales should continue as long as house prices and mortgage rates keep rising. A year ago in this publication (page 9), we wrote: Further, a rise in prices will also have supply-side effects as current homeowners become more The housing market should improve by willing to put their houses up for sale.