2017-02-16 / Front Page
Cost of housing a drag, experts say
Thousand Oaks Rotary Club’s annual Economic Outlook Forecast Breakfast at Cal Lutheran University, traditionally a subdued event, got a shot in the arm last week courtesy of Bill Dallas, CEO of Skyline Home Loans.
Bouncing between historian, self-promoter and motivational speaker, the Oaks Christian School founder told a crowd of more than 100 inside CLU’s Lundring Events Center that the nation was approaching a point of no return. A return from what? It wasn’t clear.
“We are right now cresting on that point, we are emotionally out of control as a country and as a people. We’re scared. We don’t want to admit it, and we are being led by somebody totally different,” he said.
“What Uber did to taxis and Apple did to smartphones is what Donald Trump has done to the Republican party, presidential elections, polling, global governance and maybe even the financial global markets: He’s disrupted it; he’s changed it forever.”
Unlike most speakers at the long-running economic breakfast who opt to stay behind the dais and stick to statistical analysis, Dallas grabbed the microphone and headed out into the audience for his portion of the keynote address.
Event organizer Patrick McCoy called Dallas’ performance “a reflection of his strong passion and remarkable acumen in business matters.”
“Bill’s ability to leave his chair and deliver up close a flamboyant and provocative speech really dazzled that early-morning audience,” McCoy said.
The breakfast tradition, now 25 years old, brings together CLU’s Center for Economic Research and Forecasting and local leaders in the fields of public policy, finance and real estate to predict what’s in store for the regional economy.
Matthew Fienup, CERF’s new executive director, said his organization predicted no major economic shift this year resulting from a Trump presidency (its prediction was the same for a Hillary Clinton victory). CERF has historically been one of the more pessimistic forecasting outlets.
“We’re the only economic forecast I’m aware of that’s saying no change,” Fienup said. “There are some saying positive change, there are some saying negative change . . . we’re saying no change. We expect that slow growth (of the past eight years) to continue.”
He said CERF—which produces regular federal, state and regional forecasts—doesn’t believe Trump will be able to institute the major policy changes that could kickstart the economy, such as corporate tax and regulatory reform.
If Trump were able to lower the corporate tax rate, for example, that change alone would force CERF to revise its forecast upward, Fienup said.
“Lowering federal corporate tax rates and, in particular, allowing the repatriation of foreign earnings, would have a big positive impact,” the economist said.
Regarding Trump’s impact on the California economy, Fienup said even a minor change to the Affordable Care Act could have major consequences in a state where one-third of residents receive subsidized healthcare coverage via MediCal.
And Fienup said CERF agrees with research that suggests an increase to a $15-an-hour minimum wage will lead to massive job losses among lower-skilled workers.
“We find evidence for very strong increases in the unemployment rate among that group,” he said.
Shifting to the topic of Ventura County, Fienup shared a string of statistics to demonstrate how the local economy is failing to keep pace with neighboring counties.
Ventura County, the economist said, is the only county in Southern California that has not returned to pre-recession (2008) job levels.
“There were fewer people with jobs living in Ventura County last year than there were the year before. That is unprecedented in Ventura County for a non-recessionary economy,” he said.
“And the jobs that are coming back are not the same ones that we lost,” Fienup added, saying the county is seeing fewer jobs in high-paying fields like finance and technology.
Despite all of these factors, home prices in the county continue to rise, driven by a lack of supply and negative feelings about growth, Fienup said. Prices have returned to 90 percent of their levels before the housing crisis, he said.
The combination—stagnant wages and higher housing costs— means only 26 percent of Ventura County residents can afford the cost of a median-priced home.
“We would argue what needs to change is really attitudes about densification, infill development, attitudes about urban expansion,” Fienup said.
“Not without any sustained development do we expect . . . to change direction in the years ahead.”