wildcard
7th May 2010, 01:24 AM
California construction employment back to 1997 levels. California building permits at all time record low.
http://www.mybudget360.com/
Solving the California state budget crisis just got that much tougher. Estimated tax revenues came in nearly $3 billion less than expected wiping out a steady stream of months where things seemed to be improving at least on the revenue front. And this should come as no surprise. California has done very little to wean itself off its dependence on real estate. So it should come as no shock that with real estate still in the doldrums, that income is reluctant to pick up. California takes in nearly half of its revenues through payroll taxes and with a 12.6 unemployment rate, a revenue short fall is mathematically expected.
Since California is so dependent on real estate, I wanted to track trends in construction employment and housing prices for three large metro areas. We’ll look at Los Angeles, San Diego, and San Francisco over 23 years. Let us first measure the fluctuations in real estate and construction employment:
http://www.mybudget360.com/wp-content/uploads/2010/05/ca-construction-and-real-estate-prices.png
From the above it is apparent that California has been here before with a previous real estate bubble back in the late 1980s. You’ll notice that as prices ebbed lower, construction employment contracted severely at that time. In the 1990s, construction employment fell by 29 percent before reaching a bottom. In our current bubble, construction employment has now fallen by 40 percent and it is unclear whether this is the actual bottom. The recession is still in full force in California demonstrated by the weaker than expected tax revenues. You’ll also notice in the chart above that prices remained stagnant for almost a decade in all three of the California metro areas we are measuring. How long will prices stay low this time?
The chart above shows that prices have ticked up slightly. But much of this is due to artificial stimulus through the Federal Reserve and U.S. Treasury. Tax credits have also front loaded sales and have pulled future sales forward. Even more recent micro data is showing that local housing markets are now starting to soften now that the federal tax credit has ended.
At the peak of our current housing bubble, California had 948,000 people working in the construction industry versus 648,000 back in 1990. Construction employment increased from peak to peak by 46 percent while the actual population increased by 20 percent over this same timeframe.
...
story continues at link (with graphs intact):
http://www.mybudget360.com/
http://www.mybudget360.com/
Solving the California state budget crisis just got that much tougher. Estimated tax revenues came in nearly $3 billion less than expected wiping out a steady stream of months where things seemed to be improving at least on the revenue front. And this should come as no surprise. California has done very little to wean itself off its dependence on real estate. So it should come as no shock that with real estate still in the doldrums, that income is reluctant to pick up. California takes in nearly half of its revenues through payroll taxes and with a 12.6 unemployment rate, a revenue short fall is mathematically expected.
Since California is so dependent on real estate, I wanted to track trends in construction employment and housing prices for three large metro areas. We’ll look at Los Angeles, San Diego, and San Francisco over 23 years. Let us first measure the fluctuations in real estate and construction employment:
http://www.mybudget360.com/wp-content/uploads/2010/05/ca-construction-and-real-estate-prices.png
From the above it is apparent that California has been here before with a previous real estate bubble back in the late 1980s. You’ll notice that as prices ebbed lower, construction employment contracted severely at that time. In the 1990s, construction employment fell by 29 percent before reaching a bottom. In our current bubble, construction employment has now fallen by 40 percent and it is unclear whether this is the actual bottom. The recession is still in full force in California demonstrated by the weaker than expected tax revenues. You’ll also notice in the chart above that prices remained stagnant for almost a decade in all three of the California metro areas we are measuring. How long will prices stay low this time?
The chart above shows that prices have ticked up slightly. But much of this is due to artificial stimulus through the Federal Reserve and U.S. Treasury. Tax credits have also front loaded sales and have pulled future sales forward. Even more recent micro data is showing that local housing markets are now starting to soften now that the federal tax credit has ended.
At the peak of our current housing bubble, California had 948,000 people working in the construction industry versus 648,000 back in 1990. Construction employment increased from peak to peak by 46 percent while the actual population increased by 20 percent over this same timeframe.
...
story continues at link (with graphs intact):
http://www.mybudget360.com/