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Matthew Fienup October 23, 2017

State of Ventura County’s Economy

This marks the first time that we can report that Ventura County has finally recovered its pre-

recession level of jobs. That’s an arresting fact given that we are now 10 years out from the

start of the Great Recession. The jobs that have been added since the Recession are not at all

like the jobs that were lost, and given population growth over the intervening time, the County

is still down in the level of jobs on a per capita basis. Yet, we still mark an important if symbolic

milestone.

That milestone is unfortunately overshadowed by a troubling decline in County GDP. The

Bureau of Economic Analysis indicates that Ventura County’s economy shrank by nearly 3

percent in 2016, led by a loss of nearly 1 billion dollars of output in non-durable manufacturing.

The 2016 figure is the BEA’s first estimate and will be revised 12 months from now, but we

believe that it is reasonable to conclude that Ventura County suffered a significant recession in

2016. Downward revisions to the growth estimates for the two previous years indicate that the

Ventura County economy saw nearly no growth in either 2014 or 2015.

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Together, 2014-2016 represent the slowest period of growth of any three consecutive years

since at least the early 90s. The past three years are worse even than the period that includes

the Financial Crisis and the Great Recession.

We trust local employers when they communicate what makes it difficult to conduct and grow

business in Ventura County. Amgen, the world’s largest independent biotechnology company

recently announced plans to pare its Thousand Oaks based workforce by nearly 10 percent. At

the same time, it is building a new, 136,000 square foot facility in Tampa, Florida. The reason

Amgen cited for moving from Ventura County to Tampa: “affordable cost of living and the

potential for growth.”

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Thousand Oaks and the surrounding county, where Amgen was founded, boasts the most

stringent urban containment policies in the nation. A series of eight City and one County land

use measures, known collectively as Save Open Space & Agricultural Resources (SOAR), require

voter approval of any expansion of urban areas—and residents have a decidedly one-sided

record of rejecting urban expansion. The promise made to the residents of the County,

including some 10,000 Amgen employees who then called the area home, was that growth

restrictions would ensure a singular quality of life that would attract other leading employers to

the area. That promise has proved hollow. People and businesses are voting with their feet

and leaving behind a wake of lost economic opportunity.

Ventura County’s net Domestic Migration was negative in 2016 for the fourteenth consecutive

year. The County’s accelerating out-migration is a reflection of what businesses and individuals

think about the economy that they are leaving behind. The mix of attitudes and policies related

to economic growth in other regions of the Country provide greater economic opportunity than

those in Ventura County.

The out migration, which is dominated by younger working-aged adults, along with the

demographic wave of retiring Baby Boomers, has led to declining labor force participation and

slowing population growth. Ventura County’s population grew just 0.28 percent in 2016, down

from 0.48 percent in 2015.

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Together, the County’s slowing population growth and declining labor force participation rate

have led to a shrinking labor force. 2016 marked the fourth consecutive year of declines in the

number of workers living in Ventura County.

As we noted last year, the County’s declining labor force is unprecedented for a non-

recessionary economy. And given that job growth is positive, the decline in labor force clearly

means that many of the jobs which are being created in Ventura County do not pay sufficiently

high wages that the employees occupying those new jobs can afford to live in the County.

Apparently, along with each new job comes a new commuter on the 101 Freeway. According to

the Census Bureau, more than 40,000 cross the County line each day driving into Ventura

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County, to work in mostly low wage jobs. That number is eclipsed by the 80,000 who leave the

County each day to find work in jobs that allow them to afford ownership in Ventura County’s

extremely supply-constrained housing market. This pattern of forced commuting works to

seriously undermine the County’s cherished identity as an environmentally friendly region.

Our earnest hope for the County is that the most recent GDP data and the announcement by

Amgen will serve as a wake up call. Ventura County’s decline is neither inevitable nor

irreversible, although returning to sustained economic growth would require fundamental

changes to policies such as SOAR. A critical first step is a concerted effort by the City

governments across Ventura County to aggressively court large incumbent employers seeking

input on the policies that would make retention and expansion of those businesses more likely.

Industries and Occupations

While Ventura County has finally recovered the number of pre-recession jobs, the jobs that

have been added do not resemble those that have been lost. Ten years out from the Great

Recession, Agriculture, Natural Resources & Mining, Construction, Non-Durable and Durable

Goods Manufacturing, Information & Technology, and Financial Activities are all down double

digits, with three of these sectors down 20 percent or more. The only two sectors with strong,

post-recession job growth are Leisure & Hospitality and Educational & Health Services, which

have grown 17 and 32 percent respectively.

California EDD data indicates that job growth was over the past 12 months has been

uncharacteristically strong. So much so, that we are forced to take the estimate of job gains

with a grain of salt. EDD reports that Ventura County added more than 10,000 jobs in the past

year, very close to 3 times the number of jobs created during the previous year. Suspiciously,

Non-durable Goods Manufacturing, Durable Goods Manufacturing, and Financial Activities are

reported to have added 900 jobs, collectively. This stands in stark contrast to other economic

data for these sectors. BEA estimates of real GDP growth indicate that Non-durable

Manufacturing declined by 2.43 percent in 2016 and Financial Activities declined by 0.43

percent. Even the numbers for typically strong sectors seem suspicious. Professional & Business

Services, Educational & Health Services, and Leisure & Hospitality are reported to have gained

nearly 8,000 jobs, more than doubling the previous year’s gains. The dissonance between

strong jobs data and all other economic indicators lead us to believe that the number of jobs

created in each of these sectors is likely to see significant downward revisions by the EDD next

March.

Whether the numbers of jobs are accurate or not, the latest jobs report provides evidence that

a trend which began during the darkest days of the Great Recession is continuing, if more

slowly. High-paying sectors of the Ventura County economy are in decline while low paying

sectors are continuing to rise.

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Compositional changes to the labor market have important implications when these changes

are connected back to the issue of housing affordability in Ventura County. Average salaries in

the very sectors which have experienced the strongest increases in jobs can not support a

lifestyle which includes home ownership within the County. The median single family home in

Ventura County is 11.1 times the average salary in Healthcare and Social Services, 15.8 times

the average salary in Educational Services and a staggering 27.4 times the average salary in

Accommodation & Food Services. This means that there are social costs to the compositional

changes taking place in Ventura County. The jobs being added since the recession often require

extraordinary accommodation on the part of the employee – for example, a lengthy commute

into the County from more affordable regions far away or packing a large number of individuals

into a single family dwelling in order to cobble together enough wages to cover the excessively

high rents.

Ventura County's Job Market

Changes During the Last Year Changes Since the Great Recession

not seasonally adjusted data Aug-17Aug 2016 to

Aug 2017Aug 2016 to

Aug 2017Oct 2007 to

Aug 2017Oct 2007 to

Aug 2017

Sectors Thousands Change-thousands Percent change Change-thousands Percent change

Agriculture 22.6 0.5 2.3 -3.0 -11.7

Natural Resources and Mining 0.8 0.0 0.0 -0.3 -27.3

Construction 15.8 0.9 6.0 -3.0 -16.0

Durable Goods Manufacturing 18.9 0.4 2.2 -4.7 -19.9

Non-Durable Goods Manufacturing 12.4 0.1 0.8 -1.4 -10.1

Wholesale Trade 13.5 0.4 3.1 0.5 3.8

Retail Trade 38.8 -0.7 -1.8 1.4 3.7

Transportation, Warehousing, & Utilities 6.2 0.1 1.6 0.0 0.0

Information & Technology 4.9 -0.3 -5.8 -0.8 -14.0

Financial Activities 17.9 0.4 2.3 -4.8 -21.1

Professional and Business Services 37.1 1.3 3.6 -0.6 -1.6

Educational and Health Services 48.2 4.9 11.3 15.0 45.2

Leisure and Hospitality 38.7 1.7 4.6 6.7 20.9

Personal, Repair, & Maintenance Services 9.9 0.3 3.1 -0.5 -4.8

Government 43.9 0.3 0.7 0.8 1.9

Federal Government 7.3 -0.3 -3.9 0.0 0.0

State Government 2.7 0.0 0.0 0.0 0.0

Local Government 33.9 0.6 1.8 0.8 2.4

Total All Industries 329.6 10.3 3.2 5.3 1.6

Source: CA Employment Development Department

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There is a tendency on the part of economists to try to use data to capture the social costs of

workforce composition changes during the housing crisis. However, true human stories provide

additional insights to the social, as well as economic, impacts of the crisis:

Marisa is a successful corporate business woman and a mother who lives in Ventura, California. Four years ago, her health-sciences company relocated out of state. Not wanting to dislocate her husband and two boys, Marisa searched far and wide for another job in her industry. She finally found one, in Orange County. For more than two years, Marisa made the brutal commute from Ventura to Irvine. She missed thousands of hours with her family. After two years, Marisa took a substantial pay cut to work for another company closer to home. This job is only one County away.

Teresa and her husband raised their family in a lovely home in Thousand Oaks, California. When their children finished college, they could not find jobs locally that paid well enough for them to buy a home or even to rent in this area. Their children now live in Michigan and Texas. Teresa and her husband earn frequent flyer miles but miss daily contact with their children and grandchildren.

The Montelongo family came to the US in search of greater opportunity. But that opportunity was largely restricted to low-wage jobs. For a time, the mother, father and children rented a four-bedroom home in Thousand Oaks, California with three other families. Each family was assigned one bedroom, and the common areas of the house were shared by all 16 residents. The strain on the Montelongo family was immense.

Ventura County: Industry Data2001 quarter 4 to 2016 quarter 4

Employment (Jobs) Average Salary -Annualized (thousands of dollars) Jobs Datanot seasonally adjusted data

2016 Q4 2001 Q4 2016 Q4 Change % Change

AGRICULTURE,FORESTRY,FISHING & HUNTING 24,646 21.3 34.1 12.7 59.7

MINING 929 52.7 89.1 36.4 69.1

UTILITIES 1,035 52.3 113.2 60.9 116.4

CONSTRUCTION 14,309 37.7 60.8 23.1 61.2

MANUFACTURING-DURABLE 18,622 59.3 76.7 17.4 29.4

MANUFACTURING-NONDURABLE 11,761 90.1 105.6 15.6 17.3

WHOLESALE TRADE 12,810 46.6 83.6 37.0 79.5

RETAIL TRADE 41,233 26.0 31.8 5.9 22.5

TRANSPORTATION & WAREHOUSING 4,829 33.6 48.8 15.3 45.5

INFORMATION 5,192 57.0 71.7 14.7 25.9

FINANCE & INSURANCE 13,149 53.2 84.2 30.9 58.1

REAL ESTATE & RENTAL & LEASING 4,263 34.5 60.0 25.5 74.0

PROFESSIONAL, SCIENTIFIC, & TECHNICAL SERVICES 16,156 58.3 88.2 29.9 51.2

MANAGEMENT OF COMPANIES AND ENTERPRISES 1,993 40.9 97.1 56.1 137.1

ADMIN & SUPPORT & WASTE MGMT & REMEDIATION 17,498 25.9 44.4 18.5 71.4

EDUCATIONAL SERVICES 5,196 26.0 35.7 9.7 37.1

HEALTH CARE & SOCIAL ASSISTANCE 36,683 41.0 50.8 9.8 24.0

ARTS, ENTERTAINMENT, & RECREATION 5,294 24.4 32.8 8.4 34.4

ACCOMMODATION & FOOD SERVICES 30,604 14.1 20.6 6.5 45.8

PERSONAL, REPAIR, AND MAINTENANCE SERVICES 8,183 21.9 32.9 11.0 50.6

NON-CLASSIFIED 1,591 54.3 64.3 9.9 18.3

FEDERAL GOVT 7,277 56.8 93.5 36.7 64.6

STATE GOVT 2,032 39.6 59.5 20.0 50.5

LOCAL GOVT 35,528 43.0 58.2 15.3 35.5

ALL INDUSTRIES, TOTAL NUMBER OF JOBS 320,813

AVERAGE SALARY, ALL INDUSTRIES 40.4 54.3 13.9 34.5

MEDIAN SALARY, ALL INDUSTRIES 41.0 60.4 19.4 47.4

Source: California Employment Development Department (QCEW data program)

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Demographics and Education

Population growth which has been declining in Ventura County since the early Sixties, seems to

be plumbing a new bottom.

Several factors have conspired to push population growth down to very near zero. Ventura

County’s population grew just 0.28 percent in 2016. With births declining every year since the

Great Recession and nearing a low not seen since the early 70s and with deaths increasing as

part of a decades long trend, the natural increase in population (births minus deaths) has

declined by more than 40 percent since 2007. Net domestic out-migration has increased as

individuals and households flee the County in search of greater opportunity elsewhere. This

domestic out-migration has nearly overwhelmed the natural increase in population. With

younger, working age adults representing a disproportionate share of those leaving the County,

net out migration may explain some of the decline in births.

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Meanwhile, although it has been increasing modestly from a low in 2013, international

migration to Ventura County is still very low relative to average from 2000 to 2010. As a result,

total migration has been negative on average for the past decade and negative for each of the

past two years. Net total migration actually declined significantly between 2015 and 2016.

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When we consider the contribution of these migration patterns, we are left to wonder if

Ventura County will see negative population growth in the near future.

The demographic wave which is building across the United States, as baby boomers enter their

retirement years, is building even more rapidly in Ventura County. For a long time, the

percentage of the population that is over the age of 65 has been lower in California than in the

United States. As of 2000, that share was even lower in Ventura County than it was in

California. Yet since 2000, the percentage of people over age 65 has increased 4.4 percent in

Ventura County while it has only increased by 3 percent in California and 2.8 percent in the

United States. There is no reason to think that this pattern will not continue.

With all of the compositional changes to Ventura County’s labor force, with the overall size of

the labor force declining and net migration that is negative and accelerating, it seems that the

County may be destined (doomed?) to become little more than a retirement enclave for the

wealthy. Considering the abundance of open space and the magnificent views across orchards

and row crops, it may indeed become a prized retirement enclave.

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The dark side will be a very high level of income inequality, whereby low wage employees in the

consumption economy that remains are simply priced out. Even more so than today, the

County’s labor force will be required to combine multiple families into a single residence or to

commute into the County over increasingly great distances. We suspect that the labor force will

become more transient, with individuals remaining for several years before joining the

thousands before them who have fled the County in search of the upward economic

opportunity that is desperately lacking here.

We worry about the bi-modal economy that this represents—an economy of haves and have-

nots, one in which the quality of life for which the County is famous is only enjoyed by an elite

who can afford the high cost of admission. We do not see how this growing trend can occur

without serious consequences in the form of strained communities and general social discord.

In contrast to the demographic patterns just discussed, data on Educational Attainment in

Ventura County seems to compare favorably to other geographies. Ventura County’s High

School graduation rate, while lower than that of the United States, is higher than California’s.

The share of the population with a bachelor’s degree is higher than both California and the

United States. The trend over time however is not as favorable. Since 2005, the increase in the

percentage of individuals with a High School diploma increased 3.4 percent nationwide. In that

same time, the percentage with a High School diploma increased only 1.1 percent in Ventura

County. Since 2005, the percentage of individuals with at least a Bachelor’s degree has

increased 4.1 percent. Ventura County saw an increase of only 3.8 percent.

One of the dominant stories with regard to Ventura County’s educational attainment is that the

County continues to increase the number of individuals with college degrees in other

geographies. Each year, the County produces significantly more college graduates than jobs for

college graduates. Recent college graduates are very likely to be counted among those leaving

the County each year in search of opportunity somewhere else.

Educational Attainment

Education Attainment in Persons >25 Years

HS Diploma BA or Higher HS Diploma BA or Higher HS Diploma BA or Higher

2005 84.1% 27.2% 80.1% 29.5% 83.0% 29.8%

2010 85.6% 28.2% 80.7% 30.1% 82.1% 30.8%

2015 87.1% 30.6% 82.2% 32.3% 82.9% 32.7%

2016 87.5% 31.3% 82.4% 32.9% 84.1% 33.6%

Source: U.S. Bureau of Census (ACS 1-year estimates)

United States California Ventura County

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Incomes and Poverty

On average, Ventura County residents enjoy higher incomes than those of the United States or

California. Forty percent of Ventura County households have incomes greater than 100,000

dollars, compared to 34 percent for the State and only 26 percent for the Nation. Both average

and median household incomes in Ventura County are well above those of the United States

and California:

Educational Attainment Detail 2016

United States % California % Ventura County %

Estimated Pop Age 25+ by Edu. Attainment 218,475,480 26,304,241 567,552

1st grade 135,116 0.1 39,552 0.2 826 0.1

2nd grade 292,082 0.1 90,988 0.3 1,553 0.3

3rd grade 628,916 0.3 188,502 0.7 5,742 1.0

4th grade 485,079 0.2 111,805 0.4 2,221 0.4

5th grade 665,306 0.3 152,054 0.6 1,524 0.3

6th grade 2,626,021 1.2 790,582 3.0 25,504 4.5

7th grade 905,180 0.4 127,174 0.5 2,149 0.4

8th grade 2,716,859 1.2 321,562 1.2 4,060 0.7

9th grade 3,427,397 1.6 518,830 2.0 9,292 1.6

10th grade 3,962,231 1.8 369,905 1.4 6,236 1.1

11th grade 4,422,906 2.0 491,513 1.9 8,666 1.5

12th grade, no diploma 3,906,796 1.8 682,268 2.6 11,742 2.1

Regular high school diploma 50,697,695 23.2 4,784,486 18.2 94,274 16.6

GED or alternative credential 8,676,085 4.0 606,449 2.3 10,946 1.9

Some college, less than 1 year 13,458,846 6.2 1,494,632 5.7 35,503 6.3

Some college, 1 or more years, no degree 31,636,502 14.5 4,107,766 15.6 94,078 16.6

Associate's degree 18,259,841 8.4 2,031,775 7.7 52,014 9.2

Bachelor's degree 42,242,395 19.3 5,426,164 20.6 115,645 20.4

Master's degree 18,585,803 8.5 2,203,376 8.4 49,609 8.7

Professional school degree 4,534,707 2.1 622,302 2.4 14,557 2.6

Doctorate degree 2,971,372 1.4 408,628 1.6 10,618 1.9

Hispanic/Latino 32,331,742 8,703,787 205,075

Less than 9th grade 6,255,679 19.3 1,995,304 22.9 51,010 24.9

9th to 12th grade, no diploma 4,377,162 13.5 1,256,224 14.4 25,201 12.3

Regular high school diploma 7,666,005 23.7 2,010,677 23.1 43,903 21.4

GED or alternative credential 1,320,565 4.1 246,556 2.8 4,924 2.4

Some college, no degree 5,708,764 17.7 1,633,774 18.8 39,144 19.1

Associate's degree 2,041,816 6.3 503,809 5.8 14,692 7.2

Bachelor's degree 3,385,826 10.5 751,327 8.6 18,956 9.2

Graduate or professional degree 1,575,925 4.9 306,116 3.5 7,245 3.5

Source: U.S. Bureau of Census (ACS 1-year estimates)

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Ventura County’s higher incomes are accompanied by lower rates of poverty than either the

United States or California.

In addition, Ventura County’s poverty rate has declined more than that of either the United

States or California. While the United States’ 2016 poverty rate remained 0.7 percentage

points above its 2005 level, and California’s 2016 poverty rate remained 1.0 percentage points

above its 2005 level, Ventura County’s rate was 0.4 below its 2005 level:

Income and Income Distribution 2016

United States % California % Ventura County %

Estimated Households by HH Income 118,860,065 12,944,178 268,091

Income < $10,000 7,963,784 6.7 699,927 5.4 8,735 3.3 Income $10,000 - $14,999 5,699,549 4.8 584,989 4.5 7,049 2.6 Income $15,000 - $19,999 5,615,371 4.7 526,006 4.1 9,563 3.6 Income $20,000 - $24,999 5,928,371 5.0 581,059 4.5 9,970 3.7 Income $25,000 - $29,999 5,501,898 4.6 495,728 3.8 9,741 3.6 Income $30,000 - $34,999 5,777,895 4.9 539,507 4.2 8,951 3.3 Income $35,000 - $39,999 5,338,202 4.5 498,105 3.8 8,795 3.3 Income $40,000 - $44,999 5,380,237 4.5 515,009 4.0 10,074 3.8 Income $45,000 - $49,999 4,734,622 4.0 457,955 3.5 7,957 3.0 Income $50,000 - $59,999 9,209,026 7.7 890,403 6.9 18,521 6.9 Income $60,000 - $74,999 11,850,363 10.0 1,219,707 9.4 26,709 10.0 Income $75,000 - $99,999 14,672,995 12.3 1,574,447 12.2 33,990 12.7 Income $100,000 - $124,999 10,312,781 8.7 1,228,401 9.5 33,740 12.6 Income $125,000 - $149,999 6,355,018 5.3 805,397 6.2 18,636 7.0 Income $150,000 - $199,999 6,924,913 5.8 1,019,268 7.9 25,183 9.4 Income $200,000 + 7,595,040 6.4 1,308,270 10.1 30,477 11.4

Estimated Average Household Income $81,346 $96,961 $105,609

Estimated Median Household Income $57,617 $67,739 $80,135

Source: US Census Bureau, 2016 ACS 1-year Estimates

Poverty and Income, 2016

United States California Ventura County

Poverty

People of All Ages in Poverty 14.0% 14.3% 9.5%

Median Household income 57,617 67,739 80,135

Per Capita Income 31,128 33,389 35,298

Source: U.S. Bureau of Census (2016 ACS 1-year estimates)

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Whether using traditional measures or a cost of housing adjustment, Ventura County’s poverty

rate is low. We do not believe that this should be interpreted to mean that Ventura County

offers abundant economic opportunity that has lifted the poor out of poverty. Rather Ventura

County is a very expensive place to be poor, and our belief is that many poor individuals and

families have left the county for lower cost and more generous communities. Many of the

working poor are actually residents of Los Angeles County who commute into Ventura County

to work in the growing, low wage service sectors. The fact that Ventura County’s labor force is

shrinking, at the same time that thousands of jobs are being created, provides evidence to

support this hypothesis.

Growth rates in homeless populations also bare this out. According to an annual survey by the

Ventura County Continuum of Care Alliance, the number of homeless people in Ventura County

has declined by 35 percent over the past five years. By comparison, according to a survey by the

Los Angeles Homeless Services Authority, the number of homeless in Los Angeles County

increased 30 percent in just the last two years. Surveys of homeless populations are notoriously

difficult to conduct, so we take the actual raw numbers with a grain of salt; however, the

opposing signs on each County’s homeless population growth rate is meaningful.

More evidence of the lack of upward economic opportunity in Ventura County comes from the

Brookings Institution. According to Brookings’ Metro Monitor, of the 100 largest metropolitan

areas in the United States, Oxnard/Ventura/Thousand Oaks ranked number 90 for economic

growth since 2010—only 10 metro areas suffered slower economic growth. Thousand Oaks and

the surrounding metro area ranked number 82 for economic inclusion, a measure of whether

economic opportunity and prosperity are widely shared by residents living at various income

levels within an area. Only 18 of the 100 largest metropolitan areas exhibited greater economic

inequality than Ventura County.

Poverty and Income

Education Attainment in Persons >25 Years

People of All

Ages in

Poverty

Median

Household

income

Per Capita

Income

People of All

Ages in

Poverty

Median

Household

income

Per Capita

Income

People of All

Ages in

Poverty

Median

Household

income

Per Capita

Income

2005 13.3% 46,242 25,035 13.3% 53,629 26,800 9.9% 66,859 29,634

2010 15.3% 52,250 26,059 15.8% 57,708 27,353 10.7% 71,864 31,135

2015 14.7% 55,775 29,979 15.3% 64,500 31,587 9.6% 80,032 34,226

2016 14.0% 57,617 31,128 14.3% 67,739 33,389 9.5% 80,135 35,298

Source: U.S. Bureau of Census (ACS 1-year estimates)

United States California Ventura County

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Housing Markets

New Building Activity

Ventura County 2016 home building activity has risen in a surprising fashion compared with

2015 and every other year since the Great Recession. This is a welcome boost in activity in a

county that is nationally known as difficult to develop real estate. The county’s non-residential

building activity level was also respectably good compared with the post-recession era.

Despite the fact that real estate development has a large multiplier effect, Ventura County’s

economy suffered a contraction in overall economic activity in 2016. The 2016 contraction is

unprecedented in that it is out of cycle and is extensively discussed elsewhere in this report.

Despite a boost from real estate, the county’s economy contracted.

Looking forward, we are aware of at least 4,000 units that should come online in the next few

years or so. Given how long these things can take, it might be quite a bit longer than a few

years. While these projects are very welcome, we do not expect they will change the

fundamentals of the county’s real estate markets. Or its economy.

The medium to long-term fundamentals of Ventura County’s housing markets include relatively

restricted real estate development, the exodus of private enterprise, the hollowing-out of the

middle class, and supply-restricted support for property values.

Home Prices, Sales, and Foreclosures

Prices and sales for housing have followed along in a manner very similar to previous years.

Sales rates tend to be modest, influenced by tight supply and slow economic growth.

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Inventories are low, very low for modestly priced single-family homes. Homes in decent

neighborhoods that are priced in the $300s to $500s, even the $600s, earn multiple offers and

rarely sell under asking price.

Prices continue to rise. The August 2017 median Ventura County price for existing single-family

homes is $565,000, which is a recent high eclipsed only by the bubble years of 2005 and 2006.

The median new home price reached $770,500 in July of 2017, a recent high that almost

exceeded the bubble years in real dollars. For the median to be this high, there have to be a

significant number of over $1 million dollar sales that offset the more affordable home sales.

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Notices of default have continued to decline and foreclosures have leveled off thus far in 2017.

This clearly welcome feature of the County’s market is influenced quite a bit by the ongoing

rises in property values.

As a result of property value growth that exceeds income growth, housing affordability is low

relative to the nation and many other communities in the state. The county’s affordability rate

was 31 percent a year ago and has subsided to 27 percent in the most recent data. Our 27

percent affordability rate compares to 57 percent for the nation, a massive divide that cannot

and should not be ignored.

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Housing Affordability: 2017 Quarter 2

The percent of first time home buyers who can afford the Median-priced home

Type Affordability (%) Median Home Price

Major Regions

United States † single-family 57 $232,100

California single-family 29 $553,260

California condo 38 $443,400

Los Angeles Metro Area single-family 31 $491,250

Inland Empire single-family 43 $342,050

San Francisco Bay Area single-family 21 $895,000Bay Area Communities

Alameda single-family 19 $880,000

Contra Costa single-family 31 $655,000

Marin single-family 17 $1,302,500

Napa single-family 25 $683,000

San Fransisco single-family 12 $1,450,000

San Mateo single-family 14 $1,469,000

Santa Clara single-family 17 $1,183,440

Solano single-family 44 $412,000

Sonoma single-family 25 $625,000Southern California Communities

Los Angeles single-family 28 $514,220

Orange single-family 21 $788,000

Riverside single-family 39 $380,000

San Bernardino single-family 51 $269,640

San Diego single-family 26 $605,000

Ventura single-family 27 $635,000Coastal Communities

Monterey single-family 21 $603,000

San Luis Obispo single-family 26 $565,000

Santa Barbara single-family 16 $750,000

Santa Cruz single-family 17 $850,000Central Valley Communities

Fresno single-family 47 $250,000

Kern single-family 54 $232,500

Kings single-family 52 $225,000

Madera single-family 44 $259,900

Merced single-family 48 $248,000

Placer single-family 43 $465,000

Sacramento single-family 45 $340,000

San Joaquin single-family 43 $336,940

Stanislaus single-family 47 $288,500

Tulare single-family 52 $220,000

Source: California Association of Realtors. † 2017 Q1

Page 19 of 24

Apartment market rents are high as well, with small unit market rates well over $2.5 dollars per

square foot, and with the average 2-bedroom apartment renting for almost $2,000 per month.

Rents rose by 12.3 percent for all units from January 2015 to January 2017.

To get a sense of how the stock of available homes compares to the County’s population, we

created the table below, which provides measures of housing stock as a percent share of the

population. Ventura County has a substantially smaller number of housing units relative to its

population, compared against the United States. This helps us understand the dynamics of

Ventura County, where housing is limited. Workers are voting with their feet and moving to

other parts of the U.S. where housing is more affordable and job creation is relatively rapid.

Unit # of Units Average

Type in Survey Floor Area Lowest Highest Average Lowest Highest Average

Total Properties Surveyed: 186 Studio 722 493 sq ft $795 $1,676 $1,288 $1.50 $3.41 $2.64

Minimum Property Size: 3 Units 1 Bedroom 8,485 710 sq ft $550 $2,895 $1,597 $1.07 $3.79 $2.27

Maximum Property Size: 608 Units 2 Bedroom 10,678 982 sq ft $850 $3,902 $1,953 $0.92 $3.68 $2.00

Average Property Age: 40 Years 3 Bedroom 1,488 1,241 sq ft $1,100 $4,240 $2,425 $1.10 $3.10 $1.96

Weighted Average Vacancy Rate: 2.66% Overall 21,373 875 sq ft $550 $4,240 $1,822 $0.92 $3.79 $2.13

Monthly Rent in $ per Sq. Ft.

Current Data for January 2017 - Combined County of Ventura Market Areas

General Survey Data

Market Area andMonthly Rent in $

Unit

Type Jan-15 % ± to Jul-15 % ± to Jan-16 % ± to Jul-16 % ± to Jan-17 Jan-15 % ± to Jul-15 % ± to Jan-16 % ± to Jul-16 % ± to Jan-17

Studio $1,167 5.0% $1,225 2.0% $1,250 3.3% $1,291 -0.3% $1,288 $2.37 5.5% $2.50 2.4% $2.56 3.2% $2.65 -0.3% $2.64

1 Bedroom $1,439 5.9% $1,524 1.7% $1,550 1.2% $1,569 1.8% $1,597 $2.05 5.8% $2.16 2.0% $2.21 1.5% $2.24 1.3% $2.27

2 Bedroom $1,725 5.3% $1,817 3.4% $1,878 2.0% $1,917 1.9% $1,953 $1.78 5.0% $1.87 3.6% $1.93 1.7% $1.97 1.6% $2.00

3 Bedroom $2,139 6.1% $2,269 1.7% $2,307 2.4% $2,364 2.6% $2,425 $1.73 6.2% $1.84 1.9% $1.87 2.5% $1.92 1.9% $1.96

Overall $1,623 5.6% $1,713 2.7% $1,759 1.8% $1,791 1.7% $1,822 $1.90 5.5% $2.00 2.7% $2.06 1.7% $2.09 1.5% $2.13

Weighted Average Vacancy Rate for Dates Indicated Above: 2.76% 2.12% 2.70% 3.03% 2.66%

Average Monthly Rent in $ Average Monthly Rent in $ per Sq. Ft.

Historical Data - Combined County of Ventura Market Areas

Page 20 of 24

What’s more, companies are voting with their expansion plans, where expansion is not within

Ventura County but outside it. Amgen, an important company to Ventura County’s economy,

recently announced that it will reduce its Ventura County workforce by ten percent.

Meanwhile, it is building a 136,000 square foot facility in Tampa, Florida, stating the reason for

moving from Ventura County to Florida as: “affordable cost of living and the potential for

growth”. As we have made clear throughout this report, housing has impacted Ventura

County’s population, GDP, and jobs in non-trivial ways.

Ventura County’s Forecast

The dominant economic story to emerge in Ventura County over the past year is the decline in

total economic output. Last year’s forecast predicted economic growth of 1.8 percent for 2016.

We warned then, as we will do again this year, that the balance of risks to the forecast are not

symmetric. The probability of economic growth that exceeds our forecast is very low, while the

probability that economic growth underperforms our forecast is quite high. Unfortunately, the

initial BEA estimate of -2.7 growth in real GDP is even worse than last year’s most pessimistic

forecast scenario. Our hope is that next year’s revision will move the number back in the

direction of zero, although we can not imagine a revision that results in a positive estimate of

economic growth. The effect of that very low GDP growth number for 2016 is to put downward

pressure on the current forecast.

The current forecast anticipates that the County’s economy will contract further in 2017,

declining by nearly one percentage point. Our forecast for growth in 2018 and 2019 is positive

but very low, averaging just 0.35 percent over those two years.

Housing Stock: Percent of Population

Ventura County United States

2008 34.4 42.8

2015 33.6 42.0

Sources: U.S. Bureau of Census, CA Department of Finance

Page 21 of 24

Our short term job growth forecast may seem to be at odds with the GDP forecast. The current

forecast anticipates robust job growth of 2.9 percent in 2017. This prediction is based on three

quarters of jobs data that have already been released for the year—three numbers which are

so implausibly high that we have concluded that they are likely an illusion. The annualized

quarterly growth rates are 4.2, 2.5, and 3.7 percent for quarters 1, 2, and 3, respectively. If

these numbers survive future revisions, they will represent the strongest job growth in at least

12 years, a pattern simply at odds with other economic indicators. Because of the dissonance

between the 2017 jobs data and various other economic indicators, our expectation is that the

number of jobs created in the first three quarters of 2017 will be revised downward next

March. As we await those revisions, those initial estimates must still be reflected in the current

forecast. Job growth in 2018 and 2019 is forecasted to average a much slower, and more

plausible, 0.9 percent. This is only slightly higher than last year’s short term forecast of 0.75

percent job growth.

Page 22 of 24

Even this forecast of modest job growth in 2018 and 2019 begs the question, can jobs actually

continue to grow in Ventura County at the same time that GDP growth remains near zero or

negative? Our answer to this is, unfortunately, yes. As discussed earlier in this report, the net

increase in the number of jobs masks a trend where jobs in high paying sectors continue to

decline with each passing year while jobs in relatively low paying sectors continue to be added.

Relative wages reflect the different share of the County’s total economic output that particular

jobs contribute. The continued decline of high paying jobs is also a decline in highly productive

jobs. Jobs can grow while economic activity stagnates or declines, but this pattern underscores

increasing weakness in the County’s economy.

We expect net domestic migration to remain negative and to accelerate in the years ahead.

Page 23 of 24

The risks to the current forecast are not symmetric. A pessimistic forecast scenario would

include continued declines in nondurable manufacturing as Amgen and related biotechnology

activity relocates out of State. The effect of a sustained contraction in this sector would be very

negative for the County economy at large. The probability associated with this scenario is not

necessarily low. An optimistic scenario would include growth in the biotechnology sector as

well as new, homegrown successes along the lines of Amgen and the Trade Desk. If we take

Amgen at their word, there is low probability of growth in their sector. If growth happens it is

likely to happen well beyond the County line. And Ventura County has not cultivated a healthy

ecosystem where innovative, home grown businesses can grow, flourish and remain. It seems

to us that the probability of realizing an optimistic forecast scenario is vanishingly low.

Along with our short term GDP growth and jobs growth forecasts, we also provide a ten-year

forecast of non-farm jobs. The long-term, non-farm jobs forecast includes a detailed forecast by

occupation. As with each previous forecast, it’s important to restate that current technology

does not allow great confidence in long-term forecasts such as these.

Ventura County’s long-term occupational forecasts foresee continued changes in Ventura

County’s job composition. The number of jobs in agriculture, production, construction, and

other tradable goods producing sectors will likely continue to decline. Jobs in non-tradable

services sectors such as health care will likely see continued strong growth.

Page 24 of 24

Ventura County 10-Year Employment by Occupation Forecast

2006 2016 2017 2027 2006-16 2017-27 2006-16 2017-27

. percent percent

no. of jobs no. of jobs no. of jobs no. of jobs change change change change

Total: All occupations 304,640 299,940 305,694 324,377 -4,700 18,683 -1.5 6.1

Management 16,050 16,560 16,805 18,233 510 1,429 3.2 8.5

Business and Financial Operations 15,570 16,460 16,983 19,185 890 2,202 5.7 13.0Computer and Mathematical 7,220 7,240 7,445 8,004 20 559 0.3 7.5

Architecture and Engineering 8,170 7,190 7,284 6,330 -980 -954 -12.0 -13.1Life, Physical, and Social Science 5,070 4,190 4,163 3,939 -880 -223 -17.4 -5.4

Community and Social Services 2,910 4,090 4,117 5,050 1,180 933 40.5 22.7

Legal 1,730 1,820 1,843 1,999 90 156 5.2 8.5Education, Training, and Library 17,700 20,370 20,781 23,110 2,670 2,328 15.1 11.2

Arts, Design, Entertainment, Sports, and Media 3,410 3,690 3,577 3,682 280 105 8.2 2.9Healthcare Practitioners and Technical 10,970 14,410 15,096 21,220 3,440 6,125 31.4 40.6

Healthcare Support 6,730 7,210 7,479 8,627 480 1,148 7.1 15.3Protective Service 4,860 4,800 4,920 5,064 -60 145 -1.2 2.9

Food Preparation and Serving-Related 24,350 30,970 31,667 38,415 6,620 6,748 27.2 21.3Building and Grounds Cleaning and Maintenance 9,870 8,710 8,588 7,884 -1,160 -705 -11.8 -8.2

Personal Care and Service 6,340 9,380 9,650 13,001 3,040 3,350 47.9 34.7Sales and Related 34,050 34,420 35,177 37,124 370 1,947 1.1 5.5

Office and Administrative Support 53,860 45,210 45,659 38,419 -8,650 -7,240 -16.1 -15.9

Farming, Fishing, and Forestry 6,080 5,810 5,649 4,485 -270 -1,164 -4.4 -20.6

Construction and Extraction 18,320 11,190 11,437 10,968 -7,130 -469 -38.9 -4.1

Installation, Maintenance, and Repair 9,820 10,000 10,233 11,647 180 1,414 1.8 13.8Production 23,740 20,030 20,388 19,914 -3,710 -474 -15.6 -2.3

Transportation and Material Moving 17,810 16,200 16,754 18,078 -1,610 1,324 -9.0 7.9

Date: October 19, 2017

Source: CA-EDD (OES data program) and CERF