Economic Reports & Forecasts 2004-2005 Summary of Changes
Job growth returned to the San Fernando Valley in 2003, as it added over 7,600 private-sector workers to its employment rolls. The Valley's 1.2 percent private-sector job growth compared very favorably to its meek 0.3 percent growth performance in 2002, and to Los Angeles County 's 1.3 percent private-sector job loss in 2003. Valley private-sector payrolls increased by $1.7 billion and average earnings increased by over $2,000, but in both cases inflation nibbled away some of the increase in purchasing power.
Valley industries with strong job growth in 2003 include Finance, Insurance, and Real Estate (5.5 percent), Arts, Entertainment, and Recreation (4.7 percent), Accommodations and Food Services (4.4 percent), and Professional, Scientific, and Skills (3.3 percent). Weaker employment performances were turned in by Manufacturing (-4.2 percent), Transportation and Warehousing (-3.3 percent), Construction (-0.9 percent), and Information (-0.8 percent).
Consistent with the impressive job growth, the Valley's unemployment claims reversed their recession-induced climb and jobless recovery plateau to descend sharply in the first half of 2004. This 2004 descent even defied the Valley's normally strong seasonal pattern of rising unemployment claims in the first half of the year.
Bankruptcy filings in the San Fernando Valley Division dropped off last year as both Chapter 7 and Chapter 13 filings registered decreases. Stability in the Valley Division's share of bankruptcy filings in California 's Central District confirms that the Valley bankruptcy decreases were part of a wider trend.
Commercial vacancy rates in the Valley continued their drop after their recessionary run up in spite of the continued climb in the national rate. Their second quarter 2004 rate of 11.2 percent compared favorably with the national rate of 16.8 percent. The Valley's industrial vacancy rate continued to hover around the 3 percent level, which is consistent with the very tight industrial space market in Los Angeles but about one-third of the national rate.
Total construction permit values rose dramatically in the Valley, especially in the first and second quarters of 2004. Accelerating residential permit activity drove the increase in overall value, while non-residential activity remained largely stable. New construction dominated the increase in residential permit activity even though residential alterations and additions have contributed to the increase.
Home prices continued their steep ascent with median prices rising to $490,000 in June 2004, and annual rates of change pushing through the high 20 percent and into the low 30 percent range. The home buying frenzy pushed the Valley's inventory to a record low of a one-month supply in March 2004. However, signs of changing housing market conditions abound, including the inventory level doubling to a two-month supply by June 2004. Both notices of default and foreclosures continued to fall as the upward spiral in home prices conferred more and more equity on homeowners, solving most of their liquidity problems. In another part of the housing market, apartment vacancy rates in the Valley remained stuck below 3 percent, signaling an on-going tight rental market. In response, average rents in large complexes rose 5.0 percent in 2003, but there are early signs of slowing here too, as the last four quarters produced only a 4.3 percent increase in rents.
Occupied beds in Valley hospitals increased by 3.1 percent in 2003, generating a 7.5 percent increase in the hospitals' operating revenues last year. At the same time, hospitals' operating costs only rose by 3.0 percent, which narrowed but did not close the operating losses Valley hospitals continue to incur. Long-term care facilities in the Valley experienced a 1.6 percent growth in patient days, and their revenues exceeded their costs.
Recent Valley tourism and travel activity has been a mixed bag. Airport passenger traffic returned to its pre-9/11 levels at the renamed Bob Hope Airport , and air cargo volume continues to grow. Hotel occupancy rates are climbing back toward their pre-9/11 average, but real room rates (adjusted for inflation) remain about 15 percent below their pre-9/11 levels. Theme park visits for Universal Studios and nearby amusement parks all fell in 2003 from their 2002 levels with the exception of Disneyland (remained steady) and California Adventure (increased by 13 percent).
Population growth dropped in the Valley from 27,500 in 2002 to 22,700 last year. The population growth slowdown was associated with a slight decrease in Valley births (-400) and a substantial drop in net in-migration (-4,500). Because in-migration has a lagged response to job growth in the Valley, this drop is a continued response to the recession and subsequent slow growth.
Newly available income tax return data from the IRS provides updated adjusted gross income numbers for Valley communities. The 2001 data update the 1998 adjusted gross income numbers from our 2002-2003 Report and the Census 2000 numbers, which reflected 1999 incomes. From 1998 to 2001, adjusted gross income in the Valley grew by 7.7 percent, in spite of the 2001 recession. The recession probably did contribute to the Valley's increase in poverty incidence from 15.0 percent of the population according to Census 2000 to 15.3 percent in 2004. The Valley's incidence compares favorable with Los Angeles County 's incidence of 17.9 percent in 2004.
Enrollment in Valley public schools decreased slightly (-0.1 percent) last year after growing by 4.5 percent in 2002-03. LAUSD Valley schools and Glendale district both decreased by one percent while Burbank and Las Virgenes increased. Valley private school enrollment dropped 1.6 percent last year. All Valley public school districts improved their performance on the Academic Performance Index (API).
Some quality of life measure showed improvements and some did not. Annual air quality statistics continued to improve by most measures but recently ozone levels crept up in 2002 and 2003; early indicators have ozone levels returning to much lower levels in 2004. Crime rates generally eased slightly in 2003 for most Valley cities and areas. The Transportation section shows 74 percent of Valley workers commute alone in a car, truck, or van, while the other 26 percent use more environmentally friendly means, including the 5 percent who work at home. Freeway traffic congestion did not improve last year.
