1. John Husing, Ph.D. Economics & Politics, Inc.
Coachella Valley Finding The Bottom … Setting Conditions For The Future!
John Husing, Ph.D.
Economics & Politics, Inc.
11/23/2018

2. So. Calif. Job Change,
-1.7%
-4.3%
11/23/2018

3. Inland Empire Job Change, 1984-2009
-3.8%
-5.4%
11/23/2018

4. Coachella Valley, Job Changes
-3.5%
11/23/2018

5. Worst National Unemployment Rates
14.3%
11/23/2018

6. Unemployment Can Get Stuck For Years
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Aug-09
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
U.S.
Inland Empire
U.S. & Inland Empire Unemployment History,
not U or V
11/23/2018
Source: U.S. Bureau of Labor Statistics & U.S. Census Bureau

7. 259,200 Unemployed – Approaching 3 times Normal
11/23/2018

8. What Happened?
11/23/2018

9. Here, Its About Housing $10.6 Billion Hole In IE Economic Base
$8.3 Billion From
Residential Decline
11/23/2018

10. -$21.2 Billion Loss To The $110.0 Billion Economy
Gold Mine Theory
-$21.2 Billion Loss To The $110.0 Billion Economy
Secondary Tier
Another
-$10.6 Billion
Primary Tier
-$10.6 Billion
11/23/2018

11. Coachella Valley Housing Permits
Economic Target: Construction
11/23/2018

12. Secondary Tier: Coachella Valley Sales Decline
11/23/2018

13. Housing Demand Rose With Population
CA Home Restrictions
Slow Growth
NIMBYs
Endangered Species
Water
Keep “Them” Out of Our City
million people/3.9 million SFR homes =
Add 3.2 million people: Need 709,600 homes = 4.66
Actual New homes ,900
Shortfall ,700
Annual Production Too Low: ,670 a year
11/23/2018

14. Prices Had To Take-Off To Eliminate Buyers Coachella Valley
$502,999
13.3% per year
19.2% per year
11/23/2018

15. Coachella Valley Sales Soars Until 2004 … Fell to Early 1990s Level, Now Back to 2003 Level
Price Peak
51.6%
11/23/2018

16. Prices Back to Early 2002 Levels
35,498 SFR CV Homes Traded
People Owe More Than They Are Worth!
36.4% Of CV’s 97,471 SFR Homes
Prices Back to Early 2002 Levels x
11/23/2018

17. Current Status Of Inland Empire Housing ,044 Inland Empire’s Traded in ,080,328 Total Homes Existed in January % Share of Homes In Potential Trouble
11/23/2018

18. Notices of Default
218,050 of 359,044 Homes Sold : Notices of Default
79.5% of Homes Receiving NOD’s are Lost
140,994 Upside Down but Not Yet in Visible Trouble 39.3%
11/23/2018

19. Supply: Upside Down Homes
140,994 Upside Down … Not Yet Notices of Default
26,367 NOD Grace Period
167,391 To Go
39.3%
+ Unemployed + Borrowed Equity!
Similar Situation Likely In Coachella Valley
35,198 Traded x 39.3%= 13,951 To Go
13,951
+ Unemployed + Borrowed Equity!
11/23/2018

20. Likely Pace of Future Foreclosures
Oct-2012
Alt-A
Option Adjustable
Sub-Prime
Over
11/23/2018

21. Is There Any Good News?
YES!
11/23/2018

22. Supply From Foreclosures Demand From Lower Prices
Supply & Demand
Supply From Foreclosures
Demand From Lower Prices
vs.
11/23/2018

23. Demand = Supply & Price Stability
And The Winner So Far ….
Demand = Supply & Price Stability
11/23/2018

24. Soaring CV Housing Affordability Sets A Record & Drives Demand
63%
54%
10%
11/23/2018

25. Foreclosures Not Only Sales Now
August 2009
Foreclosure Sales Share of Total Sales
Riv. Co.
51% down from 71% in Jan.
11/23/2018

26. Coachella Valley’s Regional Price Advantage Still Exists
Home Price Advantage, So. California Markets
Median Priced New & Existing Home, 3rd Quarter 2009
Median All Home Price
Coachella Valley Advantage
$498,000
$366,000
$332,000
$268,996
$229,004
$172,000
$136,996
$102,996
($57,004)
Coachella Valley
Inland Empire
Los Angeles
San Diego
Orange
11/23/2018
Source: Dataquick

27. Relative Prices By City
11/23/2018

28. Limited New Home Supply, 2nd -2009
= 466
11/23/2018

29. Consumer Confidence In Future At Dec 2007 Level (pre-Recession)
11/23/2018

30. Record Affordability, Rising Demand Housing Bottom Behind Us!
Housing Market Grade
F to D+
Record Affordability, Rising Demand
Housing Bottom Behind Us!
11/23/2018

31. Population Slowing with Housing
11/23/2018

32. Growth Has Been Aggressive
Exhibit 2.-Population Growth Rates
Coachella Valley & Other Major Areas,
34.9%
28.0%
13.0%
9.2%
8.7%
Coachella Valley
Inland Empire
California
Los Angeles County
U.S.
11/23/2018
Source: CA Department of Finance, U.S. Census Bureau

33. Who Has Been Growing?
11/23/2018

34. Here Come the Baby Boomers Economic Target: Health Care
Age Distribution
Here Come the Baby Boomers
Economic Target: Health Care
11/23/2018

35. Adult Educational Level
Economic Target: Educational Performance
11/23/2018

36. Economic Target: Rising Per Capita Income
11/23/2018

37. Income by City
11/23/2018

38. Employment
11/23/2018

39. Coachella Valley, Job Changes
-3.5%
11/23/2018

40. Jobs by City
11/23/2018

41. Economic Target: Distribution
What Jobs Grew?
Economic Target: Distribution
11/23/2018

42. Largest Employers
11/23/2018

43. Payroll Released Into Valley
11/23/2018

44. Economic Target: Rising Pay Per Job
Average Pay Per Job
Economic Target: Rising Pay Per Job
11/23/2018

45. Source: CA Employment Development Department
Average Pay By City
Employment By City
Coachella Valley, 2008
$43,188
$39,092
$36,319
$35,807
$35,292
Inland Empire
Coachella Valley
$35,099
$33,797
$32,784
$32,589
$32,000
$30,963
Indio
La Quinta
Coachella
Palm Desert
Rancho Mirage
Palm Springs
Indian Wells
Cathedral City
Desert Hot Springs
11/23/2018
Source: CA Employment Development Department

46. Jobs Are Paying Better
11/23/2018

47. Employment & Payroll Performance
Grade: C- falling to a D+
11/23/2018

48. Taxable Retail Sales In Valley
Economic Target: Rising Retail Sales
11/23/2018

49. Taxable Retail Sales Decline
11/23/2018

50. Retail Sales By City
11/23/2018

51. Retail Sales per Capita
11/23/2018

52. City Retail Sales Per Capita
11/23/2018

53. Retail Grade, 2008 C to C-
11/23/2018

54. Bank Deposits
11/23/2018

55. Who Had The Money, 2008
11/23/2018

56. Assessed Valuation
11/23/2018

57. Assessed Valuation Growth Rates
Exhibit 51.-Assessed Valuation Growth
Coachella Valley & Riverside County,
Coachella Valley
Riverside County
23%
20%
21%
19%
20%
16%
17%
13%
14%
12%
13%
12%
11%
12%
10%
10%
11%
10%
12%
11% 6% 7% 6% 7% 6% 4% 4%
4.0% 2% 1% 2% 2% 0% 0%
1.4%
-0%
-0%
-1%
-6.5%
-10.5%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
11/23/2018
Source: Riverside County Assessor's Office

58. Assessed Value by City
11/23/2018

59. Assessed Valuation 2009 B to C-
11/23/2018

60. Economic Target: Falling Crime Rate
Crime Per 1,000 Residents
Economic Target: Falling Crime Rate
11/23/2018

61. Crime Rates Compared, 2008
Performance: C-
11/23/2018

62. Academic Performance Economic Target: Rising K-12 Performance
Performance: B+ for Desert Sands … D+ for Others
Economic Target: Rising K-12 Performance
11/23/2018

63. When Will “Normal” Start To Return?x x
2010, 2011
2012
If Policies Work!
11/23/2018

64. Now Is the Time To Build A Solid Foundation For Future Prosperity
11/23/2018

65.
11/23/2018