No bubble: Chapman forecasts mild housing rebound for Orange County

Dr. James Doti the former president of Chapman University. (STEVEN GEORGES, CONTRIBUTING PHOTOGRAPHER)

Chapman University economist Jim Doti sees no housing bubble to burst in Orange County.

Yes, countywide homebuying since last summer has run at its slowest pace since 2012. But Chapman’s semiannual economic outlook suggests the county’s housing market will enjoy a mild recovery as 2019 progresses.

Doti’s logic may surprise many people.

For starters, he explains that local housing prices — easily double national benchmarks — are “economically rationale given the county’s higher median income, amenities and proximity to the Pacific coast.”

Plus, housing suddenly looks not so pricey thanks to a sharp reversal in mortgage rates, which have driven borrowing costs down to near-historic lows.

ICYMI: Does California need another crash to create affordable homes?

Doti’s math shows a household buying a median-priced Orange County home in 2018’s third quarter spent 40% of their income to be a qualified borrower. By the end of this year, if the forecast proves true, cheaper mortgages mean the typical local home will cost only 33.6% of income.

However, Doti is by no means projecting any housing boom.

The forecast sees sales of existing homes rising only 1.3% this year, a change of pace from falling 9.7% in 2018. That modest buying uptick will boost the median price by just 1.2% vs. last year’s 4.8% gain.

The recent sales slowdown nudged local developers to cool building plans, a trend that won’t change soon.

Chapman forecasts residential building permit dollars will fall 2.5% this year which is actually an improvement as construction spending fell 13.4% in 2018.

Fewer dollars spent means construction jobs will grow only by 1.2% this year vs. 4.5% in 2018. And those lower mortgage rates won’t help workers in financial services: Chapman expects staffing to be cut by 0.9% this year after dipping 0.4% in 2018.

One reason the Orange County housing market will escape the recent rough patch is that bosses countywide will still be hiring, albeit at a slower pace.

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Job growth is forecast at 1.3% for 2019 vs. 2.1% last year. Increases in personal income will cool, too: 4.5% in ’19 vs. 5.6% last year.

And the moderating expansion will continue to be a drag on another major Orange County purchase: vehicles. Chapman forecasts auto spending will grow just 0.3% vs. 1.1% in 2018.

It should be noted that Orange County is by no means alone with an economic chill.

Look at employment trends elsewhere. The school predicts 1.5% more California workers this year, down from 2% growth last year. Nationally, job growth is pegged at 1.5% this year vs. 1.7% in 2018.

Still, Doti notes significant risks in local housing tied to real estate’s three magic words: Jobs, jobs, jobs!

“There is no question O.C. housing prices will fall more dramatically when we have our next recession,” he says. “The drop in median income caused by the recession will have an exponentially negative impact on prices. But that correction will be temporary and will eventually be ‘corrected’ when incomes increase again.”

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California’s job growth to dip from more robust years, report says

California’s economy is expected to add more than 300,000 jobs this year and in 2020, but that will fall well below some of the more robust growth years the state experienced over the last half-decade.

California will add 322,700 jobs this year and 318,500 next year, the Los Angeles County Economic Development Corp.’s 2019 Regional Forecast and Economic Outlook predicts. By contrast, the state added 424,200 jobs in 2014, 474,000 in 2015 and 427,100 the following year.

On the plus side, California’s average annual income will hit $52,447 in 2020, an annual increase of $7,572 from 2014.

More good news: The state’s unemployment rate is headed down. Last year it stood at 4.2 percent. This year it’s forecast to be 3.7 percent and that’s expected to dip to 3.4 percent in 2020, the report said.

“That will be one of the lowest rates it’s ever been,” said Somjita Mitra, director of the LAEDC’s Institute for Applied Economics.

The demand for housing, particularly in coastal regions of California, is predicted to spur more construction, with a year-over-year increase in permits of more than 8,000 in 2019 and 2020.

But that won’t be enough to meet the demand, according to Mitra.

“It’s still a drop in the bucket,” she said. “We still have a pretty critical housing shortage. We would need 500,000 more homes to meet our population and economic growth — and that would have to include homes that are affordable for people who live here.”

The report also includes economic breakouts for Los Angeles, Orange, Riverside and San Bernardino counties …

Los Angeles County

The county will continue its shift from production operations like manufacturing and logistics to service-based industries, with major growth in professional business services, health care and hospitality.

Major investment in transit will continue to support strong economic growth, although failure to increase residential density along transit routes heavily limits the potential positive impacts.

“One of the big things we are dealing with is traffic congestion and mobility issues,” Mitra said. “It can take a long time to get from one part of L.A. to another. This is a highly desirable market, but there are lots of issues with rules and regulations and height restrictions on how high you can build.”

Orange County

Orange County will continue to see strong economic output, the report said, and higher-than-average education will continue to drive wage growth higher than the regional average, particularly in middle- and high-skilled industries such as business services and healthcare.

Home prices in Orange County are already some of the highest around, and that trend is expected to continue. December figures from price tracker CoreLogic show the median price for a single-family home in the 92606 ZIP code of Irvine, for example, was $930,000, up 4.2 percent from a year earlier. In the 92612 ZIP, it was more than $1.1 million, a 31.4 percent hike from December 2017.

Riverside County

Riverside County’s economic growth should continue, fueled heavily by its role as a key transportation and shipping hub for Southern California. The relative affordability of housing in the region is expected to drive population growth as families move from high-priced coastal regions.

CoreLogic figures show that home prices are considerably lower there than in Orange County. In December, the median price in Riverside ranged from $390,000 to $525,000, depending on the ZIP code.

Riverside County is predicted to lead the region in personal income growth.

San Bernardino County

The region’s importance as a key logistics hub will continue, according to the report, with strong employment and wage growth coming from transportation and trade. But mounting trade tensions with China will likely cause a drag on local growth, the report said.

“We haven’t seen it yet,” said Inland Empire economist John Husing. “One of the first places you’d notice that would be a slowdown in trade through the ports of Los Angeles and Long Beach, but they both just had a record year.”

San Bernardino County added 22 million square feet of industrial net absorption in 2018, most of which is e-commerce related, Husing said. An equal amount of industrial construction is currently underway.

“We’re filling them as fast as they’re being built,” he said.

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Inland economy ranks high in national study

Twelve months of solid job growth pushed the Inland Empire’s economic status closer to the top levels, a study released Thursday by the Milken Institute found.

In the “Best Performing Cities”  study of 200 major metropolitan areas that measured job and wage growth along with the expansion of technology development, the Inland region ranked 15th. That represents a five-point jump from the previous year’s report.

The nonprofit, non-partisan Milken Institute studied job growth for a 12-month period that ended August 20, as well as the five years before that. San Bernardino and Riverside counties had the third-best short-term increase and ranked seventh from 2012 through 2017.

However, the region ranked lower in short- and longer-term wage growth in and the expansion of a technology-based economy. As a percentage of total economic output by the technology sector, the Inland region ranked 131st of the cities studied.

Wage growth slowed

Also, the report cited “extremely low” educational attainment. Only 21 percent of the population over age 25 has a bachelor’s degree or better, compared to 31 percent nationally. That is a factor that has kept Inland wages from growing as fast as the availability of jobs.

“Wages is a long-term concern, and a big part of it is educational attainment,” said Robert Kleinhenz, executive director of research at Beacon Economics and the UC Riverside Center for Forecasting. “It’s a chicken-and-egg issue. Is the mix based on concerns about the workforce, or is it the other way around?”

Provo, Utah, ranking high in job and wage growth, topped the list of the 200 cities. It was followed by San Jose, Austin, San Francisco, Dallas, Raleigh, N.C., Orlando, Seattle, Fort Collins, Colo., and Salt Lake City.

Orange County, LA County lose ground

Orange County was ranked 56th and declined nine slots from the previous year. Los Angeles County was number 81 and fell 20 places.

Many of the high-ranking cities were propelled by single industries. The report cited technology growth traced to Brigham Young University as the main reason Provo topped the list. Tesla’s battery factory pushed Reno, Nev., from 35th-best city last year to number 11.

For the Inland Empire, that main engine was the logistics sector. Milken cited a 140 percent increase in distribution jobs between 2012 and 2017, as well as Amazon’s $4.7 billion investment in 10 fulfillment facilities during a four-year period. This growth has given residents more spending money, which spurred some growth within service sectors.

The region’s universities are producing workers with degrees. “But students tend to look elsewhere for employment after graduation,” the report states.

Kleinhenz said it was important to note that the Inland Empire ranked higher than any metro in California outside of the two Bay Area technology hubs. Several Central Valley cities, such as Stockton, Merced and Fresno, all rose sharply in the study.

“These are points of reference that we use when we talk about how good or not good the Inland Empire is doing,” Kleinhenz said.

The cost of doing business …

The cost of doing business varies from county to county. Kleinhenz said that plays a role not only in Inland growth, but in the recent lack of growth in both jobs and in the workforce, in Orange County. Also, for many workers, it is too expensive a place to live.

Los Angeles County has been trying to fix some of those issues by adding multifamily housing, which may be helping to attract more workers.

“There’s a little more of a dynamic there than in Orange County, but clearly Los Angeles still ranks low,” Kleinhenz said.

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Are builders catching up to Southern California’s housing shortage?

  • The New Home Company, a real estate developer from Aliso Viejo, is moving forward on the Bedford community that will bring 1,620 homes to South Corona. New Home Co. recently announced it will be building homes with TRI Pointe Homes, which will build Citron, 101 townhomes designed by Woodley Architectural Group — two-story, row-style residences from 1,231 to 1,514 square feet with three bedrooms and three baths. Prices are expected to begin in the low-$400,000s. (Courtesy of The New Home Company)

  • The back yard of a Sea Summit home in San Clemente. (Courtesy: Taylor Morrison)

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  • New Home Co. is building 28 new homes in Ladera Ranch. (Sketch courtesy of New Home Co.)

  • Construction workers work on new homes by Seville at Park Place community in Ontario on Monday, May 7, 2018. (Photo by Watchara Phomicinda, Inland Valley Daily Bulletin/SCNG)

  • A SunPower employee completes installation of solar panels at KB Home’s Terramor development in Riverside County. Solar systems like this would become standard at new homes throughout California if state officials adopt proposed new energy standards. “California is about to take a quantum leap in energy standards,” said Bob Raymer, technical director for the California Building Industry Association. (Photo by Will Lester- The Press-Enterprise/SCNG)

  • Bassenian Lagoni designed the Marywood Hills single-family homes that range from 3,800 to 4,400 square feet. (Courtesy: New Home Co.)

  • Workers work on some of the new homes near Newport Road and Murphy Ranch Road in Menifee Thursday, Feb. 22.
    Photo by Frank Bellino, contributing photographer

  • Toll Brothers model homes in Porter Ranch. (Hans Gutknecht, Los Angeles Daily News/SCNG)

  • Front of one of 15 homes offered by Brandywine Homes at its Newbury community in Yorba Linda. (Courtesy: Brandywine Homes)

  • New Homes Co. is building 10 homes in Rancho Mission Viejo. They’re priced at $359,818 and are a snug 700 square feet. The home features just one bedroom. (Jonathan Lansner, Southern California News Group)

  • An artist’s rendering depicts what a town center in one the 4,055-home Mission Village and the 1,440-home Landmark Village, the first two of Newhall Ranch’s nine developments. Project backers expect to take 15 to 20 years to complete all 21,500 homes and 11.5 million square feet of commercial space. (Courtesy of FivePoint Communities)

  • New homes were being built last in the Terramor community east of the 15 Freeway.



Southern California builders are putting a dent in the regional housing shortage, selling new homes at a pace not seen in nine years.

CoreLogic data shows 18,117 new residences sold in the 12 months ended in May across the four counties covered by the Southern California News Group. That’s the best performance since January 2009, and it’s up 7.7 percent in a year.

This means new housing’s share of sales also grows. Builders were responsible for 8.1 percent of all Southern California home purchases in the past year. That’s the highest share of sales since March 2009.

Still, the upswing looks sluggish compared with housing development before the Great Recession.

From 2000 through 2006, Southern California builders were selling homes more than twice as fast as today at a 43,000 units-a-year pace. (Don’t forget one reason for recently modest homebuilding — that last development frenzy ended badly when real estate’s bubble burst.)

Newly constructed housing’s recent surge is a sharp contrast to resales of Southern California’s existing homes, a market that until recently has suffered from limited inventory: 224,296 homes sold in the 12 months, down 2.8 percent in a year and off 4.4 percent from the post-recession peak of September 2013.

And according to ReportsOnHousing, Southern California house sellers are finding it takes two weeks longer to get an existing home from new listing to escrow this summer vs. a year ago.

ReportsOnHousing tracks homebuying patterns found in real estate broker networks: supply (active listings); year-to-date increase in supply; demand (new escrows in past 30 days); and “market time” (a measure of selling speed of days it takes a typical listing to enter escrow).

In the four-county region, the supply of existing residences on the market grew to 33,639 listings July 12 — up 2,738 units for sale in a year or 9 percent. That’s also up 2 percent vs. the 6-year average.

Year to date, sellers have grown the listing count by 9,925 listings. That’s triple the 3,313 added in 2017 in the same period and well above the average increase of 6,635 in 2013-2017.

More choices and slower decision-making mean Southern California’s “market time” — an estimate of selling speed — was at 80 days on July 12, up from 66 days a year earlier and an average 74 days in 2012-2017.

Here’s a look at recent housing data for the four counties — how home sales, new and existing residences, fared in the 12 months ended in May plus how the July 12 supply of existing homes on the market shapes up …

Orange County

New homes: 5,088 sales — above 5,000 for five months, best since January 2007.

Builder’s share: 13.4 percent — above 13 percent for seven months, best since June 2008.

Existing homes: 32,828 resales — down 1.8 percent in a year and off 1.9 percent from the recent peak of October 2017.

Supply: 6,579 listings, up 596 residences for sale in a year or 10 percent.

Market time: 80 days vs. 63 a year earlier and an average 69 days in 2012-2017.

Riverside County

New homes: 4,977 sales — above 4,900 for 33 months, best since March 2010.

Builder’s share: 11.6 percent in past 12 months — eighth month below 12 percent after 31 months above it.

Existing homes: 37,978 resales — off 1.1 percent from recent peak January 2011.

Supply: 8,597 listings, up 859 residences for sale in a year or 11 percent; and up 6 percent vs. six-year average.

Demand: 2,760 new escrows, down 292 sales contracts in 12 months or -10 percent; and down 4 percent vs. previous six years.

Market time: 93 days vs. 76 a year earlier and an average 88 days in 2012-2017.

Los Angeles County

New homes: 4,205 sales — above 4,200 for seven months, best since April 2011.

Builder’s share: 5.2 percent — at 5.2 percent or higher for seven months, best since April 2011.

Existing homes: 76,927 in past 12 months — — off 4.8 percent from the recent peak of July 2013.

Supply: 12,989 listings, up 835 residences for sale in a year or 7 percent; but down 2.7 percent vs. six-year average.

Market time: 72 days vs. 63 a year earlier and an average 68 days in 2012-2017.

San Bernardino County

New homes: 3,847 sales — above 3,000 for 10 months, best since February 2009.

Builder’s share: 11.9 percent — highest since January 2009.

Existing homes: 28,541 resales — off just 0.2 percent from the recent peak set in April.

Supply: 5,474 listings, up 448 residences for sale in a year or 9 percent; and up 6 percent vs. six-year average.

Market time: 81 days vs. 66 a year earlier and an average 79 days in 2012-2017.

Have you checked out Bubble Watch …

Bubble Watch: Are house hunters shying from newly built homes?

Bubble Watch: Is California’s anti-business vibe killing the state’s economy?

Bubble Watch: Home-equity loans back at pre-recession levels

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Does cost of living matter in retirement? Well, it matters when ranking best places to retire

So why do rankings of all sorts often vary widely?

View the creators of all those data-driven rankings like a chef.

Sure, selection and quality of ingredients matters — or, in this case, choosing the underlying economic and demographic stats that build a ranking’s metrics.

But it’s the recipe — how the ingredients are mixed — that can truly impact the final result. You know, a dash here. Or a pinch there.

Take retirement. How the complex concept of personal finances figures into a person’s location choice for their golden years is by no means a set number.

Did you save enough? Are you a heavy spender? What might medical costs be? All are fairly unique parts of any household’s happy-retirement recipe.

But recent, noble efforts of data crunchers at WalletHub, Bankrate and Kiplinger’s to gauge the states in terms of retirement livability factors help show how the statistical mix can alter a ranking’s outcome.

I used my trusty spreadsheet to combine this trio’s retirement rankings in order to give a composite picture of strengths vs. weaknesses. I reassembled their published ranking data — overall scores, subindex grades and related data — into three categories: cost-of-living; character (culture and climate); and care (healthcare and healthiness).

Imagine making the costs measurement doubly as important as the other two metrics. That’s probably good for folks who are carefully watching their retirement pennies.

Florida and South Dakota were the top two. Utah was third followed by Wyoming and Tennessee.

California was the ninth-worst state for retirement when personal budgetary items were given high importance. And New York and New Jersey were worst-to-retire-to states by this math.

On the other hand, there are folks who don’t worry much about money. Perhaps they have generous pensions or saved smartly (or were simply lucky).

Also, note what many studies of retirees’ views on their quality of life after employment reveal. Life’s intangibles — friendships, families, and health — are far more critical to seniors’ happiness than many of factors frequently used to study best-place locations.

So, what if costs weren’t part of the retirement math, just the character of a state and the quality of its senior care?

According to this formula, the top three states shift to Vermont then Hawaii and Maine. Vermont was No. 40 when costs were a double factor.

Meanwhile, Florida and South Dakota fall into a tie for eighth place when costs aren’t part of the recipe. Tennessee drops to No. 40.

And California, minus its well-known high expenses? The 15th-best state for retirees.

Have you checked out Bubble Watch …

Bubble Watch: Are house hunters shying from newly built homes?

Bubble Watch: Is California’s anti-business vibe killing the state’s economy?

Bubble Watch: Home-equity loans back at pre-recession levels

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California ranks sixth-worst state to retire to — or 15th best

California is the sixth-worst state to retire in.

Or 15th best.

That’s the confusing message from three recent state-by-state, best-to-retire rankings based on a myriad of economic and demographic stats.

Data crunchers at Bankrate and Kiplinger’s both ranked California No. 45 among the states for desirability as a place to live out one’s golden years. But statisticians at WalletHub placed California 30 notches higher!

How do you explain the gap? Well, let’s look at how California’s grades varied by those doing the rankings.

Remember, when it comes to rankings, beauty is in the eyes of the grader. My trusty spreadsheet — filled with retirement data and rankings of WalletHub, Bankrate and Kiplinger’s — found that even population counts display a deep statistical divide.

Yes, California has 5 million people aged 65 or older, the largest number of seniors in the nation. Certainly, that means something. But that flock equals only 12.9 percent of all Californias, the sixth-smallest share of 65-plus residents nationally. Are we young? Or unattractive to retirees?

Then look at the ranking divergence when it came to expenses. Yes, California’s expensive … but just how much pricier vs. other states is up for debate.

Bankrate found California third worst for cost-of-living and third-worst for its tax rates. But WalletHub scored California 14th worst for “affordability.” And Kiplinger’s noted California’s 65-plus households had a $65,904 average income, sixth-best among the states.

As for scoring conditions for care for seniors, Bankrate ranked California No. 19 for healthcare quality and No. 14 for well-being. WalletHub gave the state a No. 16 ranking for healthcare. And Kiplinger’s cited average healthcare costs for a retired couple of $430,867. That’s above a national average of $423,523 and 10th highest among the states.

Of course, California “cool” scored well. Bankrate gave the state a No. 14 ranking for the weather, No. 20 for culture, but 19th-worst for its crime. WalletHub ranked the state third-best for quality of life.

California appeared trickier to grade than other states as the three rankings had some agreement on the where-to-retire extremes.

Best states? Well, South Dakota made the top three among each surveyor: For Wallethub it was Florida, Colorado and South Dakota; Bankrate was South Dakota, Utah and Idaho; and Kiplinger’s list was topped by South Dakota, Hawaii and Georgia.

Worst states? New York and Maryland got double dings in the bottom-three grades: Wallethub (Kentucky, New Jersey, and Rhode Island); Bankrate (New York, New Mexico, and Maryland); and Kiplinger’s (New York, Massachusetts, and Maryland).

Here’s how the 50 states ranked in this trio of gradings for retirement quality, listed in alphabetical order …

State Wallethub Bankrate Kiplinger’s
Alabama 41 24 28
Alaska 30 36 42
Arizona 10 29 17
Arkansas 46 46 49
California 15 45 26
Colorado 2 17 11
Connecticut 34 35 20
Delaware 25 19 13
Florida 1 5 1
Georgia 37 37 45
Hawaii 42 11 5
Idaho 8 3 12
Illinois 31 44 46
Indiana 32 22 43
Iowa 4 16 9
Kansas 17 25 23
Kentucky 50 30 48
Louisiana 44 47 50
Maine 23 22 14
Maryland 38 48 41
Massachusetts 19 12 8
Michigan 29 14 21
Minnesota 11 28 19
Mississippi 47 10 36
Missouri 18 15 24
Montana 13 6 7
Nebraska 33 9 22
Nevada 16 42 38
New Hampshire 7 4 3
New Jersey 49 32 35
New Mexico 43 48 47
New York 40 50 40
N. Carolina 28 6 15
N. Dakota 24 20 27
Ohio 20 38 32
Oklahoma 36 40 44
Oregon 26 39 31
Pennsylvania 14 31 16
Rhode Island 48 34 34
S. Carolina 27 41 39
S. Dakota 3 1 2
Tennessee 35 21 30
Texas 22 17 29
Utah 9 2 6
Vermont 39 26 10
Virginia 5 13 4
Washington 21 43 33
W. Virginia 45 33 37
Wisconsin 12 26 25
Wyoming 6 8 18

Have you checked out Bubble Watch …

Bubble Watch: Are house hunters shying from newly built homes?

Bubble Watch: Is California’s anti-business vibe killing the state’s economy?

Bubble Watch: Home-equity loans back at pre-recession levels

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If pump prices take their seasonal tumble, will that save the gas tax?

If California gasoline prices tumbled before Election Day, would you change your mind about a ballot initiative that calls for the repeal of the state’s new gas tax?

Last November, the state upped the gasoline tax by 12 cents a gallon to help fund roadway repairs, improvements and other transportation projects. Let’s politely say the new tax wasn’t warmly greeted: Come November, Californian voters will decide on a proposition calling for the reversal of the tax.

But even without the new tax Californians would probably be cranky about gasoline these days. Pump prices have been on the rise for two years, largely due to rising crude oil prices. But I wonder if the historically predictable post-July Fourth decline in fuel prices will make a difference, voting-wise.

It’s odd to me that in a state where almost everyone complains about traffic, so many folks seemingly don’t want to pay for road improvements.

Well, at least pay through a higher gas tax.

Form the start, California’s new gasoline tax was on rocky ground. The state has long been one of the priciest places to buy gasoline — with already high taxes, a long-running refinery shortage, and environmental requirements to use pricer-but-cleaner formulas in the summer.

So, the new tax gave the opponents a great battle cry: Highest gas taxes in the nation — depending on who’s doing the ranking.

Also, implementation of the tax — one big levy – runs counter to how other states have increased gasoline taxes: in smaller increments spread out over several years.

Plus, explaining the spending plans for the tax revenue has been challenging. And how do you argue that the tax is only one part of why pump prices are up?

Global energy markets haven’t been kind to drivers or the tax hike’s proponents of late. A price rollercoaster in gasoline’s main ingredient — crude oil — has whipsawed what you paid at the pump.

During much of the economic recovery from the Great Recession, crude oil prices ran well above $80 a barrel. Beginning in 2014, a glut of oil hammered energy markets. As a result, crude oil prices plunged to well below $40 a barrel by 2016. Since then, a price reversal has put crude oil around $70 a barrel.

And to date, while California gasoline is priced well below 2012’s record peak, drivers started this summer paying the most in four years.

Not an outlier

Just so you know, California isn’t the only state raising gasoline taxes.

As 2018’s second half starts, drivers in seven states face just-raised taxes on fuel, according to the Institute on Taxation and Economic Policy.

In fact, 27 states nationwide have increased gasoline taxes in the past five years – with Missouri voters facing an Election Day choice to become No. 28 with a gas-tax hike on their November ballot.

The underlying rationale for these tax hikes — spanning both red and blue states – is a relatively recent realization that more funds are needed for transportation projects. So who’s upped gas-taxes, mid-2018?

Oklahoma: The first time in 31 years, the state’s gas tax rate rose — up 3 cents to 19 cents per gallon.

South Carolina: Up 2 cents as part of a 12-cent hike that will be slowly phased in.

Indiana: Up 1.8 cents, based on a formula tied to inflation and gasoline prices.

Maryland: Up 1.5 cents, based on a formula tied to inflation and gasoline prices.

Tennessee: Up 1 cent, part of a phased-in hike that will total 6 cents.

Vermont: Up 0.42 cents, based on gas prices.

Iowa: Up 0.2 cents for fuels that are not blended with ethanol.

Nebraska: Cut by 0.4 cents under a formula tied to fuel prices and infrastructure spending. (Note: its fuel taxes are 1 cent higher than last year.)

‘Tis the season

California gasoline prices may have hit their peak for the year.

I tossed 23 years worth of pump prices, statewide and nationally, into my trusty spreadsheet to remind myself of gasoline’s strong seasonal pricing trends: On average, fuel is cheapest in January, peaks in late spring, then begins an ascent that lasts the rest of the year.

Using a government index — tracking all grades of gas by the Energy Information Administration — I found California gasoline prices are typically most affordable shortly after the new year begins. The same is true nationally, even if drivers elsewhere pay less for fuel.

Why the relatively predictable ups and downs?

Well, the typical year starts with less travel following the holiday rush. So, demand for gas falls. Plus, many folks are watching pennies, post-New Year’s, after overly generous gift giving. Remember, gasoline use is economically cyclical, too.

Those wintertime gasoline bargains are short-lived, though.

History tells us California prices rise relatively slowly but continually through mid-May. Driving — that’s demand for gas — increases, then there’s the switch to cleaner-but-costlier summertime fuel mixtures. And household budgets are replenished after holiday bills get paid off.

Since 1995, statewide gas prices on average peaked in mid-May – 20 percent above the lows of early January. So this year’s 50-cents-a-gallon jump to $3.70 — January low to May peak — was actually a below-average upswing (just 16 percent).

But this isn’t just a California thing.

Nationally, January’s price bottom is followed by a slow increase in prices that runs to early June. But the national index grows only by 18 percent, on average, from the wintertime low to the springtime high. (And in 2018, low-to-high was a 15 percent increase to $2.92 a gallon.)

Of course, historic cyclicality also suggests prices will fall for the remainder of the year as the summertime driving peak ends and the gasoline sold reverts to a more traditional (and cheaper) mix.

Apply historical pricing patterns to California gas prices as of July 2, and you’ll see drivers paying 23 cents a gallon less by Halloween, just before Election Day. Then, they’d save another 23 cents a gallon by Christmas. So, my formula says $3.16 at year’s end — a total 15 percent drop.

Will that make a difference in how people vote on the repeal-the-gas-tax initiative?

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Bubble Watch: Is Southern California’s housing ‘shortage’ near its end?

“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: As the traditionally busy spring shopping season drew to a close, a decided market shift was underway: sellers seemed almost as anxious as buyers.

Source: ReportsOnHousing

Trend reported: As of June 28, homeowners in the four-county region covered by the Southern California News Group added 9,334 homes to the market so far this year vs. 2017’s 2,939 — a huge 218 percent jump. Yes, the rate of listing homes for sale has tripled!

Dissection: Southern California’s “shortage” of existing homes to buy seems to have reverted to at least a more “normal” state of supply.

I filled my trusty spreadsheet with data from ReportsOnHousing that tracks homebuying patterns found in real estate broker networks: supply (active listings); year-to-date increase in supply; demand (new escrows in past 30 days); and “market time” (a measure of selling speed of days it takes a typical listing to enter escrow).

A surge of new listing’s in the first half of 2018 meant house hunters had 2,402 more listings to consider as June ended than a year ago. That’s an increase of 8 percent, bringing mid-year supply to slightly above average levels in 2012.

ReportsOnHousing stats show a 10 percent decrease in sales contracts signed vs. a year ago. Not the direction you’d think sales would go if supply rose sharply. And house sellers are learning a tough lesson: by the “market time” metric, 2018’s sellers need 74 days to get a home from listing to escrow — up 12 days in a year vs a year ago and five days above the 2012-17 average.

Yes, today’s supply levels of existing homes are well below what was seen before housing’s bubble burst and during the Great Recession. But much of that was due to the insanity of the easy-lending era followed by the deep pain of the housing-led downturn.

And, yes, local homebuying’s pace is well above the ugly market bottoms. But house hunters’ current reluctance to swiftly gobble up this year’s new listings suggests, at a minimum, a noteworthy hiccup. I’m betting pricing is an issue — both from what an owner may think a home is worth to the price-cutting impact of pricier mortgages to a potential buyer’s budget.

Quotable: Steve Thomas of ReportsOnHousing writes, “The housing market feels a bit frigid in the higher end compared to the rest of the market. Recent headlines exclaim that the median sales price has reached a record level in Orange County, Los Angeles County, and all of Southern California. Article after article details the continued lack of supply, hot demand, and years of nonstop appreciation. How in the world can any local market be a buyer’s market? Technically, luxury housing favors buyers and it is anything but hot.”

Details: Bargains will still sell swiftly. But other properties will likely sit. And the more-listings-fewer-escrows trend is fairly widespread when you look at county-level data.

Los Angeles County

Supply: 12,757 listings, up 981 in a year or 8 percent. Year-to-date: Up 4,355 listings vs. average increases of 2,089 in 2013-2017.

Demand: 5,638 new escrows, down 636 in 12 months or 10 percent; and down 10 percent vs. previous six years.

Market time: 68 days vs. 56 a year earlier and an average 62 days in 2012-2017.

Orange County

Supply: 6,362 listings, up 426  in a year or 7 percent. Year-to-date: Up 2,655 listings vs. average increases of 1,822 in 2013-2017.

Demand: 2,604 new escrows, down 281 in 12 months or 10 percent; and down 11 percent vs. previous six years.

Market time: 73 days vs. 62 a year earlier and an average 64 days in 2012-2017.

Riverside County

Supply: 8,665 listings, up 615 in a year or 8 percent. Year-to-date: Up 1,034 listings vs. an average decline of 563 in 2013-2017.

Demand: 2,956 new escrows, down 301 in 12 months or 9 percent; and down 2 percent vs. previous six years.

Market time: 88 days vs. 74 a year earlier and an average 84 days in 2012-2017.

San Bernardino County

Supply: 5,264 listings, up 380 in a year or 8 percent. Year-to-date: Up 1,290 listings vs. average increases of 628 in 2013-2017.

Demand: 2,162 new escrows, down 215  in 12 months or 9 percent; but up 5 percent vs. previous six years.

Market time: 73 days vs. 62 a year earlier and an average 74 days in 2012-2017.

How bubbly? On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … this trend rates THREE BUBBLES … In recent years, real estate pros were telling anybody who’d listen that Southern California’s homebuying pace was modest and prices were on the rise because there weren’t enough options for potential buyers to ponder. Yet with homeowners finally listing homes back at roughly the post-recession average, where is all that pent-up demand?

Previously from Bubble Watch …

Bubble Watch: Are house hunters shying from newly built homes?

Bubble Watch: Is California’s anti-business vibe killing the state’s economy?

Bubble Watch: Home-equity loans back at pre-recession levels


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California ranked 3rd-most psychopathic state

Think your co-worker’s a little nuts? Maybe it’s because California is No. 3 for psychopathy!

The ranking craze comes to psychology. A new study by Ryan Murphy of Southern Methodist University ranked the collective mental health of the contiguous 48 U.S. states and the District of Columbia by psychopathy.

Psychopaths are the pushy folks who are heavy on dishonesty, manipulation, and risk-taking while lacking guilt, empathy, and attachment. And this trait — much debated in psychology circles as either a personality disorder or mental illness — is most prevalent in the District of Columbia. The report noted: “psychopaths are likely to be effective in the political sphere.”

Next in psychopathic density came Connecticut, California, New Jersey, and a New York-Wyoming tie. Lowest psychopathy? West Virginia, then Vermont, Tennessee, North Carolina, and New Mexico.

California’s laid-back vibe may not jibe with these results, but remember a “charm” of the psychopathic mind is convincing others of a positive image.

Now, other pundits can debate the social meaning of this scientific discovery — how crime and/or urbanization factor in. I’ll stick to the dollars and cents. Namely, how California’s economy — notably its workforce — may be shaped by psychopathy.

Apparently, certain work is very prone to having more psychopaths — perhaps due to skills required or the comfort of being with like minds. Demand for that kind of worker can bring more psychopaths to a region.

Let’s look at the Top 10 psychopathic-leaning jobs: CEO, lawyer, media, salesperson, surgeon, journalist, police officer, clergyperson, chef, and civil servant. How many of you are nodding your head and thinking “sounds about right” to yourself? (Yes, I noted my own craft in the list!)

Conversely, the report also listed professions where you’re least likely to find psychopathic habit. Primarily, people-pleasing trades or assistance work: care aide, nurse, therapist, craftsperson, beautician/stylist, charity worker, teacher, creative artist, doctor, and accountant.

So, I wondered how California fared with these jobs and what that says about the state’s workplace psyche. I tossed into my trusty spreadsheet some employment data — with my best match possible for the professional niches — for these on-the-job psychopathic extremes.

Ponder how California’s employment patterns compare with national norms. In the 10 heavily psychopathic-leaning jobs, California had 9 percent more workers than the usual. Meanwhile, the combined level of low-psychopathy jobs was roughly on par with U.S. averages.

When it comes to pay, my spreadsheet strongly hints the California psychopath is well-rewarded.

California’s psychopathic-leaning jobs had an average annual wage of $127,000 vs. $52,000 for those working in niches where the disorder was typically limited.

Look at six-figures professions. Five of the 10 heavily psychopathic-leaning jobs paid $100,000 or more annually — surgeon ($229,340); CEO ($222,950); lawyer ($168,200); media, defined by me as producers and directors ($118,830); and police officer ($100,090).

Just two from the list of low-psychopathy work paid above that threshold: doctor, defined by me as family and general practitioners ($196,180); and nurse ($102,700).

Even the lowest-paid of these psychopathic extremes favored those most likely to have the trait: Civil servants, defined by me as municipal clerks, got $47,270 vs. personal care aides earning $26,220.

You’ve probably heard that the gap between genius and madness can be small. In California, paychecks can’t seem to tell the difference.

ICYMI: In California, it’s not blue vs. red! Its homeowner vs. renter! (Even when it comes to Trump!) 

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California home prices called ‘rational’ when climate is factored in

Everyone knows a key reason you pay up for California housing is the impressive climate.

Chapman University researchers now have some math to prove it.

Veteran economist Jim Doti and some of his students set out to see how county-by-county home values looked when traditional metrics — median selling prices and income levels from 2016 — were mathematically meshed with unorthodox ones — a U.S. Department of Agriculture “natural amenities” score and the proximity to the Pacific Ocean.

As Doti noted, “Location. Location. Location.”

Chapman’s “amenities factor” revealed significant variations in housing’s “overvaluation” or “undervaluation” throughout the state. However, the statewide median valuation for the 39 large counties studied was 0.5 percent — a sign statewide housing is fairly priced.

“Prices may be high but they are rational,” Doti concluded.

Most overpriced was Santa Clara County, where Chapman’s amenities factor showed the typical home was priced 25 percent too high. Santa Barbara County was next, scored 22 percent too high. 

Looking for a bargain? Try Placer County where home values are 44 percent too low, the largest discount in the study. Humboldt County was next in undervaluation, 31 percent too low.

Here’s how key Southern California counties fared by this math: estimated value vs. median selling price; the gap in valuation; and ranking among 39 counties …

San Bernardino County: Its $267,901 valuation compared to a $243,007 median — meaning 10 percent undervalued. The four-county region’s best and No. 8 statewide.

Orange County: $710,219 valuation vs. $733,113 median — meaning 3 percent overvalued. Rank: No. 23.

Los Angeles County: $475,497 valuation vs. $493,739 median — or 4 percent overvalued. State rank: No. 25.

Riverside County: $319,213 valuation vs. $350,717 median –or 4 percent overvalued. State rank: No. 32.

Chapman’s latest forecast says the economic future for California looks bright — unless a trade war breaks out.

The forecast sees continued strong job growth through the rest of the year with construction and trade-related industries leading the way.

Housing construction should grow this year to the fastest pace since the Great Recession. It’s an “adequate” level of building, says Chapman economist Jim Doti, that should meet expected growth in jobs and population.

But that housing production won’t make much of a dent in pricing, Doti says. “Affordability is rearing its head in many issues.”

More worrisome is California’s status as the nation’s top state for international trade, with China and Mexico the top foreign business partners. Doti warns that if current frictions between the U.S. and its trading allies intensifies, “a trade war will hit California hard.”

Here’s a summary of Chapman’s forecast for 2018 vs. last year’s results for key economic variables …

New jobs: California, 384,000 vs. 2017’s 315,000. Nationwide, 2.20 million vs. 2017’s 2.3 million.

Job-growth rate: California, 2.3 percent vs. 2017’s 1.9 percent. Nationwide, 1.5 percent vs. 2017’s 1.6 percent.

Home-price gains: California, 7 percent vs. 2017’s 7 percent. Nationwide, 5.4 percent vs. 2017’s 6 percent.

Housing units permitted: California, 131,430 vs. 2017’s 113,384. Nationwide, 1,321,000 vs. 2017’s 1,208,300.

Looking further ahead, Doti offers some caution — even if the economy isn’t jolted by a surprise of geopolitical tensions. After eight years of economic upswing, odds are against much of a continuation.

Rising interest rates will dampen spending for consumers and corporations. New federal income tax rules will also dent California’s household budgets.

Plus, the traditional boost for California’s business climate and its tech hubs such as Silicon Valley has already cooled. And construction cannot grow much faster.

“There are more and more clouds on the horizon,” he says.

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