Home prices, worker shortage threaten local economy

Fifth straight year of flat growth predicted



UPDATE—Kristin Decas, chief executive for the Port of Hueneme, and Matthew Fienup, director of the Center for Economic Research and Forecasting at Cal Lutheran, give the Chamber’s 2019 economic forecast. JOHN LOESING/Acorn Newspapers

UPDATE—Kristin Decas, chief executive for the Port of Hueneme, and Matthew Fienup, director of the Center for Economic Research and Forecasting at Cal Lutheran, give the Chamber’s 2019 economic forecast. JOHN LOESING/Acorn Newspapers

A housing affordability crisis threatens to deepen an already wobbly Ventura County economy that has seen a record number of workers move out of the area due to high prices, an analyst told the Greater Conejo Valley Chamber of Commerce last week.

The county faces a fifth consecutive year of zero economic growth, Matthew Fienup of Cal Lutheran University’s Center for Economic Research and Forecasting said during the Chamber’s June 21 economic forecast breakfast at the Sheraton Agoura Hills Hotel.

Fienup is slightly more optimistic for the nation as a whole, but worries about the impact of trade tariffs and a risk-oriented federal monetary policy that is bent on keeping interest rates artificially low and the stock market happy.

He said farm incomes are down 20% from last year, and that some local growers are being affected.

“The door has been slammed on many agricultural exports,” Fienup said.

“We’re not predicting a recession. The economy will continue to grow until it doesn’t. Until something shocks it.”

Leaving town

Last year, Ventura County experienced negative population growth for the first time. Statewide, 156,000 more people left California than moved here, numbers show.

“That is households and firms voting with their feet as to where there is greater relative economic opportunity,” Fienup said.

A report this week by the Camarillo-based, pro-business group Economic Development Collaborative disputes the belief that high taxes and government regulation are contributing to a “business exodus” both locally and statewide.

“Our weak economic performance is correlated more to slow or negative rates of expansion for existing firms, to an increasing concentration in low-wage sectors, and to slow growth in startups,” the report said.

Locally, it is the high cost of housing that is driving residents away, Fienup said.

“Thousands more are leaving Ventura County for somewhere else in the U.S. than coming here. This is an economy that’s not necessarily a hot one.”

While higher paying jobs in manufacturing, technology and finance are exiting the county, jobs in lower paying sectors such as leisure and hospitality are on the rise and are being taken by commuters who live in the more affordable San Fernando and Antelope valleys.

Overall, the local labor force has shrunk four years in a row, Fienup said.

“Two consecutive years of labor force contraction, that’s unprecedented for a non-recessionary economy.”

Fienup added, “We were a weak economy even before the fires and other tragedies of the last year.”

He said the county’s declining population count might be skewed by the 2018 fires.

“How much of this is real population loss and how much of this is just hundreds of homes destroyed?” he asked.

Economy down, home prices up

Fienup said the experts are baffled by the continued rise in home prices despite the worst economy since the recession 10 years ago.

“Even as the population is shrinking, labor force is shrinking, economy is shrinking, home prices continue to appreciate six, seven percent a year across the county,” he said.

The anomaly can be attributed to weak construction numbers.

“This is purely a supply story,” Fienup said.

Approximately 3,500 homes were permitted in the county in the year prior to the recession. In 2017, growth in the county had rebounded with 2,500 permits, but in 2018 fewer than 1,500 permits were issued.

“The bottom fell out last year,” Fienup said.

“There is work to do in Ventura County in terms of making the quality of life we all treasure accessible to as many people as possible.”

The high rents and home prices are hurting the middle class, he said.

“It is true we have a singular quality of life; this is an incredible place to live, but how broadly shared is that quality of life?”

Fienup called the City of Thousand Oaks the “most progressive city in the county” in terms of taking on the tough issues such as affordability, permitting and density allowances.

“There’s a weak economy but there’s real reason for hope in city council chambers,” the economist said.

Also speaking at the breakfast was Kristin Decas, chief executive officer at the Port of Hueneme, where a different picture is being painted.

“We have a good story to tell,” Decas said. “Overall the health and state of the port is very strong.”

Jobs tied to the Port of Hueneme are up 44 percent compared to 2013, Decas said. The 120-acre port is BMW’s only distribution facility on the West Coast and is a leading distributor of fresh produce to much of the western U.S.

Editor’s note: The Acorn’s John Loesing also served as moderator for this economic forecast.