LIVABLE CALIFORNIA PRESENTATION BY JOEL KOTKIN, CHAPMAN UNIVERSITY APRIL 18, 2020 What is a City for? “a city comes into being for the sake of life, but exists for the sake of living well.” -- -Aristotle The Challenge of California Feudalism: Distorting the Property market and the economy • Concentration of property in a few hands • Politics dominated by theology or ideology • Lack of Upward mobility • Decline of middle class • Stagnation and poverty widespread • The crux of the issue: low wages and high prices • Will Covid make it worse? 3 Housing Share of Excess Costs of Living MOST EXPENSIVE UNITED STATES MARKETS: 2017 Services Housing 6.8% 87.4% Goods 5.8% Metropolitan areas with cost of living 10% or more above the national average. Estimated from Bureau of Economic Analysis & American Community Survey Data California & the United States Compared MIDDLE-INCOME HOUSING AFFORDABILITY: 1950-2019 11 Includes 53 Metropolitan Areas Coastal California 10 1,000,000+ (2015) Interior California 9 COASTAL CALIFORNIA Outside California Los Angeles, San Francisco, 8 San Diego & San Jose 7 INTERIOR CALIFORNIA Riverside-San Bernardino, 6 Sacramento 5 4 3 2 1 Median Multiple (Price/Income Ratio) 0 1950 1960 1970 1980 1985 1990 1995 2000 2005 2010 2015 Derived from Census Bureau, Harvard University and Demographia. Change in House Values v. Income MEDIAN MULTIPLE: 1969-2018 10 1969 9.0 2018 8.8 9 8.4 8 7.7 7.3 7 6 5.5 5.7 5 4 3.7 2.6 2.7 3 2.5 2.5 2.4 2.0 2.2 2.0 2 1 0 Derived from US Census, 1970 & American Community Survey, 2018. Figure 6 Change In Percent of Population Able To Afford Median- Priced Home In 2018 Compared to 2000 California Regions, Compared to U.S 10% 3.7% 0.1% 0% Los San San Diego Sacramento San Joquin Central Sacramento California: Balance US Angeles- Francisco MSA MSA Valley Coast Valley Weighted -10% Inland Bay Area Average Empire -10.0% (Displayed Areas) -20% -21.9% -23.8% -30% -26.5% -33.2% -40% -38.9% -50% -60% -58.8% -70% Source: Derived from NAHB Wells Fargo Housing Opportunity Index Lowest Homeownership Rates By State - 2018 70% 61.7% 61.8% 61.8% 62.5% 62.5% 62.8% 58.3% 60% 56.8% 53.7% 54.8% 50% 40% 30% 20% 10% 0% Source: American Community Survey, U.S. Census Bureau Household Net Worth by Housing Tenure 2016 $250 $231 $200 $150 $100 Median (000s) $50 $5 $0 Owner Renter Source: Federal Reserve Survey of Consumer Finances Figure 9 Considering Moving Out of California? REGISTERED VOTERS BY AGE: SEPTEMBER 2019 Some Consideration 60% Serious Consideration 50% 33% 34% 40% 27% 28% 29% 30% 23% 20% 28% 24% 25% 26% 10% 23% 17% 0% -10% Source: UC Berkeley IGS Poll Why do Californians Want to Leave? REGISTERED VOTERS BY ETHNICITY: SEPTEMBER 2019 75% 65% 55% 45% 35% 71% 58% 25% 47% 38% 15% 26% 5% 14% 13% -5% Source: UC Berkeley IPSOS Poll Figure 11 In the Decade from 2008 to 2018 5 Times More Below-Average Paying Jobs Were Created Than Above Average Jobs In California California Jobs Created 2008-2018 Above and Below Average Annual Pay Level Source: U.S. Census 1,800,000 1,578,825 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 263,610 200,000 - Jobs Gained in Industries Paying Below 2018 Average Pay Jobs Gained in Industries Paying Above 2018 Average Pay Level Level • 86% of the Jobs Added Were Under The Average Pay • 48% Pay Under $40,000 • Net1000000 Loss of Middle-Income Jobs Number of Jobs Added in California By Pay Range, 2008-2018 900000 881,677 800000 690,077 700000 600000 500000 2018 CA Average 400000 Annual Pay For 300000 267,908 All Private Sector 200000 Jobs: $ 78,668 100000 0 -100000 (4,298) Number of Added Jobs Number of Added Jobs Number of Added Jobs Number of Jobs Paying Paying More than 100K Paying Between $78K andPaying Between $40K and Under $40K $100K $78 K Above Average Paying, Mid-Skilled Job Creation By State – Percent Change In Past Decade California Has Been Among The Leaders In Creating Low Paying (under $40K) Jobs The Big Shift is On • Large movement to suburbs and affordable cities • Demographic factors • Economic factors • Social/environmental factors Urban Footprint Densities: 1800-2010 PARIS, LONDON, NEW YORK, BEIJING & LOS ANGELES 600 500 Paris 400 Beijing 300 (Urban) 200 New York London Population per Hectare 100 Los Angeles 0 1800 1850 1900 1950 2000 2010 Angel et al and Demographia. Urban Core, Suburban & Exurban Growth MAJOR METROPOLITAN AREAS: 2010 TO 2014/2018 Middle Year: 2016 Urban Core 8.2% Suburbs & Exurbs… Derived from American Community Survey, 2014/2018 & City Sector Model Figure 19 Net Domestic Migration 2010-2019 BY 2019 METROPOLITAN AREA POPULATION 150,000 100,000 50,000 0 Major MSAs (Over 2011 2012 2013 2014 2015 2016 2017 2018 2019 1,000,000) -50,000 Middle-Sized MSAs (500,000-1,000,000) -100,000 MSAs 100,000 - 500,000 -150,000 Smaller MSAs & Not MSAs -200,000 -250,000 Derived from Census Bureau data Figure 20 Net Domestic Migration: Core & Suburbs 50 MAJOR METROPOLITAN AREAS 300,000 200,000 100,000 0 2011 2012 2013 2014 2015 2016 2017 2018 -100,000 -200,000 -300,000 Core Counties -400,000 -500,000 MSA’s comprised of a single county excluded (Las Vegas, San Diego, Tucson) -600,000 Derived from Census Bureau data Figure 21 Center of Covid as well Suburb/Exurb & Urban Core Growth CALIFORNIA METROPOLITAN AREAS: 2010 TO 2014/2018 100% 90% 80% 70% 2014/2018 - 60% 75.0% 87.5% Suburbs & 50% 98.9% 97.5% 100.0% Exurbs 40% Urban Core 30% 20% Share of Growth: 2010 10% 0% Los Angeles MSA San Francisco Riverside-San San Diego MSA Sacramento MSA MSA Bernardino MSA Derived from American Community Survey & City Sector Model Bay Area CSA: Domestic Migration by MSA 2010 TO 2018 20,000 San Francisco MSA 15,000 San Jose MSA Bay Area Exurbs 10,000 Central Valley Exurbs 5,000 BAY AREA EXURBS 0 Napa MSA Santa Cruz MSA -5,000 2011 2012 2013 2014 2015 2016 2017 2018 Santa Rosa MSA Vallejo MSA -10,000 Annual (to year) -15,000 CENTRAL VALLEY EXURBS Merced MSA -20,000 Modesto MSA Stockton MSA -25,000 -30,000 Derived from Census Bureau Population Estimates 2018 Domestic Migration: Los Angeles CSA 2010 TO 2018 40,000 20,000 0 -20,000 2011 2012 2013 2014 2015 2016 2017 2018 Annual -40,000 -60,000 Los Angeles -80,000 Orange Riverside -100,000 San Bernardino Ventura -120,000 Derived from Census Bureau Population Estimates 2018 Net Domestic Migration: California 2010 TO 2018 0 -20,000 2011 2012 2013 2014 2015 2016 2017 2018 -40,000 -60,000 -80,000 -100,000 -120,000 -140,000 -160,000 -180,000 Derived from Census Bureau Population Estimates 2018 International Migration: California 2010 TO 2018 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2011 2012 2013 2014 2015 2016 2017 2018 Derived from Census Bureau Population Estimates 2018 Figure 27 California Net Domestic Migration by Age ANNUAL RATE: 2014-2016 0.00% 0-25 26-34 35-44 45-54 55-64 65+ -0.05% -0.05% -0.10% -0.15% -0.16% -0.20% -0.18% -0.25% -0.26% -0.26% -0.30% -0.31% -0.35% Derived from IRS data (Latest at 2019.11) Figure 28 Age 5-14 Population % by Urban Sector 53 MAJOR METROPOLITAN AREAS: 2014-2018 (AVERAGE YEAR: 2016) 16% 14.0% 14% 13.4% 12.4% 12.8% 12% 11.2% 10% 8% 6% 5.5% 4% 2% 0% Urban Urban Early Later Exurb OVERALL Core: Core: Inner Suburb Suburb CBD Ring Small Areas (Zip Code Analysis Zones) Derived from American Community Survey: 2014-2018. Change in Child Population (5-14) SELECTED METROPOLITAN AREAS: 2000-2018 Raleigh Austin Houston Dallas-Fort Worth Atlanta Denver Washington Seattle San Jose San Francisco Boston New York Chicago Los Angeles Detroit -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% Derived from US Census Bureau data Change: California Median Age: 2010-18 COMPARED TO HIGH DOMESTIC MIGRATION STATES & U.S. 1.6 1.5 1.4 1.3 1.2 1.2 1.0 1.0 0.8 0.8 0.6 Change in Years 0.4 0.4 0.2 0.0 United States California Oregon Washington Colorado Texas Derived from 2010 Census & American Community Survey 2018 Figure 31 The Future lies in the A rchipelago of Villages: Towards “Smart Sprawl” • Housing near jobs • Emphasis on families but with big appeal to seniors (grandparents) • Strong role for village shopping streets and markets • Provision of open space around the village core and housing estates- • Solving the problem of “sprawl” within the Sprawl Rethinking Density on Environmental Grounds • Low/mid-density using proper design and landscaping may use less water and energy • Reducing “heat islands” — overdense development in London and Los Angeles can lead to urban centers being 3°C higher than outlying areas • Learning from mideastern ancient cities like Shiraz in how to design largely low-rise housing to maximize natural cooling and reduce evaporation • New Technology allows for dispersion to a more sustainable community Forgotten Factor: Urban Heat Island CO2 Emissions per Capita: By Sector AUSTRALIA 5 LARGE CAPITAL URBAN AREAS 30 25 20 15 Metric Tons 10 5 0 Core Inner Ring Second Ring Outer Ring Source: Housing Form in Australia and Its Impact on Greenhouse Gas Emissions Telecommuting: A Big Part of the Urban Future Job Access: Transit v.