By Dan McAllister
Changes in the local economy impact every San Diegan, and it can have a large effect on what happens at the San Diego County Treasurer-Tax Collector’s Office (TTC). Here are some of the biggest economic trends we at the TTC tracked through the third quarter of 2016 that could affect you, too.
San Diego County’s unemployment rate declined to 4.7 percent in September and remained below that of Los Angeles (5.2 percent) and Riverside (6.5 percent) counties, California as a whole (5.3 percent), and the nation overall (5 percent).
The rate declined 0.1 percent year-over-year as local nonfarm payrolls grew by 30,700 workers, or 2.2 percent. Private sector gains drove much of the employment growth, accounting for 24,100 new jobs, although the government sector also added 6,600 workers.
Within the private sector, the educational and health services industry posted the best performance, adding 7,600 jobs since September 2015, or a 3.9 percent increase. Most of these new positions were in health-related fields, indicating a core segment of our innovative local economy remains strong.
Other industries with significant year-over-year growth included professional and business services (plus 7,200 jobs), leisure and hospitality (plus 6,100 jobs), trade, transportation and utilities (plus 2,100 jobs), and financial activities (plus 1,700 jobs). Other than healthcare, specific subsectors that outperformed were architecture and engineering, administrative and support services, and restaurants.
The University of San Diego’s Index of Leading Economic Indicators remained virtually unchanged during Q3. The Index hit its highest level in almost 10 years in April, but has since declined slightly as local construction activity has slowed. Still, modest economic growth is expected for the region over the near term.
The reduction in building permits highlights a primary area of concern for the local economy over the next few years: a lack of affordable housing supply. SANDAG estimates the region will need to add about 325,000 housing units by 2050 to accommodate demand, or about 12,000 per year just to keep up with population growth. The last year in which permits reached that level, however, was 2005. Even worse, the vast majority of permits are issued for properties only upper-income residents can afford. Just 7 percent of units approved in 2015 were valued below the median County home price.
Real estate values have risen to a point where over 70 percent of area residents cannot afford to purchase a median-priced home. These same residents have also been squeezed by rising rents.
Average rents are up 32 percent since 2000, despite median wages falling 2 percent. Clearly, this issue needs to be addressed to attract and retain the best workers, including millennials.
Nevertheless, it should be noted that San Diego County’s median sales price in September of $569,000 is still lower than in other parts of Southern California, such as Orange County, and far below average prices in the Bay Area. However, prices locally are rising faster than in most other areas, indicating the lack of supply is affecting our market.
—Dan McAllister is San Diego County Treasurer-Tax Collector. You can reach his office online at sdtreastax.com, or by calling 619-595-5231.