Inland Empire:

Region Leverages Housing Affordability and Job Creation in Late-Cycle Economy

Even as the broader economy moderates in 2020, the Inland Empire’s expansion is still on track to relatively outpace several other regions in the state as job creation and housing affordability remain important, unique local drivers of business and consumer activity.

That’s according to the most recent forecasts presented and published by Economics and Politics Inc., Chapman University, and Yardi Matrix. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Economics and Politics Inc.
Presented on Jan. 15 by Economist John Husing at the “2020 Business Benefactors Luncheon” for the San Antonio Hospital Foundation:

The Inland Empire’s economic growth will continue moderating in 2020 due to a lack of workers in certain hard-to-fill jobs and impacts from U.S. foreign trade policies with China. Although still a hotspot compared to the Southern California region surrounding it, the Inland Empire is feeling the late-cycle economic effects that the state and nation are going through. The region’s bright spot is still relatively cheaper land for construction builders, lower housing/mortgage and rent costs for households, and robust payroll job growth by local employers in nearly all occupational categories.

The Inland Empire will add at least 28,150 company payroll jobs (1.8 percent annual growth) in 2020 — lower than the past few years. Compare this to 2019, which saw the region add 32,700 jobs (2.2 percent annual employment growth). The unemployment rate, which averaged 4.2 percent in 2019, will average 4.3 percent in 2020 (nearly the same). About 9,550 new jobs created this year will be in low-paying sectors ($32,500 annual salary), with another 6,000 created in logistics/warehousing ($45,000 - $62,500 annual salary), 5,600 in high-paying jobs (more than $62,500 annual salary), 4,500 in health care (more than $62,500 annual salary), 2,500 in a combined mixture of finance/real estate/local school education ($45,000 - $62,499 annual salary), and zero jobs in construction and mining.

For households, the Inland Empire’s median household income continues to “feel higher” than that of nearby Los Angeles County after deducting the noticeably higher annual cost of housing in that county. This provides a strong point for the Inland Empire to leverage as it continues providing a commuter/bedroom culture that local workers and families can afford compared to coastal counties. The Inland Empire’s median household income “feels like” $65,500, in general, because of the higher mortgage and/or rental costs of living in Los Angeles County (median household income of $61,000). The respective median household incomes for other comparable counties with high-cost housing include Orange County ($79,100), Ventura County ($77,100), and San Diego County ($70,100).

View more Inland Empire economic, job, demographic, and business/industry trends: click here to see the slide presentation from this conference.

You can view even more trends in the Inland Empire Quarterly Economic Report: click here for trends in job-level strength, local sub-markets, employment hubs, average pay per job, housing-versus-job dynamics, employer breakdown, increasing sectors, declining sectors, and more.

Chapman University
Presented on Jan. 28 by economists from the A. Gary Anderson Center for Economic Research at the “2020 Inland Empire Economic Forecast,” hosted by ORCO Block and Hardscape:

The Inland Empire — while slowing down — is still at the forefront of economic growth and job creation compared to all other counties/areas in Southern California. A total of 36,000 jobs could be added to the Inland Empire’s employment base in 2020, continuing a “winning” streak of stellar, robust performance compared to other geographies in California. As housing costs plateau in many areas across California’s coasts and high-priced neighborhoods, annual home-price appreciation in the Inland Empire is slowing down (but still growing). The region still remains a magnet for growth in business activity, job creation, worker absorption, and household formation due to its relatively lower cost of living.

The Inland Empire’s housing market activity will actually press forward at a moderate pace in 2020 compared to 2019. Last year proved to be a “breather” for the market after consecutive yearly existing home price appreciation and new units (multi and single-family) entering the market in 2017 and 2018 at a much brisker pace than the 2014 – 2016 period. For 2020, the median price of a single-family existing home will probably shoot up 5 percent (landing at $394,000 by year’s end); existing home sales will most likely rise about 8 percent (to 67,700 transactions); and building permits for new units will jump 10 percent (to 14,700 after dipping to 13,400 in 2019).

View more Inland Empire economic, job, demographic, and business/industry trends (as well as those for California and the United States): click here to see the forecast report synopsis/highlights from this conference.

Yardi Matrix and Interface Conference Group
Presented on Jan. 23 by commercial real estate experts and other professionals at the “Annual Inland Empire Commercial Real Estate Conference,” hosted by France Media Inc.:

The Inland Empire suffers from same labor market issues as the state and nation, but in its own unique way due to the region’s industry base and worker demographic. It is difficult to find labor “at the right price, with the right skills, in the right city,” the forecast presentation states. In the United States, currently there is less than one unemployed person for every one job opening (representing a very tight labor market) — and the Inland Empire’s job market is a good local example of this trend. What doesn’t help is total housing production, which is “unlikely to catch up" to household formation anytime soon (since new jobs and a tight labor market feeds into continuing new household formation).

From a commercial and residential/rental real estate perspective, the Inland Empire benefits from being a lower cost alternative to expensive California markets such as Los Angeles and San Francisco. Strong employment growth continues to fuel healthy fundamentals and heightened levels of demand across commercial real estate sectors. However, despite a solid number of building completions in 2019, upcoming 2020 completions are expected to slow significantly. The Inland Empire continues to see rising commercial real estate rents and an overall occupancy around 96 percent in a combined marketplace (retail, office and industrial). Moreover, the office market is “thriving” and employment growth continues to create local demand. “Intellectual nodes” that help this trend include the worker/job environments in Ontario, Rancho Cucamonga, Redlands, and Riverside. What also is helping: public/private partnerships, communities and amenities that retain and draw talent, a business-friendly environment compared to other areas of California, and an increasingly educated workforce in relative comparison to the past.

Other highlights include: new commercial real estate “supply” will be added in the Moreno Valley and southwest Riverside County submarkets. Domestic migration into the Inland Empire has steadily increased over the past few years, with a decrease in immigration. Employment growth in the Inland Empire outpaced the national average, while wage growth is in line with the national average. Multifamily (apartment) rents are rising, primarily in the “renter by necessity” asset class; and occupancy for “renter by necessity” assets is outpacing the “lifestyle” assets by about 1 percent. Multifamily (apartment) completions are expected to hit 2,500 units in 2019 but will drop off significantly in 2020. Office fundamentals remain positive, with “class A” and “class A-plus” asking rates significantly higher than “B” and “C” assets. The Inland Empire has about 1.2 percent of office square footage under construction as a percentage of existing stock, and most of that new supply will be added to the Moreno Valley and southwest Riverside County submarkets.

View more Inland Empire commercial real estate trends: click here to see the forecast report synopsis/highlights from this conference.

Allen Matkins/UCLA Anderson Forecast
View the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey for trends and projections across all local California commercial real estate markets (office, industrial, retail, and multi-family apartments).

Local Home Affordability Vs. Job Growth
The National Association of Realtors recently released a study (“Home Affordability Index Ranking and Payroll Job Growth") showing trends in how local housing affordability can contribute to slower local job growth by employers. View the data table for local metropolitan information in California.

Local Migration and Population Change’s Impact
Within one of Harvard University Joint Center for Housing Studies' latest research endeavors — "Losing Residents but Still Growing” — you can understand how the components of population change differ by county, as well as exactly how each community is evolving and where people are drawn to when they move. As the county-by-county map shows, many large central metro counties are attracting numerous international migrants, while many nearby suburban areas (referred to as “large fringe metros”) are attracting sizable numbers of domestic migrants. Counties in many high-cost metropolitan areas are losing more domestic migrants than they are gaining. Indeed, of the 100 most populous US metros, four of the five with the highest rates of renter cost burdens also have negative domestic migration.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) has released its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more. For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

Inland Empire Occupational/Industry Trends
Additionally, download Chmura Economics and Analytics’ latest Inland Empire Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in California and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

Latest CA Population and Demographic Trends
The California Department of Finance has released its latest news — "State's Population Increases by 141,300 While Rate of Growth Continues to Decline" regarding 2018 to 2019 population growth, which includes highlights and snapshot trends of each county and region across the state. (You can also download the long-term 2010 to 2019 demographic tables by clicking here). Also, the department's deeper demographic breakdown (age, race, income, employment, poverty, health care, education, and social/housing characteristics) — courtesy of the American Community Survey by the U.S. Census Bureau — can be found by clicking here.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in California and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

Demographic Profile and Projections: Inland Empire*

  • Total population: 4.6 million (and will hit 5 million by 2025).
  • Working-age individuals (15 - 64 years old): 68 percent of total population in 2015 (and will fall to 64 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 2.06 million out of 3.5 million adult population.
  • Labor force participation rate (adults who “want” to work): 59 percent (or 2.06 million individuals).
  • Unemployment rate: 3.5 percent (versus 3.9 in CA and 3.5 in U.S.)
  • Unemployed workers: 73,300.
  • Median household income: $65,400 as of 2019 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 17 percent (versus 15 in CA and 13 in U.S.)
  • Education of population: 20 percent have a college degree; 33 percent some college; 26 percent high school diploma; and 21 percent no high school diploma.
  • Employment sector growth: click here for a local future growth breakdown (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance in the Ontario-San Bernardino-Riverside metropolitan region.
  • * Combined counties of San Bernardino and Riverside
  • ** Data as of January 2020 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

Pin It