Explaining Southern California's economy

Why the Obama administration thinks the housing market is improving

Homes

KPCC

An improving housing market is bringing buyers back.

The federal Department of Housing and Urban Development and the Treasury Department just released their October "Housing Scorecard," a rundown of all things housing and housing-related in the U.S. economy.

The October Scorecard contains a huge amount of housing data, but the really good news has to do with prices — and although there's a limited amount information related to Southern California and Los Angeles, the news is fairly positive. After crashing during the financial crisis and stumbling further in 2011, they’ve begun to steadily move up this year.

Even better, expectations for rising home prices are more optimistic. 

They never dropped as far as feared back in 2009. Rather, prices have bumped along, rising and falling, for three years. Now they appear to have formed a bottom and are projected to resume a trend of price appreciation that was completely distorted by the bubble that inflated between 2003 and 2007. Check out the two charts above in the short slide show. They tell a reasonably happy story.

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Home foreclosures continue decline in California

Stockton, CA Leads Nation In Rate Of Foreclosures

Justin Sullivan/Getty Images

Cars drive through downtown Stockton, California. The city tops the list of U.S. cities for foreclosure activity in the third quarter, according to RealtyTrac.

California is in an interesting position when it comes to home foreclosures. On one hand, according to RealtyTrac's just-released third-quarter Metropolitan Foreclosure Market Report, the state still has some of the highest foreclosure rates in the entire country, with bankrupt Stockton leading the pack. 

On the other hand, California cities continue to see substantial year-over-year declines in foreclosure activity. San Francisco, Los Angeles and San Diego saw their foreclosures plummet, by 36, 29 and 26 percent, respectively. 

On its face, this sounds like pretty good news. But as I reported earlier this week, the foreclosure crisis hit California so hard that its cities have a long way to go before the situation normalizes.

RealtyTrac compared 2012 to 2008 in political terms — What does the situation look like for areas that went for Obama versus McCain? — and found that counties carried by Obama have seen big improvement on the foreclosure front.

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California sees a big drop in unemployment rate to 10.2 percent

Justin Sullivan/Getty Images

A job seeker looks over event materials as she waits to enter the San Francisco Hirevent job fair.

California's unemployment rate dropped to 10.2 percent in September, according the Labor Department. That's a big dip — the August rate was 10.6 percent and had been falling relatively slowly.

With the state now in striking distance of single-digit unemployment for the first time in years, it is clear that the recovery is gaining steam here. California has added 262,000 jobs since the beginning of the year, second only to Texas, which has added 700 more (it's neck and neck). 

Overall, the news is good for California and its nearly $2-trillion economy, the largest in the U.S.

A housing recovery is taking shape, with a "boomlet" at the lower end of the market creating bidding wars for entry-level homes. This is spurring builders to start building again, to capitalize on surging demand in a market that doesn't have enough supply. That's a big plus for unemployed construction and building trades workers.

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When headlines deceive: Toyota Prius is top-selling car in California, but...

MARK RALSTON/AFP/Getty Images

Toyota Prius hybrid model cars wait for customers at a Toyota dealer in Hollywood. The iconic hybrid is the best-selling vehicle in California so far this year.

Experian and the California New Car Dealers Association report that the Toyota Prius is the best-selling vehicle in California through the first nine months of 2012. 

Amazing, right? If you went with the headline, you'd think that Prii are thick on the roads of the Golden State.

But if you take a closer look at the numbers, you get a different story. 

Take nothing away from Toyota and the Prius: the success of the iconic hybrid is a great story and, with gas prices spiking of late, fuel economy matters today more than ever.

But here's the thing. Toyota has sold 46,830 Priuses (I called then "Prii" once and that's all you're going to get) in California this year. That's a quarter of all Priuses sold nationwide.

A different story emerges when you compare that with the total number of new vehicles sold in California this year. So far, Californians have bought 1.25 million cars. The Prius is 3.7 percent of that. Another 96.3 percent of the California market is still up for grabs.

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California sees biggest unemployment claims drop in U.S.

Job-Seekers-Getty

STAN HONDA/AFP/Getty Images

First-time unemployment claims fell substantially in California for the week ended October 6, according to the Labor Department.

California has seen the biggest unemployment claims drop in the U.S. That's the good news. Sort of. The bad news, according to the Labor Department, is that first-time unemployment claims rose nationally last week, to 388,000 from the previous week's 342,000 (the lowest since early 2008).

That was for last week. For the week ending October 6 (specific state data is laggy), California saw first-time claims fall by nearly 5,000 — exceeding number two Alabama by...about 4,700. 

The general view of economists is that these numbers, while below the important 400,000 number, don't represent anything close to a healthy labor market. Rather, they show a market moving sideways, with limited layoffs and firings but without much hiring.

A word of warning: This is some pretty noisy data, currently being affected by changes in seasonal hiring patterns. The Labor Department generates a four-week moving average that's less volatile. For the most recent report, it show a pace of initial claims that was little changed, at around 365,000.

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