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e-Edge Newsletter v.19 n. 36 – Released September 1, 2015

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v.19 n. 36 – Released September 1, 2015

This Week’s Headlines:

California Home Sales and Median Prices in July

The California Association of Realtors recently released their report on California existing home sales and median prices in July. The statewide median price in July was $488,260, down by 0.3% from June but up by 5.4% from a year earlier. Despite sustained increases over the last two years, the statewide median is still $100,000 shy of the previous peak of $595,500 that was established in May 2007. By comparison, a separate release from the National Association of Realtors reported that the national median price in July was $234,000 (for all homes).

Statewide, the number of single-family homes that closed escrow in July increased by 12.7% over the year to 449,530 units (seasonally adjusted, annualized rate) and was up by 2.7% from June. Home sales in July reached their highest level since October 2012 and was the fourth straight month in which sales rose above 400,000 units.

With home prices continuing to rise and mortgage interest rates edging up ahead of the expected rate increase by the Federal Reserve, housing affordability is becoming more and more of a concern. The interest rate in July on a 30-year fixed-mortgage averaged 4.05%, up from 3.98% in June, and only slightly below the year ago rate of 4.13%. According to the CAR home affordability index, only 30% of California households could afford to purchase a median priced home during the second quarter of this year, down from 34% during the first quarter. The comparable number for the U.S. as a whole is 57%. Affordability peaked in California during this cycle at 56% in the second quarter of 2012. If demand continues to outstrip supply, especially in metro areas with strong job growth, declining affordability will become even more acute.

Below is a year-over-year summary of sales and price activity in Southern California by county. Although the statewide sales figures are seasonally adjusted, regional and county figures are not.

  • Los Angeles County: unit sales increased by 14.2% over the year in July, while the median price rose by 5.4% to $486,310.
  • Orange County: a jump in sales of 21.3% was accompanied by an increase in the median price of 3.9% to $722,170.
  • Riverside County: sales of existing homes rose by 14.4% and the median price increased by 5.8% to $338,510.
  • San Bernardino County: sales increased by 16.7% in July with the median price rising by 5.9% to $230,180.
  • San Diego County: unit sales climbed by 25.1% and the median price rose by 7.6% to $622,580.
  • Ventura County: sales were up by 23.3% over the year while the median price moved up by 6.3% to $622,580.

(Kimberly Ritter-Martinez)

Source: California Association of REALTORS

Consumer Spending Rises with Increase in Wage Income

Total personal income in the U.S. increased in July by 0.4% on a nominal basis for the fourth consecutive month. Wages and salaries rose by a robust 0.5%, (mainly because more people were working as opposed to earning higher wages). Total wages in goods producing industries were up by 0.7% over the month, while wages in services industries advanced by 0.5%. Services account for just over 67% of the total wage bill in the U.S. with the remainder about evenly split between goods producing industries and the public sector. Government transfers (social security, Medicare, Medicaid, unemployment insurance, veterans’ benefits) also increased by 0.5% in July.

Real disposable income (adjusted for taxes and inflation) increased by 0.4% while real personal consumption expenditures moved up by 0.2%. With incomes rising faster than spending, the saving rate increased to 4.9% in July from 4.7% in June. Spending on durable goods was up by 1.3%, while spending on nondurable goods and services both edged up by 0.1%.

On a year-to-year basis, incomes and spending moved higher in July:

  • Real disposable income growth accelerated in July, rising by 3.3% versus 3.0% in June;
  • Real personal consumption expenditures were up by 3.2%;
  • Growth in real spending on goods (3.9%) outpaced spending on services (2.8%) although in dollar terms, Americans spend more than two times as much on services as they do goods.

Consumer prices were little changed over the month in July, inching up by 0.1%. Over the year ending in July, consumer price inflation increased by just 0.3%. The current low inflation environment has helped support consumer spending in the absence of stronger hourly wage gains.

The outlook for consumer spending for the rest of the year is fairly optimistic. Supported by employment growth, solid gains in disposable income and low inflation, real consumer spending should increase by about 3.0% in the third and fourth quarters of this year. (Kimberly Ritter-Martinez)

Source: U.S. Bureau of Economic Analysis

Events of Interest

Save the Date!

Thursday, September 10, 2015: BLS Data User’s Conference

Location: 915 Wilshire Blvd., 9th Floor, Los Angeles

This conference will give BLS data users the opportunity to speak with BLS economists and learn more about the economic data series they produce. The sessions will provide an overview of BLS programs, how the data are collected, uses, trends, and how to access the data from the BLS web site. LAEDC chief economist, Dr. Robert Kleinhenz, will be a featured speaker on the U.S. and Los Angeles economy.

Wednesday, September 30, 2015: LAEDC Fall Economic Forecast

Location: Omni Los Angeles Downtown Hotel; 251 South Olive St., Los Angeles 90012

Join the LAEDC on September 30th, 2015 for our Fall Economic Forecast, featuring long-range analysis and the topic “From Boomers to Millennials: The Future of the Urban Environment”.

Tuesday, October 13, 2015: Southern California Visitor Outlook Conference

Location: Sheraton Los Angeles Downtown Hotel; 711 South Hope St., Los Angeles 90017

Please join us for the 27th Annual Southern California Visitor Industry Outlook Conference to be held at The Sheraton Los Angeles Downtown Hotel. Hear from noted experts, representing a range of travel sectors, offer their best assessment of the southern California economic situation and how it may affect your business.

All attendees receive an electronic link of PKF Consulting’s 2016 Lodging Forecast and will be able to enjoy a continental breakfast buffet before the conference begins.

Friday, October 30, 2015: 2015-16 South Bay Economic Forecast Conference

Location: California State University Dominguez Hills, Loker Student Union/Grand Ballroom, 1000 E. Victoria St., Carson 90747

The South Bay region has the second highest concentration of Fortune 500s in the State of California. As technology continues to rapidly evolve, how does that change the platform for the way companies conduct business in the South Bay region and what will it mean to your business? What is the next “big idea” in technology and how will that affect your industry?

The CSUDH South Bay Economic Forecast offers a focused look at the key economic drivers, employment trends, and the impacts and opportunities of a region in transition. Gain valuable insight and ideas about potentially lucrative industries in the South Bay region: aerospace, goods movement, creative industries, higher education, manufacturing, retail trade, healthcare, leisure and hospitality, real estate, digital media / entertainment, energy, and sports management.

Who Should Attend: Business Leaders in the community, civic leaders, small business owners, major corporations and South Bay residents.

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