OC’s Housing Crisis is also an economic, social and

demographic one

Presentation by Joel Kotkin, Roger Hobbs Presidential Fellow in Urban Futures Chapman University to

Orange County Housing Summit, September 28, 2017

Issues related to Housing

• Housing prices too high relative to incomes

• Millennials and 30 somethings are not staying here

• A rapidly aging population that lacks alternatives

• Growing homelessness, and high levels of poverty

• OC needs a new housing vision

0 2 4 6 8 10

New York MSA

Chicago MSA

Austin MSA

Dallas-Fort Worth MSA

Houston MSA

San Jose MSA

San Francisco MSA

Riverside San Bernardino MSA

Los Angeles County

Orange County

California

United States

Median Multiple (House Price/Household Income)

OC Housing Affordability: 3rd Lowest In U.S. ORANGE COUNTY IN CONTEXT

Estimated from Census Bureau, California Assoc. of Realtors & Demographia data

Practical factors would most likely remove an area from consideration; housing is most impactful, recreational factors carry less weight in a moving decision.

4

1 Q14: Which of the following would REMOVE a metro area from consideration as a destination for you if the metro did not meet your needs in this category?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Cost of housing was the #1 factor to remove an area from consideration, but this challenge is not unique to Orange County

Characteristics that eliminate metro from considerationNational n = 1,191 / Orange County n = 104

- OC resident- National respondent

The Slow Erosion of OC Tech Base: Fewer Tech Jobs Today than in 1990

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1990 1995 2000 2005 2010 2014

Total Tech Industry Employment in Orange County - Selected Years, 1990-2014

Source: US Census Bureau data

49.2 49.2 49.148.1

45.5 45.1 44.9 44.4 44.242.2 42.1 42 41.9 41.3 41.2 40.7 40.5 39.6 38.9 38.4 38.3 38.3

37.2 37.236 35.7 35.7 35.2 34.6 34.1 33.9 33.8 33.5 33.2 32.8

0

10

20

30

40

50

60

Individuals Earning $75,000+, As Percentage of PopulationTop 35 Counties, 2015

Source: U.S. Census

96.9293.89

90.70 89.81

78.2376.06

74.13 73.45 73.15 72.5070.83 70.00

67.96 66.4564.89

62.96 62.3860.39 59.34 58.67 58.20

43.90 42.86 41.43 40.91

29.50

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Top 20 Largest Percent Growth in $75,000+ Incomes By County, Plus Selected West Coast Counties2006-2015

-400,000 -300,000 -200,000 -100,000 0 100,000 200,000 300,000 400,000

Seattle MSA

San Jose MSA

San Francisco MSA

Riverside San Bernardino MSA

Phoenix MSA

Nashville MSA

Denver MSA

Dallas-Fort Worth MSA

Charlotte MSA

Austin MSA

Orange Co.

Los Angeles Co.

Census Bureau data

Net Domestic Migration: 2010-2016ORANGE COUNTY & SELECTED MSA’S

24.0 28.3

41.5

56.9

77.7 79.4 88.3

100.3

Personal & Home Care

Aide

Retail Salesperson

Construction Laborer

Carpenter Elementary School Teacher

Computer Programmer

Nurse (RN) Biomedical Engineer

Even High-Wage Workers Cannot Afford Housing9

Orange County Wages v. Qualifying Income

($000s)

ORANGE COUNTYTO QUALIFY: $117.5K

Growth in Educated Population Not Keeping Pace

10

6966

47 47

39 37

2318

Inland Empire

Austin New York Texas Chicago LosAngeles

Silicon Valley

Orange County

2000 – 2014 Bachelor’s or Graduate Degree Holders Growth Age 25-34(000s)

-3.6

3.0

0.1

-43.0

-11.0

-1.0

-5.5

-5.7

1.3

-1.6

-4.7

-2.6

-7.1

-4.1

1.1

2.0

Total:

1 to 4 years

5 to 17 years

18 and 19 years

20 to 24 years

25 to 29 years

30 to 34 years

35 to 39 years

40 to 44 years

45 to 49 years

50 to 54 years

55 to 59 years

60 to 64 years

65 to 69 years

70 to 74 years

75 years and over

Orange County Net Domestic Migration Rates By Age, 2011-2015

Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0-25 26-34 35-44 45-54 55-64 65+

Ne

t D

om

est

ic M

igra

tio

nCalifornia

Texas

Net Domestic Migration by AgeCALIFORNIA AND TEXAS: 2013-2014

Derived from Internal Revenue Service data

International Migration Is Growing In Orange County

13

0% 1% 2% 3% 4% 5% 6%

United States

Seattle MSA

San Jose MSA

San Francisco MSA

Riverside San Bernardino…

Phoenix MSA

Nashville MSA

Denver MSA

Dallas-Fort Worth MSA

Charlotte MSA

Austin MSA

Orange Co.

Los Angeles Co.

As a % of 2010 Population

Net International Migration Rate: 2010-2016ORANGE COUNTY & SELECTED MSA’S

-10% 0% 10% 20% 30% 40% 50%

United States

Seattle MSA

San Jose MSA

San Francisco MSA

Riverside-San Bernardino MSA

Phoenix MSA

Nashville MSA

Denver MSA

Dallas-Fort Worth MSA

Charlotte MSA

Austin MSA

Orange Co.

Los Angeles Co.

Age 35-49 Growth Orange Co. Compared SELECTED AREAS & US TREND: 2000-2015

Census Bureau data

Generation X

Age in 2015

OC Is Losing GenX’ers Compared To Other Key Areas

-20% -10% 0% 10% 20% 30% 40% 50% 60%

United States

Seattle MSA

San Jose MSA

San Francisco MSA

Riverside-San Bernardino MSA

Phoenix MSA

Nashville MSA

Denver MSA

Dallas-Fort Worth MSA

Charlotte MSA

Austin MSA

Orange Co.

Los Angeles Co.

Census Bureau data

Age 0-17 Growth: All EthnicitiesORANGE COUNTY & US TREND: 2000-2015

The Number of Children Is Declining Compared To Key Areas

0.00 0.10 0.20 0.30 0.40 0.50

Orange Co.

San Diego MSA

San Jose MSA

San Francisco MSA

Los Angeles Co.

Sacramento MSA

Riverside-San Bernardino MSA

Stockton MSA

Fresno MSA

Bakersfield MSA

Coastal MSAs & Counties

Interior MSAs & Counties

CALIFORNIA

U. S. OUTSIDE CALIFORNIA

Age 65+ as a Ratio of 15-64

2040

2015

Old Age Dependency Ratio: 2015 & 2040CALIFORNIA METROPOLITAN AREAS >1M IN 2040

Figure 16Derived from California Department of Finance projections

0% 5% 10% 15% 20% 25%

Stockton MSA

San Jose MSA (Santa Clara Co. Only)

San Francisco MSA

San Diego Co.

Sacramento MSA

Riverside-San Bernardino MSA

Oxnard MSA

Modesto MSA

Los Angeles MSA

Fresno MSA

Bakersfield MSA

Orange Co.

California (2014)

Calculated from California Poverty Measure data (Stanford University)

Cost of Living Adjusted Poverty RateORANGE COUNTY & SELECTED MSA’S: 2012-2014 AVERAGE

Data available

only for

California

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Single-Family Multi-Family

Rat

e p

er

1,0

00

Po

pu

lati

on

San Bernardino Co.

Los Angeles Co.

Orange Co.

California

Texas

United States

New Houses: Building Permits Growing At Half U.S. Rate2014 BY TYPE

Source: US Census Bureau data

For OC respondents, good weather, professional opportunities, and familial affiliations keep them in the area.

19

0%

5%

10%

15%

20%

25%

Good Weather Job / Good WorkOpportunities

Close to Family or Friends Raised in the area Already live in OrangeCounty

Fun Things to Do /Entertainment

1Q28. Why did you choose to live in Orange County?

- OC respondent

Top 6 Reasons why OC respondents live in OCOrange County n = 104

0

1

2

3

4

5

6

7

8

Co

mp

are

d t

o D

eta

che

d (

5)

Construction Cost/Square Foot Compared to Detached (5 per Acre)

Construction Cost by House TypeSAN FRANCISCO BAY AREA

Figure 20Derived from FBI Statistics: 2013, Major metropolitan areas (average).

Building a Future in OC

• New Housing needs to be found both in OC and IE

• Density is no replacement for single family homes people prefer

• More efforts needed to nurture tech, professional and arts employment in county

• Skills training needed for large working class population

• Leaving people behind suggests problems to come