California housing market remains buoyant
Lalaine C. Delmendo | January 10, 2020
California's economy grew by 2.6% in 2019. This was a slowdown from the prior year's 3.5% growth but outpaced nationwide GDP growth, which was 2.1% in the last quarter. California's economy will continue to outshine the nation's overall performance this year as employers boost payrolls, based on the latest UCLA Anderson School forecast.
“In spite of trade tensions between the United States and China, the economic news remains positive,” said Jerry Nickelsburg of UCLA Anderson School. “For example, the July county-wide unemployment rates from Marin to Santa Clara are below 2.2%; from Sonoma through the East Bay are below 2.7%; and in Southern California, Orange and San Diego counties are at 2.8%.” Unemployment California-wide fell to a new low of 3.9% in October, down from 4% in the previous month, and 4.1% a year earlier.
“To be sure, Los Angeles and the inland regions are not doing as well by this measure, but unemployment rates are falling there as well,” Nickelsburg added.
The median number of days it took to sell a California home fell to 24 days in October, from 26 days a year earlier. Existing single-family home sales were up 1.9% to a seasonally-adjusted annual rate of 404,240 units in October, according to the California Association of Realtors (CAR).
As a result, the statewide median price for existing family homes rose by a robust 5.8% to US$605,280 during the year to October 2019, based on figures from the California Association of Realtors (CAR). When adjusted for inflation, home prices increased by a modest 3.73% over the same period.
For condominiums and townhouses, the median price rose by a minuscule 0.7% y-o-y to US$473,400 in October 2019, actually declining by 1.3% in real terms.
In October 2019:
- Central Valley saw 7.8%medianhome price rises y-o-y to US$345,000
- Inland Empire saw 5.8% median home price rises y-o-y to US$380,000
- Los Angeles Metropolitan Area saw 5.6% median home price rises y-o-y to US$545,000
- Central Coast saw 0.8% median home price rises y-o-y to US$675,000
- San Francisco Bay Area saw 2% median home price falls y-o-y to US$940,000
California's economy is the largest in the United States, with a GDP of US$3 trillion in 2018. If it were its own nation, California would be the world's fifth largest economy, ahead of France, the UK, Italy, Brazil or Canada. The state has an incredibly diverse economy, with Hollywood, Silicon Valley, agriculture and manufacturing all making substantial economic contributions.
California's GDP per capita was US$58,619 last year, higher than the national level of US$50,577, according to the Bureau of Economic Analysis (BEA). The state's median household income has grown about 17% since 2011, higher than the 10% growth nationally, adjusted for inflation.
California is the most populated state in the US with more than 39 million people.
Statewide economic growth modest, unemployment at record lowCalifornia’s economy grew by a modest 2.6% in 2019 – a slowdown from the prior year’s 3.5% growth but outpaced nationwide GDP growth, which was 2.1% in the last quarter. California's economy will continue to outshine the nation’s overall performance this year as employers boost payrolls, based on the latest UCLA Anderson School forecast.
The US economy is projected to grow by 2.1% this year and by another 1.9% in 2021, following annual expansions of 2.3% in 2019, 2.9% in 2018 and 2.2% in 2017, according to California’s Department of Finance.
During the year-to-date, the state’s merchandise exports totaled US$129.1 billion, down 3.2% from a year earlier. Likewise, merchandise imports dropped 6.3% y-o-y to US$304.6 billion.
California’s labour market remains fundamentally strong, with the unemployment rate falling to a new record low of 3.9% in October 2019. It is now a full percentage point below the 2007 pre-recession low of 4.9%! About 23,600 nonfarm jobs were added in the state in October 2019, up 1.8% from a year earlier.
California’s minimum wage will increase to US$13 per hour in 2020. But the new minimum wage, which will take effect in January 1, applies only to large employers with 26 or more employees. This is the fourth consecutive year that the minimum wage was raised, as the state moves toward a goal of a US$15/hr minimum wage for large employers by 2022 and for all employers by 2023. Several municipalities in California have their own minimum wage that exceeds that of the state.