2015-2025 California Statewide Housing Plan Technical and Research Advisory Input

1. 2015-2025 California Statewide Housing PlanTechnical and Research Advisory Input Walter Schwarm DOF Demographic Research Unit (DRU) Anda Draghici HCD Housing Policy Development Division Wednesday June 4, 2014

2. Population 1. The current population projections reflect growth around 0.9% for CA. Will California's population grow faster, slower or about the same as US? • Faster, consistent with 0.8% - 0.9% (majority) • About the same • It’s complicated

3. Population (cont.) 2. Taken as a whole, do you think the Baby Boomers (50-68 y.o.) will work longer than previous generations before they retire? Why or why not? • Yes, Baby Boomers are going to work longer 4. Are the recent declines in fertility rates starting a long term trendtowards more “European” rates (1.6 TFR) or are the rates in the chart below still more likely? Would you change anything? • Decline toward “European” as the start of a longer term trend • Declining trend to exclude Asian and Hispanic groups

4. Immigration 5. Are new female immigrants likely to have more or fewer children than women in theiroriginating country? Does the country of origination matter? • Fewer children • Country of origin matters 6. If immigration reform passes, how much will international migration to Californiaincrease above its current level (~100,000)? • Not much in the next 10 years • 10% • 50,000/year • It depends 7. How would California's housingmarket be impacted by immigration reform? • Not much in the next 10 years • More people-more demand • Tighter market for high density • Depends on affluence of immigrants

5. Jobs 3. When do you expect California to be at or below its 6.9% historic unemployment rate? • 2015-2016 (majority) • 2020 • 2025 - 2030 13. Employment Development Department data reports unemployment rate of 8.1 % as ofMarch 2014, down from 9.2% in March 2013. Estimate the unemployment rates below. • 2015 7.2% - 7.9% • 2025 >5% - 7.0% • 17 California share of US jobs will be: • 2020: the same • 2025: the same

6. Homeownership Rates 8. California's experienced a prominent shift between homeownership and renting in recent years. Whattenure patterns are likely over the next decade? • Considerations: • Financing still an issue • Investors still active • Cash sales represent 40% of all sale • CA sustainable homeownership rate is 54%

7. Vacancy Rates 9. Within the last decade, vacancy rates, both for sale and for rent, increased to unprecedented levels, then began to decrease. 2012 ACS indicated vacancy rates of 1.6% for sale units and 4.5% for rental units. What is the trend in the next 5 and 10 years?

8. Housing Characteristics 10. HCD review of literature has identified the following vacancy rates by tenure from various sources. Which is applicable to California? Source Owner Renter • State of Florida 3.00% 8.00% • State of New Jersey 2.50% 8.00% • State of Oregon 1.75%-2.00% 5.0%-6.00% • Market Research- Real Estate 4.00% 7.00% • Federal Housing Administration HH Annual Growth Detached (Owner) Attached (Renter) 5%+ 1.50%-2.00% 6.00%-8.00% 1%-5% 1.00%-1.50% 4.00%-6.00% Below 1% <1.00% 4.00% 11. Data from local governments indicates demolition levels at an average of 0.6% annually for the past 10 years. Is it representative for the state to use in the statewide need for replacement calculation? • Will increase (majority)

9. Income 12. The distribution of households by income categories between 2010 and 2012, are shown in the table below. While the share of households with incomes in the 50-80% of AMI remained fairly constant, the shares of households in the extremely low income (ELI) andvery low income (VLI) increased from 16% to 18% , and from 29% to 32%, respectively. • 12a. Do you envision a continuing shift in the shares of households for the ELI and VLI • households by 2025, and if so, what would be the approximate change ? • Yes, the percentage of ELI+VLI households will likely increase (majority) • 12b. HUD family median income : • Will likely continue upward (majority)

10. Housing Conditions 14. Housing cost burden (>30% of household income) based on ACS 1-year averages 2010 to2012 is reflected below. Please indicate in the comment section the likely direction of level of overpayment by California’s households in 5 years and 10 years, by tenure. • Cost burdened lower income share up for owner and renter • Others: • Owner : 35% in 2025 • Renter: 57% in 2025 • 15. Overcrowded renter households as well as owner households were seen in 2010, when many households “doubled up”. Is there any evidence relative to the likely effects of un-coupling on housing demand within next 5 years? • No evidence of un-coupling • CAR

11. Residential Permit Activity 16. California residential permit activity plummeted to 36,421 permits in 2009, then gradually increased reaching 83,725 in 2013, 40% of the 2004 peak. Multifamily permits comprisedover half of all 2013 permits, at 47,167. Is this trend likely to continue to 2020 and 2025? • Yes, MF will likely comprise 50%+ of all residential permits in 2020 • Expect greater demand for single family • It depends

12. Other Considerations 19. Other significant factors influencing California’s employment, population, household projections and housing demand for 2025 • Growth will remain in sync with US trends, more people to move from urban to rural communities • Fertility rate, Immigration, New health care, Economic situation, • Net in-migration - wild card influenced by job creation , immigration. and the cost of housing • Climate change, GHG/air quality, compact development, energy/water usage • Efficient and clean movement of people and goods • Big unknowns: climate change, drought, education (debt and where grads go) • Employment and education to train entry level workers for 21st century jobs. • Growth control policies constrain supply at a time of growing demand. • Fear of displacement • Transportation infrastructure - critical linkage connecting families to employment, education • .

13. Regional and Cross-Sector Considerations 18. In your opinion, which regions of the State will grow faster than the state in 2020 and2025? What effects of this do you anticipate on housing markets? • Coastal • Bay Area/San Jose • SACOG, San Joaquin valley, Inland Empire 20. Top five- six cross-sector metrics that the plan should include to help paint a holistic picture of the future sustainable California. • Distance to employer • Education • Economic development • Health • Employment, job housing balance • Housing cost (to produce, household cost burden)

14. Housing Need Calculation • Projected Total Population • (-) Projected Group QuartersPopulation • Projected HouseholdPopulation • Household Formation (headship) Rateby race/ethnicity, age and gender • 2025 Projected Households (Occupied Housing Unit) • 2015 Projected Household Projected Household Growth • (+) Allowances (small percentage) for: • Vacancy ( owner, renter) • Replacement (demolitions reported to DOF) • ______________________________________________ • Projected Statewide Housing Need

15. Other Considerations • Headship Rate • Housing Need Range • Others?

16. Next Steps • Jul. – Sep. Focused consultation on households projection • Sept./Oct. Review of draft Statewide Housing Need • Oct. Second TRAC meeting • Jan. – Feb. 2015 Finalize Projected Housing Need