Friday, May 05, 2006

Cinco de Mayo

Following Monday's "Day Without Immigrants," which many feared would shut down the U.S. economy, with millions protesting the criminalization of illegals, Cinco de Mayo, a popular Mexican holiday, continues the nation's focus on the Hispanic culture within the U.S. On May 5, 1862, the Mexican army defeated French invaders at the Battle of Puebla. Since then Cinco de Mayo is one of our south-of-the-border neighbor's most important holidays celebrating the Mexican heritage.
According to the U.S. Census, there are about 25.9 million U.S. residents of Mexican origin in 2004. These residents constitute about 9 percent of the nation's total population. Of those, 16.6 million people of Mexican origin reside either in California (10.1million) or Texas (6.5 million). People of Mexican origin make up nearly one-third of the residents of these two states.
About 15.7 million people of Mexican descent were born in the United States, while approximately 10.3 million are foreign-born residents from Mexico. About 3-in-10 foreign-born people are from Mexico.
The Mexican population is younger (25.3 years) than the U.S. population as a whole (36.2 years.) and tends to have larger families (4.1 people) than all U.S. families (3.2.) Thirty-seven percent of households with a householder of Mexican origin consists of a married couple with children. For all U.S. households, 22 percent are married with children.
About 50 percent of those of Mexican origin own their homes. Those of Mexican heritage have a median household income of about $35,185, and about 23.6 percent live in poverty.
Nearly 69 percent of people of Mexican origin are in the labor force. Businesses owned by people of Mexican descent numbered about 698,314 in 2002; among these firms, 275,055 were in California and 234,732 in Texas. Sales receipts for firms owned by those of Mexican descent were about $96.5 billion in 2002.
About 1.1 million people of Mexican descent age 25 or higher have a bachelor's degree or higher education, while approximately 15 percent of people of Mexican heritage work in managerial, professional or related occupations. The value of trade goods with Mexico is only second to that of trade with Canada. About $290.2 billion was traded between Mexico and the U.S. in 2005.
Enjoy your weekend. Dos mas margaritas!

Thursday, May 04, 2006

Who is living where?

The town of Lincoln was responsible for 75 percent of Placer County’s growth this last year. According to the Department of Finance, that not surprisingly keeps track of who is where, Placer County was the fifth fastest-growing county in the state, finishing the year with a 2.6 percent increase in population or 316,508 people. Lincoln led the state as the fastest-growing city with a 22.6 percentage gain in population from 27,408 at the end of 2004 to 33,589 in December of 2005. Lincoln’s Community Development Department is estimating 1,500 to 1,700 more new homes will be built during 2006 down from 2,900 built in 2005.

Two Placer County cities lost residents. Colfax dropped a few people from 1,840 to 1,825 and Rocklin’s population declined 1 percent during the year to 50,920. Auburn remained nearly the same at 12,972. Loomis increase its population 2.3 percent to 1,825 and Roseville had a slight increase ending the year with 104,655 people.

Nevada County’s population topped 100,000 for the first time but the town of Grass Valley decreased 4 percent to 13,031.

El Dorado County increased in numbers from 173,511 to 176,204 but most of the yearly growth was either in El Dorado Hills or the more rural areas. Placerville and South Lake Tahoe experienced a loss of local residents.

Of the 478 California cities 357 gained population, 8 including Auburn experienced no change and 113 including Colfax and Rocklin lost population.

California County populations range from 1,241 people living in Alpine County to 10.2 million living in Los Angeles County. L.A. is the most populous county in the nation and has 27 percent of our state’s population. Only seven states have more people than does L.A., which is a good reason not to be there.

Wednesday, May 03, 2006

Economic Forecast

There have been no popping real estate bubbles this year. Housing has been having a soft landing according to economists at this year's NAHB Construction Forecast Conference last week in Washington, D.C.
All eyes are on housing because of fears that rising mortgage interest rates will slow housing so much it could impact the economy negatively. The economy is heating up with core inflation up 2 percent over last year in March. But rising interest rates have some economists expecting gross domestic product to slow down by 3.2 percent in the second quarter, largely due to an anticipated pullback in consumer spending.
According to a report of the conference on The National Association of Home Builders site, NAHB Chief Economist David Seiders believes that other industries will pick up the slack that housing is leaving. "It's pretty clear that the housing sector is in a period of transition," said Seiders.
Along with some other economists, Seiders believes that the Fed will raise short-term interest rates at its upcoming May 10th meeting, the 16th consecutive increase since June 2004, but that the raise should be enough to ease inflationary pressures.
Meanwhile, the NAHB predicts that new home sales will reach 1.13 million units, down 12 percent from 2005's record 1.28 million units, and that 2007 will see about 1.09 million homes sold. "Hopefully, most of this decline will be due to investors and speculators stepping out of the market," said Seiders. "What we don't want to see is investors dumping homes on the market." According to the National Association of Realtors, approximately one-third of homes sold in 2004 were to non-occupying owners and the percentage was higher in 2005.
In anticipation of fewer investors driving the market, home starts will slow this year to 1.59 million units and 1.48 million units in 2007. Correspondingly, home price appreciation will also slow from the 12 percent in 2005 to about 4 percent in 2007, with mortgage interest rates rising.
Expect mortgage interest rates to rise slowly through the end of 2006, but they'll still remain well below historical norms. Most families will be insulated against rising rates because 87 percent of existing loans are fixed-rate. The housing market will continue to correct, not crash and with a little luck, maybe only a few speculators will feel the houses landing on top of them.

Tuesday, May 02, 2006

Boomers

While working in my office on an offer/counter offer on a home in Garden Valley, Tom called. He had been previewing my web site and decided to call me to discuss his particular situation. Tom had just turned 60, he was retiring from his job in a few months and he and his wife wanted to move out of the Bay Area to a more rural setting. Tom had driven through Placerville a few times on his way to South Lake Tahoe and was seriously considering settling in the area after he sold his house in Freemont.

Tom like Bill Clinton and George W. Bush (both born in 1946) are among the front-runners of a large generational wave consisting of 70 million babies born between 1946 and 1964. Retiring Baby Boomers will have an impact on most every aspect of our economy including the county’s future housing values.

Tom’s story was familiar. Now that retirement was a reality he was seeking a more relaxed, less congested environment to spend the next chapter of his life. His story is a real life example of a migration taking place all over the country and confirmed by a report last week in a US Census Bureau study on domestic migration. The report tracks where people are leaving from and moving to between 2000 and 2004.

According to the study, more Californians are leaving the state than moving here. Each year nearly 100,000 more Californians moved out of state than moved in. This net out-migration is predominately from our larger metro regions such as Los Angeles, Santa Ana and Long Beach in the south and San Francisco/Oakland and Freemont region in the north. The yearly net out-migration of 61,000 people from the Bay Area has been increasing in recent years. So where are all these people going?

If Californians are moving out of state they are likely to end up in Arizona, Nevada and Washington. Riverside and San Bernardino Counties in the south have been gaining 75,000 in yearly net in-migration, while Sacramento, Placer and San Joaquin Counties have been the large recipients further north.

Many fleeing the big cities are seeking lower cost of housing. Affordable housing in our region has been attracting Bay Area homebuyers, investors and flippers for years. But many like Tom and millions of other retiring Baby Boomers are seeking a sanctuary of open space and woodland.

New consumer research, conducted by ProMatura Research and presented at the annual convention of the National Association of Home Builders in Orlando, provided some insight as to where Boomers want to live when they retire. On a golf course in a senior community didn’t even make the top ten list. The most popular vocational or environmental draws for boomers were “fresh water” and “green space”. Over 25 percent of likely movers over 55 told researchers they want to buy real estate “directly on”, or “with a view of”, or “near” fresh water such as lakes, rivers or ponds.” Nearly 12 percent want to buy real estate surrounded by “green space” such as “parklands”, “fields” or “trees” and 27 percent said they want to see “green space out their windows.” Do you know of anyplace close by meeting that description?

Over the past 150 years the value of real estate in the Sierra Foothills has been influenced by natural recourse extraction, agriculture and the availability of less expensive land within close proximity to major employment. Until very recently, open green space had not been assigned a value except by a few environmental groups. That thinking is changing. Many retiring Boomers, desiring to remain in California are seeking the inherent benefits that a rural country lifestyle has to offer. It’s not local employment that will attract well off boomers to pay premium prices for our real estate. It’s open green space. Our politicians and planners should focus on preserving the real value of county real estate before we lose it.