U.S. HOUSING WATCH -- March New Home Sales Down Again

The U.S. Census Bureau reported that U.S. sales of new single-family homes fell by -8.5% in March to 526,000 units (seasonally adjusted annual rate) after dropping by -5.3% in February.  Last month marked a new low in new home sales for this downturn.  Sales have dropped by -36.6% since March 2007 and were down by -62.1% from the peak sales pace (1,389,000 units sold) of July 2005.  Yecch!

About 468,000 new homes were available for sale at the end of March 2008, compared with an inventory of 548,000 unsold homes available a year earlier and with the peak level of 573,000 unsold homes in July 2006.  At March’s selling rate, the number of unsold new homes represented an 11.0 months’ supply, a new high.  This was up from 8.3 months’ supply available at the end of March 2007.  [FYI, there was only a 4.2 months’ supply of new homes available for sale in July 2005, the peak sales month.]

New home construction activity has been falling for 20 months now and won’t turn up until unsold inventories drop back to more normal levels.  However, new home sales have been plunging, which keeps available inventories (measured by months’ supply) elevated.  It looks like there’s still a way to go before a housing recovery can take place.   (Nancy D. Sidhu)

PR :  http://www.census.gov/const/newressales.pdf

California New Homebuilding Fell Off the Roof in March

The March report from the Construction Industry Research Board was pretty grim.  In Los Angeles County, the number of permits issued during the month was down by -69.1% over the year.  The three-month total was down by -43.4% to 3,173 units, with the weakness in both the single family sector (-55.8% through three months) and in multi-family units (-35.2%).  In Orange County, the March permit count was down by -88.2% over the year (March 2007 was fairly strong), while the three-month total was down by -42.6% to 1,162 units.  Again the weakness was in both the single family sector (-55.6% through three months) and multi-family units (-36.7%).

The March permit count in the Riverside-San Bernardino area was down by -72.8% over the year.  The three-month total for the area was off by -65.1% to 2,351 units, with the single-family sector lagging by -71.8%.  San Diego County’s March permit total was down by -83.7% over the year.  The three-month total was down by -63.6% to 926 units.  The multi-family sector was the weak link here, falling by -73.6%.  Rounding out this tale of woe, the number of housing permits issued in Ventura County was down by -82.1% over the year to March, while the three-month total trailed by “only” -37.7% to 404 units.  The single-family sector’s three-month total was off by -60.6%

In the 9-county Bay Area through March, 2,843 housing units were permitted, down by -34.1%.  Single family permits were down by -63.8%, but multi-family permits were up by 11.0% over the comparable 2007 period.  A big boost here came from San Francisco County, where multi-family construction in January-March soared by 130.3%.

This bad housing news is good news in a way.  Supply of new product has to fall, as there is a large inventory of resale homes on the market, and unfortunately a growing supply of REO units.  (Jack Kyser)

 

March Resale Housing Numbers Crummy as Well

The March report from the California Association of Realtors (CAR) was not good reading either.  Unit sales in the state were down by -24.5% over the year, while the median price declined by -29.0% to $413,980.  (The latter was down by
-30.7% from the recent high recorded in April 2007.) 

Unit sales of resale homes in Los Angeles County fell by -37.6% over the year to March, while the median price fell by -25.6% to $431,950.  (The latter was down by -29.9% from the high recorded in February 2007.)  In Orange County, unit sales dropped by -36.6%, while the median price fell by -16.3% over the year.  (The March median was -20.8% below the peak price recorded in April 2007.)

Unit sales in the Riverside-San Bernardino area were down by a modest -3.9%, while the median price fell by -29.8% to $276,630.  (The latter was down by -33.4% from the peak recorded in January 2007.)  San Diego County’s resale activity dropped by -29.9% over the year to March, while the median price declined by -26.1% to $447,500.  (The latter was down by -28.1% from the peak price recorded in May of 2006.)  Unit sales in Ventura County fell by -38.5% over the year, while the median price fell by -25.0% to $504,210.  (The latter was -29.1% below the peak price recorded in August 2006.)

To the north, unit sales in San Francisco Bay fell by -33.3% over the year to March, while the median price dropped by -10.2% to $704,580.  (The latter was down by -17.5% from the peak posted in May 2007.)  In San Jose, unit sales were off by -35.0%, while the median price eased by a modest -2.4%.  (The latter was off by -6.7% from the peak recorded in April 2007.)  (Jack Kyser)

PR:  http://car.org/

 

March Nonresidential Permit Values Not So Hot Either

The March nonresidential permit data from the Construction Industry Research Board were no great shakes either.  In Los Angeles County, the three-month permit valuation total for office was down by -54.9% over the year.  Retail was up by 17.0%, while industrial was up by 41.8% (over a weak 2007).  In Orange County, industrial was down by -45.2%, office was off by -89.7%, while the three-month total for retail lagged by -83.8%.

In Riverside County through three months, industrial permit values trailed by -2.1%, while retail was down by -18.9%.  However, office permit values were 7.5% ahead of the comparable 2007 period.  In San Bernardino County through 3 months, retail values were about flat (+0.1%), industrial was down by -44.3% and office was off by -59.6%.

The news through March from San Diego County was a tad better, with office permit values up by 19.6% while retail was 10.9% ahead.  However, industrial permit values were down by -75.9%.  In Ventura County through the first three months of 2008, office permits were down by -63.4% and retail was off by -54.3%.  No industrial permits have been issued in the County to date.

In the 9-county Bay Area through three months of 2008, permit values for retail buildings were down by -7.3%, but office was up by 21.0%, with big boosts in San Francisco and San Mateo counties.  Also, year-to-date industrial permits were up by 87.2%; the push here was a $75 million permit issued in Solano County back in January.  (Jack Kyser)

 

Los Angeles Area Office and Industrial Vacancy Rates Up in Q1

Grubb & Ellis Research Services released the office and industrial market vacancy rates for first quarter 2008.  The numbers were up across the board and reflected the gloomy economic environment and outlook for the region.

The office vacancy rate in Los Angeles County during the 1st quarter of 2008 was 10.0%, up slightly from the 4th quarter 2007 vacancy rate of 9.7% and from the comparable period a year ago of 9.5%.  This was the second quarter in a row that L.A. County’s office vacancy rate edged higher and the first time it was in double-digits since 2nd quarter 2006.  Orange County’s 1st quarter office vacancy rate shot up to 14.9% from12.5% the previous quarter and from 8.2% the same period a year ago.  This was not unexpected considering its heavy exposure to subprime lenders.  The Riverside-San Bernardino area reported a 14.6% office vacancy rate during the 1st quarter of 2008, up from 11.9% the previous quarter and from 7.3% the same period in 2007.  The Inland Empire also experienced job losses from mortgage- and real estate-related industries and in addition badly-timed completion of new office projects.

The industrial vacancy rate in Los Angeles County remained low at 1.6% during the 1st quarter of 2008.  This was just a tad higher from the 1.5% rate in the previous quarter and 1Q 2007.  Orange County’s 1st quarter 2008 industrial vacancy rate, though still low at 4.3%, was up from last quarter’s 4.0% vacancy rate and the comparable period a year ago of 3.5%.  The Riverside-San Bernardino area industrial vacancy rate moved higher to 6.5% in the 1st quarter 2008, up from 4.8% during the 4th quarter 2007 and from a 4.4% industrial vacancy rate in 1st quarter 2007.  Again, seemingly badly-timed products just popped out of the pipeline, resulting in the higher vacancy rate in the area.  (Candice Flor Hynek)

PR : http://grubb-ellis.com/research/reports.aspx

 

February Hotel Numbers for Southern California Holding Up

The February numbers from PKF Consulting indicated that Southern California’s hotel industry is holding up.  The occupancy rate in Los Angeles County was 78.7% compared with 79.9% last year.  However, operators were able to push up the average daily room rate (ADR) by 6.2% to $169.00.  Eight areas in the County had occupancy rates of 80% or better.  The pace was set by Downtown 2 (lower-priced hotels adjacent to the downtown core) at 84.9%; Santa Monica at 83.2%; and LAX at 83.2%.  The I-5 Corridor/Whittier area (a business market) came in with an 82.2% occupancy, but that was down from 85.5% in February 2007.  The highest ADR was again found in Beverly Hills, up by 7.4% to $437.03.

In Orange County, the February hotel occupancy rate was 71.4% compared with 74.0% last year.  However, the ADR rose by 6.3% to $155.93.  The highest occupancy during the month was found in Costa Mesa at 73.2%, while the highest ADR was Newport Beach’s $221.79, which was up by 11.9% over February last year.

The February hotel numbers for San Diego County were not as bright.  The occupancy rate was 74.0% compared with 78.2% last year.  The ADR declined by -3.1% to $165.83.  Only one area in the County had an occupancy rate over 80%, and that was Sports Arena/Old Town at 82.0%.  Also, “San Diego Bay Areas” pushed aside La Jolla for the honor of the highest ADR in February, coming in at $256.00, up by 8.2% over the year.  (Jack Kyser)

 

Southern California First Quarter 2007 Retail Sales Okay

At last, the 1st quarter 2007 retail sales data from the State Board of Equalization, and the numbers were interesting.  The state saw taxable retail sales rise by 2.7% over the year.  Setting the pace were apparel stores (+13.1% over the year) and service stations (+9.0%).  However, there were declines over the year in new car sales (-4.2%), building material (-1.9%), and home furnishings & appliances (-1.4%).

By area in the state, 1st quarter taxable retail sales in Los Angeles County were up by 3.3% over the year, while Orange County posted a 3.9% gain.  Riverside County saw sales move up by 1.6%, but San Bernardino County recorded a decline of -0.2% (sales here in the 4th quarter of 2006 had declined were also down over the year by –0.3%).

Taxable retail sales in San Diego County inched up by 0.2% during the 1st quarter of 2007, while Ventura County saw a 1.6% increase.  This was a welcome rebound as sales in the 3rd and 4th quarters of 2006 had declined over the previous year.  (Jack Kyser)

PR: http://www.boe.ca.gov/news/2008/22-08-C.pdf

Durable Goods Orders Mixed in March

New orders for durable manufactured goods edged down by -0.3% in March after declining by -0.9% in February and by -4.4% in January.  Excluding transportation, new orders for durable goods were up by 1.5% in March after falling by -2.1% in February. 

Order patterns experienced by the various sectors of durable manufacturing were mixed last month.  The “plus” column was led by orders for defense aircraft & parts, which surged by 29.4%.  Other sectors reporting respectable orders growth in March included machinery (with a 6.2% increase over the month) and nondefense aircraft & parts (up by +5.5%).  Manufacturers of computers & related products reported a gain-of +1.9% over the month, followed by fabricated metal products (+1.7%).  Lower orders were registered by only two sectors.  They were electrical equipment, appliances, & components (dropping by -6.6% over the month) and motor vehicles & parts (-4.6%).

Shipments of durable goods displayed similar trends during the first three months of 2008.  Total year-to-date shipments of durable goods rose by +1.5% for an overall increase of +$10.2 billion compared with the same period in 2007.  Defense aircraft & parts registered the most remarkable increase, an enormous 38.3% growth in deliveries worth about +$3.7 billion.  Four other sectors recorded moderately higher shipments year-to-date:  machinery (+10.5% or +$8.2 billion); primary metals (+7.4% or +$4.4 billion); nondefense aircraft & parts (+7.0% or +$1.7 billion); and computers & electronic products (+4.8% or +$4.6 billion).  Lower shipments were registered by just two sectors.  They were motor vehicles & parts (-10.6%, or -$12.6 billion below first quarter 2007); and “other durable goods” (-2.5% or -$2.6 billion).   (Nancy D. Sidhu)

PR :  http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf

 

Events of Interest

Thursday, May 8

2008 San Fernando Valley Economic Summit
7:30 a.m. - 1 p.m. at the Sheraton Universal Hotel.

Featuring National Economic Overview, Economic Trend & Opportunities, and Valley Economic & Real Estate Report.

Register: Wednesday, May 14

LAEDC International Trade Outlook
Breakfast & Networking: 8:00 a.m. - 8:30 a.m.  Program: 8:30 a.m. - 10:00 a.m. At Keesal, Young and Logan – Long Beach.

Foreign Direct Investment is a major contributor to LA County's economy. Join us to preview this special report on FDI along with the International Trade Outlook report highlights. For more information and sponsorship opportunities, please contact Eydie Galper (213) 236-4828 or e-mail: eydie.galper@laedc.org.