2014 July PASO Magazine

BUSINESS
Things are getting better all the time
By Bob Chute
“Things are improving...2014
will be better than 2013 and 2015
will be better yet with trends accelerating,”
stated Economist
Christopher Thornberg during a
rapid fire presentation outlining
trends nationally, statewide and
locally.
Thornberg is the
Founding Partner of
Beacon Economics,
LLC and widely considered
to be one of
Celebrating Our
20th Year in
Paso Robles!
Christopher
Thornberg
805.239.7443
1818 Spring Street Paso Robles
www.hfginsurance.net
Insurance Lic.
#0H00452
California’s leading
economists. He was
the keynote speaker
during the 2014 Central
Coast Economic
Forecast Mid Year Update held
at the Paso Robles Event Center
in early June, hosted by the Paso
Robles and Atascadero Chambers
of Commerce.
“Auto sales were over 17 million
in May, an excellent sign -
better than pre-recession levels
- and consumer spending was up
overall by 5% in April while disposable
income rose 2 to 2.5%
and people have the capacity to
borrow again.” The county’s job
growth increased by 1.3 percent
compared to 2013.
Home-ownership rates have
stabilized, mortgage lending is
starting to loosen while lending
is up 12% in banks, and we are
the second fastest job growth
state, and SLO County unemployment
is 6% lower compared
to the State figures.
“A major positive is the fact
the quality of the credit available
today is of zero concern,”
said Thornberg. “Compared to
the quantity of bad credit - giving
loans to those who couldn’t
afford them - when the bubble
burst. Today lending is top down,
with better credit risks being
funded and many others simply
paying cash.”
Wealth levels have grown to
new high levels, said Thornberg,
with consumer credit finally
starting to expand. Foreclosures
are down, from a high of
just over 120,000 statewide in
the first quarter of 2009 to less
than 20,000 in first quarter
2013.
Encouraging signs but ‘homes
for sale’ inventories are low and
consequently sales are slowed
and creating a tight housing
market. Existing homes sales in
2014 to date dropped 8.1% with
just 712 sold countywide.
“We have a construction paradox,
we need more move-up buyers.
It’s just not there yet because
they have no equity...it’s starting
to move up but the all cash offers,
while homes are still relatively
cheap, make it difficult for many
to find a home to move up to,”
said Thornberg.
The lack of housing is driving
prices back up, “that is becoming
our worst problem with the highest
home prices in the country.”
In SLO County Multi-Family
permits for year to date dropped
81.3% from 107 to 20 while
single family permits increased
31.1% county wide from 132 to
173. In Paso Robles there were no
multi family unit permits issued
with just 9 single-family permits,
down 57.1%.
“We need to allow ourselves
to grow,” said Thornberg, “We
need 800,000 new homes built in
Mark McConnell
805-674-0297
California to ease this crunch.”
The median price of single
family homes overall in San Luis
Obispo County is $476,206...
up 17.5% over last year. In
Paso Robles the median price
rose to $372,880, up 8.7% over
last year. The largest increase
in the county was in Arroyo
Grande, up 19.9% to a median
price of $569,224.
Thornberg predicts the median
county home price will continue
to increase over the next few
years...to $493,562 by the end of
2014, $531,217 by end of 2015
and $559,254 by end of 2016. He
expects consumers to continue to
spend on better income and he
sees unemployment dropping to
5.6% by the end of this year and
to 4.6 by the end of 2016.
“Great for the local economy
is that tourism and wine sales are
on fire,” said Thornberg. Wine
sales are up 11% in San Luis
Obispo County, more than Napa
or Sonoma, and hotel occupancy
up 6% in SLO County.
County crop values were up
overall by 11.5% in 2013.
The value of Regional Wine
Grapes in San Luis Obispo
County were up 11.3% (with production
up 10.1%); in Sonoma
and Marin the value was up just
3.8% (with production up 1.3%);
and the value in Napa
was flat comparing 2012
to 2013 with production
down 4.4%.
“California has plenty
of water in our reservoirs
and ground water,”
said Thornberg.
“The problem is the
allocation system - it’s
preposterous. We need to step
back and allocate differently
and evaluate. How can the
San Joaquin Valley be flooding
fields to grow rice and have no
meters defining the amount of
water they are using?” But locally
he felt it was concerning to put
a moratorium on anything, “You’ve
got to think what wine means for
the local economy.”
He sees long term concern in
the unfunded liabilities...social security,
medicare and medicaid. “In
1970 the average American was
assessed $2059 per year, in 2010
that had grown to $8700, by 2050
it’s expected to rise to $30,000 per
person per year...that is not sustainable.”
Other future issues to be
dealt with, according to Thornberg,
include: Bank credit is
still tight; Government spending
is constrained; Construction
activity has far to go to get
back to normal and the State
is short on affordable housing -
it needs CEQA reform; the
Healthcare crisis still needs to be
dealt with; and we still have to
deal with national/state entitlement
reform.
But, in conclusion he encouraged
everyone in attendance, “We
need to focus on what is important
- California offers the best
quality of life in the country.”
Heart to Heart Real Estate
Liz Lee Marziello
805-464-1007
Corp. Bre Lic #01932429
Giving to the
Cancer Support Community
50% OF OUR COMMISSIONS GO TO THE CHARITY
OR NONPROFIT OF OUR CLIENT’S CHOICE!
Pictured from left: Ashley Bartels,
Jimmy Ramirez, Liz Lee Marziello,
Christie Kelly, Mark McConnell
hearttoheartrealestate.com
hearttoheartrealestate@gmail.com
205 17th Street, Paso Robles
Mark & Liz
52 Paso Robles Magazine, July 2014