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2014
Economic Outlook
Torrey Pines Bank
(619) 417-1817 [email protected]
1
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Section 1: National Economic Trends
Section 2: California Economic Trends
Section 3: California Residential Construction
Section 4: California Commercial Construction
Section 5: Comparison of Home Prices in Silicon Valley
and West Los Angeles
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Section 1: National Economic Trends
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Position Points – National Economic Trends
• The Nation is Growing Far More slowly than it should be
• First Time Unemployment Claims are much higher than they should be at this point in the recovery
• But the unemployment rate is down to 7.0%
and
• Interest rates are staying low, so at least we are moving in the right direction.
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Change in Gross Domestic Product 1988-2012
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Year Avg. % Change
1988-1992 6.0%
1993-1997 5.6%
1998-2002 5.0%
2003-2007 5.7%
2008-2012 2.3%
Source: Bureau of Economic Analysis
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0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
United States Initial Claimants for Unemployment Insurance Seasonly Adjusted
Weekly Jan 2004 - Dec 2013
Lehman Bros. Collapse
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UNITED STATES Monthly Unemployment Rate 2000 - 2013
Source: U.S Department of Labor
3.8%
10.0%
7.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Lehman Bros. Collapse
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Section 2: California Economic Trends
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Position Points – California Economic Trends
• California has gained almost 900,000 jobs in the past 3 years
• The unemployment rate has moved steadily downward
• Only the dearth of construction jobs is holding back the economy.
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Unemployment Rate California
2000-2013 (thru Nov.)
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0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
3.97%
Lehman Bros. Collapse
6.84%
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New Jobs Created in California 2010-2013 (thru Oct.)
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15,600
15,800
16,000
16,200
16,400
16,600
16,800
17,000
17,200
Oct-10 Oct-11 Oct-12 Oct-13
16,319
16,994
910,000 Jobs Created between Oct 2010
and Oct 2013
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Construction Jobs California
2005-2013 (thru Nov.)
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0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
905,300
636,700
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Section 3: California Residential Construction
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Position Points – Residential Construction
• Single family construction lags way behind what it should be
• Multi-family is doing well, but it is virtually all rental housing
• Renovation still plays a major role in the construction market
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Residential Units Permitted California
2005-2014 (Projected)
15
-
50,000
100,000
150,000
200,000
250,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F
Total
Single Family
Multi-Family
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Single Family Units Permitted Selected Metropolitan Areas
California 2009-2013 (thru October)
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0
500
1000
1500
2000
2500
3000
3500
4000
4500
2009 2010 2011 2012 2013
Riverside
Los Angeles
San Diego Orange County
San Bernadino
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Multi - Family Units Permitted Selected Metropolitan Areas
California 2009-2013 (thru October)
17
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2009 2010 2011 2012 2013
Riverside
Los Angeles County
San Diego
Orange County
San Bernadino
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Renovation/Alterations as % of Total Valuations Selected Metropolitan Areas
California 2009-2013 (thru October)
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2009 2010 2011 2012 2013
Riverside
Los Angeles County
San Diego
Orange County
San Bernadino
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Section 4: California Commercial Construction
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Position Points – Commercial Construction
• In most of California, office, retail and industrial construction is moving forward
• Renovations account for more than half of all dollars expended
• Since 2011, commercial construction is up 20% in SoCal and 35% in NorCal
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Total Permit Valuation Commercial Construction Major Metropolitan Areas 2009-2013 (thru October)
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$-
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
2009 2010 2011 2012 2013
Southern Cal Northern Cal San Diego
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Office Building Permit Valuation Major Metropolitan Areas
California 2009-1013 (thru October)
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$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2009 2010 2011 2012 2013
Southern Cal
Northern Cal
San Diego
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Retail Building Permit Valuation Major Metropolitan Areas
California 2009-1013 (thru October)
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$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
2009 2010 2011 2012 2013
Southern Cal
Northern Cal
San Diego
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Industrial Building Permit Valuation Major Metropolitan Areas
California 2009-1013 (thru October)
24
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
2009 2010 2011 2012 2013
Southern Cal
Northern Cal
San Diego
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Building Alterations Permit Valuation Major Metropolitan Areas
California 2009-1013 (thru October)
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$-
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
$3,500,000,000
$4,000,000,000
2009 2010 2011 2012 2013
Southern Cal
Northern Cal
San Diego
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Alterations/Renovations as % of Total Commercial Permit Valuation
2009-2013 (thru October)
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0%
10%
20%
30%
40%
50%
60%
70%
80%
2009 2010 2011 2012 2013
Southern Cal
Northern Cal
San Diego
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Commercial Lending California Real Estate Lending All California-Based Commercial Banks
(loans in millions $)
2008-2013(through October)
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$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q 2013
1-4 Family
Commercial
Construction/Land Development
Multi-Family
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Commercial/Industrial Equipment Loans ($Millions) by California Based Banks
( Indicating Growing Business Confidence)
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$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q 2013
$58,514
$46,998
$66,421
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No. of California Based Banks
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0
50
100
150
200
250
300
350
3Q 2008 3Q 2009 3Q 2010 3Q 2011 3Q 2012 3Q 2013
287
210
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Section 5:
Comparison of Home Prices
Silicon Valley & West Los Angeles
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Position Points – Santa Clara Co. vs. West L.A.
Battle of the Bulge
• Detached home prices are up more than 20% since 2008 in both markets.
• Home sales in 2009-2013 in Santa Clara County have been a steady 15,000 annually.
• Both markets have average detached home prices of $1,000,000.
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Resale Prices Index
West Los Angeles & Silicon Valley (Santa Clara Co.) 2009-2013 (thru Nov.)
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$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
2009 2010 2011 2012 2013 (thru Nov.)
West Los Angeles
Santa Clara County
