City of Modesto Economic Indicators December 2014 Edition Steve Christensen City of Modesto
Economic Outlook: City of Modesto The City of Modesto continues to slowly recover from the Great Recession. Some economic indicators have shown improvement over the last few years and continue to show positive trends. These factors along with minor revenue growth show that the City of Modesto, and many of the surrounding areas in Stanislaus County, is moving beyond recovery into growth. The recession brought an onslaught of decreases in everything from employment rates to job growth to housing starts. Many economists are recognizing the recovery and growth that is now starting; as the Great Recession is thought to be over. In the most recent California and Metro Forecast from the University of the Pacific, many of these key areas are projected to be increasing over the next few years across California. Single-family housing starts are projected to grow statewide from an estimated 43,000 in 2014 to 61,000 in 2015 and then to 86,000 in 2016. After years of such sharp decline, these small amounts of growth are welcome indicators that California is continuing its climb out of the recession. The Central Valley and Modesto continue to improve economically. Indicators included in this report show many positive trends. Unemployment for the City of Modesto has declined drastically since 2010 going from an annual rate of 17.2 to the most recent monthly rate of 9.7. Median household income continues to slowly increase since 2011 going from $41,863 to $46,329 in 2013. While this indicator shows recovery, there is still more room to grow to return to pre-recession levels when the median household income was nearly $50,000 for Modesto according to the U.S. Census Bureau s 2006 American Community Survey. Revenues for the City of Modesto continue to grow steadily. Sales and property tax revenues are continuing to show improvement and will eventually reach pre-recession levels if the current trends continue. This is important as these two revenue sources make up about 49% of the total General Fund revenues. Sales tax has increased from a low of $22.3 million in FY 2010 to $27.6 million in FY 2014. This is approaching the amount of sales tax receipted in FY 2006 of $29.6 million. Property tax continues to rise as well but at a slower pace. Property tax has increased by 5.8% from 2013 to 2014. This is after an almost 4.4% decrease from the previous period of 2012 to 2013. Going forward some indicators will need to be monitored closely for possible negative impacts on the fragile growth that the City of Modesto and the Central Valley are seeing. Things such as the drought and its impact to the agricultural industry could affect multiple economic indicators including employment rates, personal incomes, etc. A recovering housing market is another area of some concern. Prices continue to rise slowly in Modesto for home sales but some experts think that it could take eight to 10 years for the market to gain the nearly 40% lost from peak sales prices prior to the recession. While these indicators are lagging in their recovery from the Great Recession, overall the economic outlook for the City of Modesto is favorable as unemployment rates continue to fall, permit activity continues to gradually grow, and revenues continue their upward march. 1
05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 Consumer Price Index Median Household Income ($) Household Indicators $65,000 Median Household Income $60,000 $55,000 $50,000 $45,000 United States California Stanislaus County Modesto $40,000 $35,000 2009 2010 2011 2012 2013 Average median earnings of households in the City of Modesto have risen over the last two fiscal years. The median household income went from $46,316 in FY 2009 to the lowest amount of $41,863 in FY 2011, but it has shown steady increases through FY 2013 to $46,329. 260 Consumer Price Index Comparison 255 250 245 240 235 230 United States Average West Region San Francisco - Oakland - San Jose 225 220 West Region includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming The U.S. CPI increased from 233.6 in October 2013 to 237.4 in October 2014, while the San Francisco Oakland San Jose CPI increased from 246.6 to 254.5 over the same time period. 2
Household Indicators (Continued) 1,600 City of Modesto Water Shutoffs 1,400 1,200 1,000 800 600 400 200 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2011 2012 2013 2014* *2014 only contains shutoff figures through the month of October. The number of monthly shutoffs in October 2014 was 820 which were down from 1,196 in October 2013. 3
Labor Indicators 18 Unemployment Rate Comparison 16 14 12 10 8 6 4 2 0 9/11 2/12 7/12 12/12 5/13 10/13 3/14 8/14 United States California Modesto The unemployment rate in Modesto for September 2014 was 9.7, down from 11.3 a year before in September 2013. While this remains higher than the United States (5.9) and California (7.3) rates it is still a positive sign that the rate is slowly decreasing over time. 246,000 244,000 242,000 240,000 238,000 236,000 234,000 232,000 230,000 228,000 Unemployment Rate and Labor Force 9/11 2/12 7/12 12/12 5/13 10/13 3/14 8/14 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Labor Force Unemployment Rate Increased labor force in August and September 2014 from the previous summer months has not led to an increase in the unemployment rate as the rate has actually decreased over the same time period. 4
Housing Indicators According to RealtyTrac, there are currently 792 properties in some stage of the foreclosure process in the City of Modesto. The number of properties that received a foreclosure filing for October 2014 was 18% lower than the same month the previous year. Home sales were down by 6% in September 2014 when compared with the same month the previous year. The median sales price of a home was $208,500 with the median sales price of a foreclosure home being $166,000. This was 20.38% lower than a non-foreclosure home. 5
# of Permits Issued 10/05 4/06 10/06 4/07 10/07 4/08 10/08 4/09 10/09 4/10 10/10 4/11 10/11 4/12 10/12 4/13 10/13 04/14 10/14 # of Permits Issued Construction Indicators 300 SF and MF Permit Activity 250 200 150 100 SF # of Permits MF # of Permits 50 0 Single Family (SF) and Multi-Family (MF) permit activity continues to be somewhat dormant in the City of Modesto. While there has been some activity over the last fiscal year, it pales in comparison to the booming years from 2000 to 2005. In these years permits for SF would average 85 per month and MF would average over 7. Now those averages have fallen sharply to 2 permits per month for SF and barely 1 for MF over the past 5 years. 90 80 70 60 50 40 30 20 10 0 Commercial Permit Activity by Type New Remodel Misc Commercial permit activity continues to be active, albeit at lower levels. The graph above shows the different types of permits that are issued within the commercial category. Remodel permits continue to be the most active category in the area. 6
Permits Issued Construction Indicators (Continued) Building Activity by Type and Average Valuation 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 350000 300000 250000 200000 150000 100000 50000 Residential Commercial Average Valuation 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fiscal Year 0 Since the Great Recession permit activity has been pretty consistent. Residential permits have ranged from 2,654 to 3,526 annually and commercial permits have ranged from 455 to 576 annually. The graph above shows that there is has been a slight increase in activity for residential permits over the last two fiscal years. 7
Millions Sales Tax $ in Millions Revenue Indicators $25 $20 $15 $10 $5 $- Sales Tax: 2014-15 Monthly Budget to Actual $22.25 $20.10 $18.49 $16.41 $14.57 $13.20 $11.28 $9.14 $7.54 $5.47 $3.48 $1.99 $5.51 $3.45 $1.90 FY 2014-15 Budget FY 2014-15 Actual *Does not reflect the semi-annual receipt of the Triple Flip. Through September 2014, Sales Tax receipts are $67,193 higher than the cumulative monthly budgeted amount. This is about 1.23% higher than the cumulative budgeted amount of $5,446,695 through September 2014. $30 Sales Tax and Triple Flip: Annual Budget vs Actual $25 $20 $15 $10 $5 Total Sales Tax - Budget Total Sales Tax - Actual Sales Tax - Budget Sales Tax - Actual Triple Flip - Budget Triple Flip - Actual $- 2009 2010 2011 2012 2013 2014 2015 The City of Modesto s Sales Tax figures continue to rebound after the recession. The graph above shows the slow but steady increase in overall Sales Tax revenues received. Modesto has seen the Sales Tax revenues receipted go from $29.6 million in 2006 down to $22.3 million in 2010 and back up to $27.6 million in 2014. 8
Thousands Property Tax $ in Millions Revenue Indicators (Continued) $31 $29 Property Tax: Annual Budget vs Actual $28.38 $27 $25 $23 $21 $28.26 $25.48 $25.52 $24.50 $24.22 $24.03 $23.11 $23.36 $23.53 $24.46 $23.96 $25.26 Budget Actual $19 $17 $15 2009 2010 2011 2012 2013 2014 2015 The City s Property Tax collections fell along with many of the revenues during the Great Recession but are on the rise again as we continue to move into the second half of the decade. Transient Occupancy Tax Quarterly Revenue Received $1,000 $900 $800 $700 $600 2012 $500 $400 $300 2013 2014 2015 $200 $100 $- 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Fiscal Year 2015 1 st Quarter Transient Occupancy Tax (TOT) were $159,840 which is up from $86,519 in 1 st Quarter of Fiscal Year 2014. 9
Revenue Indicators (Continued) Regular Gasoline prices were down in November 2014 compared to November 2013. The average price per gallon in Modesto is less than $2.93 at the end of November. This was still higher than the US average which was right around $2.75. 10
Notes: 11
Works Cited American FactFinder. US Census Bureau, n.d. Web. 27 Nov. 2014. http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=acs_09_5yr _S1903&prodType=table. Consumer Price Index All Urban Customers. US Bureau of Labor Statistics, n.d. Web. 27 Nov. 2014. http://data.bls.gov/timeseries/cuur0400sa0?data_tool=xgtable. Gold, Howard R. "6 Housing Boomtowns That Haven't Come Back." Kens5 Eyewitness News. N.p., 02 Nov. 2014. Web. 02 Dec. 2014. http://www.kens5.com/story/money/consumer/2014/11/02/6-housingboomtowns-that-havent-come-back/18381867/. "Historical Price Charts." Historical Gas Price Charts. N.p., n.d. Web. 27 Nov. 2014. http://www.modestogasprices.com/retail_price_chart.aspx. Labor Force Statistics from the Current Population Survey. US Bureau of Labor Statistics, n.d. Web. 27 Nov. 2014. http://data.bls.gov/timeseries/lns14000000?data_tool=xgtable. "Modesto Real Estate Statistics & Foreclosure Trends Summary." Foreclosure Listings, Homes for Sale, Real Estate Records. N.p., n.d. Web. 02 Dec. 2014. http://www.realtytrac.com/statsandtrends/ca/stanislauscounty/modesto/. "Modesto Real Estate Trends & Market Info." Modesto Real Estate Statistics and Foreclosure Trends Summary â RealtyTrac Real Estate. N.p., n.d. Web. 02 Dec. 2014. http://www.realtytrac.com/statsandtrends/foreclosuretrends/ca/stanislaus-county/modesto. United States. US Department of Labor. Bureau of Labor Statistics. US Consumer Price Index for All Urban Customers. N.p., n.d. Web. 27 Nov. 2014. http://www.bls.gov/cpi/cpid1410.pdf. University of the Pacific. Eberhardt School of Business. California and Metro Forecast: September 2014. Business Forecasting Center. Michael, Jeff, Sept. 2014. Web. 01 Dec. 2014. http://forecast.pacific.edu/cametroforecast/news%20release%20september%202014.pdf. 12