Monthly Archives: November 2012

California Economic Update, November 2012

The Department of Finance released its November 2012 Finance Bulletin which includes the following review of the latest economic indicators for California.

Home building gradually improved during the first half of 2012. Rising demand for homes, coupled with limited inventories of homes for sale, have driven existing home prices up in recent months.

Construction

  • In July, residential permits were issued at a seasonally adjusted annual rate of 60,533 units—an increase of nearly 83 percent from a year earlier. With a seasonally adjusted annual pace of 30,800 units, single-family permits were up 59 percent. In the more volatile multi-family sector, permitting slowed from June to a pace of 29,800 units, but was up over 117 percent from July 2011. 
  • New home permitting during the first seven months of 2012 was up over 16 percent from the same months of 2011, led by multi-family permitting. The pace of total new residential permitting during the three months ending with July increased over 31 percent from the same months of 2011.
  • After posting strong gains early in the year, the pace of nonresidential construction slowed significantly starting in April.  The pace of nonresidential permitting during the three months ending with July slowed nearly 24 percent from the same months of 2011. In July, the pace was down over 34 percent in from a year earlier.

Real Estate

  • Existing single-family home prices rose strongly in recent months, driven in part by a limited supply of homes for sale resulting in a restrained pace of sales. 
  • The median price of existing, single-family homes sold in September was $345,000, nearly a 20-percent increase from a year earlier. The median price of homes sold in the third quarter of 2012 rose 16 percent over the year.
  • Sales of existing, single-family detached homes totaled 484,240 units at a seasonally adjusted annualized rate in September, essentially the same pace posted a year earlier. The pace of sales during the first nine months of 2012 increased only 5.6 percent from the same months a year earlier.
  • Existing home inventories have fallen substantially. The California Association of Realtors’ unsold inventory index stood at 3.7 months in September, which was a 30-percent drop from the 5.3 months reached in September 2011. 
  • Similarly, the median number of days needed to sell a home dropped to 39.3 days, down almost 15 days from September 2011.
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Reaping the Rewards

The following is a recent article in the California Financial Times by your’s truly.

Many dynamic California companies are reaping substantial rewards for their leadership in high tech specialties, alternative energy innovation and in export-driven industries.  The Golden State has historically been a leader in developing and capitalizing on emerging technologies, from aerospace to computers and now, clean technologies and information services.  This specialization is particularly profitable when it is combined with the state’s role as a gateway to emerging economies, such as China, that are becoming richer and more urbanized.  As this development continues, demand will increase for electronics and software—think iPads and iTunes—that have become staples in our consumer economy.  Rising wealth is also normally accompanied by greater concern for the environment.  Environmental protection in another area where California’s past development and current expertise could pay big dividends.  Many leading California firms have been phenomenally successful at capitalizing on these trends, which should continue for years into the future.

The investing world already recognizes California’s potential.  In 2011, California scooped up more than half of the entire nation’s venture-backed invest­ment—for the fourth consecutive year.  National venture capital investment exceeded $28 billion in 2011, up 22 percent from 2010—the third highest amount in the past 10 years, according to the National Venture Capital Association.  California ventures received $14.5 billion, a 24 percent jump from 2010.  The Silicon Valley received the lion’s share, $11.6 billion—27 percent more than in 2010.

(To continue reading, go to page 12 here)

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