August Was a Mixed Month for Job Creation in California

Following incredible job growth in July, which was revised upward to 84,500 positions, the August data release from the California Employment Development Department was a mixed bag, showing a decline of 8,200 jobs. However, the overall state number carries some discrepancies with California’s combined metropolitan area numbers, which showed an increase of about 15,800 jobs in August.
Over the last 12 months, California has added about 265,000 jobs, which is a 1.8 percent increase and still outpaces the national growth rate of 1.4 percent. Nevertheless, as this year’s numbers have indicated so far, job growth has slowed from previous years.
California’s unemployment rate increased slightly to 5.1 percent in August, which is largely due to a sizable addition to the labor force of 31,600 new workers. This is the largest monthly increase in the labor force since the spring of 2010. Despite the 0.2 percent year-over-year increase in the labor force, California’s job markets remain tight.
Sectors that gained jobs in August include services, which encompasses personal-care services and equipment and machinery care. The manufacturing, retail, trade, and health care sectors also added jobs. What is interesting to note is that some industries are reversing previous trends. For example, data shows strong performance for manufacturing and retail jobs, which have been trending down so far this year.
Sectors that lost jobs in August included leisure and hospitality, another reversal of previous positive increases. But despite the one-month dip, year-over-year growth levels for the leisure and hospitality industry remain positive, showing an increase of 39,500 positions. Other notable declines were in professional, scientific, and technical services; government; and educational services. The professional, scientific, and technical services sector now shows a 0.4 percent jobs decline for the year, which could be concerning as it is the higher-wage segment of the labor market. The government and educational services sectors are still in the positive and show strong year-over-year increases.
In the Bay Area, San Francisco and San Mateo counties added 3,600 jobs in August. Government added a substantial 2,000 jobs net, which is double its average between July and August over the previous 10 years. The construction sector added 1,600 jobs, a change from its usual downward trend at this time of year. Leisure and hospitality gained 1,400 jobs seasonally, primarily within food services and drinking establishments. By contrast, the private educational and health services industries, with 1,500 fewer jobs, experienced a larger-than-typical cutback over the month. The professional and business services and information sectors both lost jobs, which countered the usual upward trends.
Alameda and Contra Costa counties lost 500 jobs from July, mostly in private education services; specialty trade contractors; trade, transportation, and utilities; government; leisure and hospitality; financial activities; and other services. Note that these sectors have actually posted year-over-year gains so far in 2017.
In Santa Clara and San Benito counties, the seasonal gain in local public schools dominated the monthly job growth, with a net increase of 3,800 positions, outpacing the combined prior 10-year average gain of 2,300 jobs between July and August. Statewide, public schools lost 200 jobs. Other sectors that showed gains include trade, transportation, and utilities; manufacturing; and electronic computer manufacturing. The information sector countered this year’s downward trend and added 900 jobs in August. By contrast, the leisure and hospitality industry lost 2,900 jobs from July.
Los Angeles County added 8,300 jobs, with the largest increase in the government sector. Most of the growth was in local government, while state and federal government jobs declined. The professional and business services sector saw notable gains, as well as job additions in the trade, transportation, and utilities; construction (up 1,300); and other services sectors. The information sector also posted a strong increase. Similar to other metros areas, Los Angeles’ leisure and hospitality industry posted the largest month-over-decline, with 67 percent of the decrease in accommodations and food services.

September 19, 2017 by Selma Hepp • Posted in Economic Straight Talk, Featured Posts, Industry Surveys & Studies, Pacific Union Insights

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Annual Home Price Growth Recorded in 9 of 10 U.S. Metro Areas

• Nationwide, the median single-family home price grew by 6.2 percent year over year in the second quarter to reach a new peak of more than $250,000.
• Annual appreciation in the Bay Area’s two largest metropolitan areas outstripped the U.S. rate — San Jose (9.1 percent) and San Francisco (8.6 percent).
• San Jose and San Francisco remain the two most expensive U.S. housing markets, with respective median sales prices of $1.2 million and $950,000.

A limited supply of homes isn’t just a challenge here in California and the Bay Area; it’s a nationwide issue, and it helped push the national median sales price to another new high in the second quarter.

The latest quarterly report from the National Association of Realtors says that the median price for an existing single-family home was $255,600 in the second quarter, a year-over-year gain of 6.2 percent. That marks a new peak, surpassing the third quarter of last year, with 87 percent of U.S. markets experiencing annual home price gains.

“The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” NAR Chief Economist Lawrence Yun said. “With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.”

Bay Area housing market count among those, with price growth in the region’s two largest cities outstripping the national rate. Home prices in the San Jose metropolitan area grew by 9.1 percent from the second quarter of last year to $1,184,300, continuing its run as the nation’s most expensive major housing market. San Francisco-Oakland-Hayward followed in the No. 2 spot, with a median sales price of $950,000, an annual gain of 8.6 percent.

The nationwide U.S. household income increased to $71,529, but higher mortgage rates than a year earlier and rising home prices are canceling out bigger paychecks, and affordability continues to erode. Assuming a 20 percent down payment, the average U.S. household needs to earn an annual income of $47,300 to afford a median-priced home.

In the Bay Area, yearly qualifying income requirements with a 20 percent down are four to five times higher than the national average — $175,804 in the San Francisco metro area and $218,996 in San Jose. When broken down by individual counties, that can be even more, according to the California Association of Realtors’ second-quarter Housing Affordability Index: almost $300,00 in San Francisco and San Mateo counties.

Yun noted more new construction as key to solving the nation’s affordability challenges, saying “An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth-building benefits of homeownership.”

August 24, 2017 by Pacific Union

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Your Market Quarter Updates for Marin County – Q2 2017

Marin County homebuyers once again showed signs of renewed enthusiasm in the second quarter, particularly for homes priced above $2 million. Demand has rebounded at the higher end of the market, and the number of homes priced above $3 million sold so far this year has increased by one-third from the same period last year.

With inventory levels relatively unchanged from one year earlier, the median home price grew moderately in the second quarter, and heightened purchase activity left fewer homes available for sale. Bidding wars increased, and more homes sold over asking price than during the same period last year.

Looking Forward: A seasonal slowdown traditionally occurs during the summer months, but September will bring buyers back to the market. With low inventory still a concern, buyers may face stiff competition and rapidly growing prices.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the charts includes single-family homes in these communities.

From Pacific Union International Chief Economist Selma Hepp – July 14, 2017

Click here to view the full report

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Bay Area Home Sellers Are Still Raking in the Nation’s Largest Profits

U.S. homeowners who sold in the second quarter realized average returns of 26 percent since the time of purchase, which translates to $51,000.
Home sellers in the San Jose and San Francisco metro areas netted average profits of 74.5 percent and 65.1 percent, respectively, the most in the country.
Bay Area homeowners who sold in the second quarter had held their properties for almost 10 years, among the longest such times in the U.S.

The second quarter was an excellent time to sell a U.S. home, with sellers pulling in the largest gains in a decade. That was particularly true here in the Bay Area, where sellers again realized the biggest returns in the country.

ATTOM Data Solutions’ latest quarterly home sales report says that Americans who sold a home in the second quarter profited by an average of $51,000 since the time of purchase, the most since the second quarter of 2007. That represents a return of 26 percent, also the highest in a decade.

As in the first quarter of this year and 2016, the Bay Area was the best place to sell a home in terms of profits. Sellers in the San Jose metro area enjoyed average returns of 74.5 percent since the time or purchase, which translates to $410,000. San Francisco ranked No. 2 for largest seller returns — 65.1 percent, or $306,000.

Sellers in other Bay Area markets also saw substantially higher profits than the U.S. average. Santa Rosa home sellers realized gains of 61.1 percent ($220,000), while those in Vallejo saw returns of 50.3 percent ($130,500).

U.S. homeowners who sold in the second quarter had owned their properties for an average of 8.05 years, the longest stretch on record and likely the result of tight inventory conditions that are making it difficult to trade up. Second-quarter sellers in San Francisco and San Jose held their homes for an average of 9.87 years and 9.71 years, respectively, among the five longest such times in the U.S.

“Potential home sellers in today’s market are caught in a Catch-22,” ATTOM Data Solutions Senior Vice President Daren Blomquist said in a statement accompanying the report. “While it’s the most profitable time to sell in a decade, it’s also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling. And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years.”

August 1, 2017 by Pacific Union

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California Job Growth Slows in June, but the Bay Area Comes Out Ahead of Other Metro Areas

California’s unemployment rate remained unchanged in June at 4.7 percent according to the state Employment Development Department, the same rate recorded at the end of 2000 and down 0.8 percent from last June. California’s unemployment rate is only 0.3 percent higher than the national rate, far from the 3 percent difference seen in 2011. The continued decrease in the state’s unemployment rate has mostly resulted from a higher slowdown in labor-force growth than in employment growth. The state’s employment growth rate has been slower in 2017, but it is on pace with the national growth rate of 1.6 percent.
California added a total of 159,900 jobs so far in 2017 compared with the 65,400 positions added during the same period last year. While it appears that job openings are plentiful, employers are having a difficult time finding skilled workers, especially for lower-wage positions where employees face increasingly forbidding housing costs.
A recent Yahoo Finance article addresses the issue employers are facing in trying to fill vacancies: “According to a chart from Deutsche Bank economist Torsten Sløk, it now takes 31 days to fill an open job in America, up from 23 days in 2006 and about 15 days in 2009 … It’s never taken this long to find a worker in America … ” The article quotes another report from the National Federation of Independent Business’s small-business optimism report, which showed that “85% of those hiring or trying to hire [reported] few or no qualified applicants for their open positions.” In May, the NFIB’s report found that 33 percent of all small-business owners couldn’t fill a job in the previous month, the highest reading since November 2000. In April, there were 6.04 million open jobs in the U.S., the most on record.

Nevertheless, while the state lost 1,400 jobs in June, the decline was driven by the government sector, which shed 8,800 positions, driven by a larger-than-usual summer drop for public schools. Public schools generally shed about 20,200 jobs from May to June between 2011 and 2015, compared with 31,400 lost in 2016 and 32,000 lost in 2017 between the two months. Next month, public education should see the largest annual jobs decrease based on historical trends. Still, year-over-year government employment is in positive territory.
The industries that added jobs in June included administrative support, construction and transportation, and warehouse and utilities. The information and manufacturing sectors lost jobs, as did the professional, scientific, and technical services; wholesale trade; and retail trade industries.
Over the last year, 8 of California’s 11 industry sectors added a total of 274,000 jobs, with the largest gains in the educational and health services, construction, and leisure and hospitality sectors. Other sectors that added jobs over the year were government; trade, transportation and utilities; professional and business services; other services; and financial activities.
Industries that shed jobs year over year totaled 12,600 job losses and include manufacturing, information, and mining and logging. The loss in the information sector was driven by a large drop in the motion-picture and sound-recording businesses, following a surge in those industries seen in the year prior. Thus, it could be simply an adjustment and not a general declining trend.
Employers in California’s metropolitan areas created 19,100 jobs in June, with the Bay Area taking the lead. San Francisco added 4,900 jobs, San Jose added 2,600 jobs, and the East Bay added 1,900 jobs. In Southern California, Orange County added 3,600 positions, while Los Angeles added 2,900.
Overall, the June jobs report is encouraging but highlights some of state’s pain points, including the disproportional growth among jobs paying below $60,000, which make it increasingly difficult for such employees to find affordable housing close to their jobs. Hence, some of the fastest-growing areas of the state include more affordable regions such as Sacramento and Merced, the latter of which had the largest month-to-month increase in jobs in percentage terms, at 1.2 percent.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

by Selma Hepp, Chief Economist, Pacific Union

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Pacific Union CEO Mark A. McLaughlin’s Top Four Time-Management Tips

At a recent company meeting, I was asked by our firm’s real estate professionals to offer insight into how I manage my time. While the time-management strategy below has served me well in the real estate sector as I have grown Pacific Union over the past eight years, I believe that it can be leveraged to achieve success and get results in any industry.

  • Treat time as a precious resource. Time is a resource you cannot reproduce. Compare your time to your financial resources. You are likely frugal with your cash, consciously allocating it to appropriate priorities. Allocate your time in the same manner — be proactive, not reactive. Set a reasonable time limit on meetings. Next time you say to yourself “I do not have time for activity X,” reframe it in your mind as “that activity is not important to me as other activities.” The importance to you should allocate the time you devote.
  • Create quiet or private time. It is important in your business and personal life to set aside time for critical thinking, physical exercise, or time with loved ones. During these quiet or private times, let phone calls go to voicemail and try to disengage from e-mail and text messages. Your productivity will soar and so will your relationships — maybe even your health and fitness, too. Think about the quiet time as time on an airplane; whether it’s a two-hour flight or a five-hour flight, you can’t be reached by phone.
  • Separate the urgent from the important. Often we receive text messages, voicemails, or e-mails marked “urgent.” Take a moment to consider if this same activity is urgent to you. It could be that someone else’s emergency is not urgent to you. Focus your time on the items that are both important and urgent to you — don’t let someone else put the monkey on your back.
  • Create an action list. At the end of every day, I create an action list that consists of high-impact activities — some short term and others long term. This list focuses me, shows me how I can best allocate my time, and helps me identify urgent and important items. We all know that our day can change with one phone call or text message; we simply need to make sure that we calibrate our reallocation of time with an action list of our own priorities for context.

 — Mark A. McLaughlin, Chief Executive Officer, Pacific Union International


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Just Listed! 357 Rose Avenue, Mill Valley | Exclusively Offered at $2,495,000

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Q4 – The Marin County Market at a Glance


From Selma Hepp, Chief Economist Pacific Union International – 1/13/2017

Following a slower fall, housing market activity in Marin County regained some speed to finish the fourth quarter slightly up on an annual basis. Nevertheless, overall home sales in Marin were down from 2015. The two price segments that were particularly challenged were homes priced below $1 million and above $3 million. While sales at the lower end were simply constrained by a lack of inventory, higher-priced homes continued to face a cautious buyer pool.

Fewer buyers were willing to bid above asking prices – particularly for higher-priced homes – and bidding wars were less common than in previous quarters. Generally, only homes priced below $1 million saw continued high single-digit-percent appreciation.

The number of homes for sale remained scarce, especially at more affordable price points. The inventory of homes priced above $2 million has remained steady after some buildup during the earlier part of the year, but, due to slower sales of higher-priced homes, the monthly supply of inventory has steadily increased.

Looking Forward: The recent increase in mortgage rates and the uncertainty around the incoming administration’s policies could hold back Marin County housing-market activity in the first quarter. The following quarters will likely see a boost in sales as it becomes clearer how the new administration will impact the Bay Area’s economy.

To read Pacific Union’s real estate and economic forecast through 2019 for Marin, San Francisco, and San Mateo counties, click here.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the charts includes single-family homes in these communities.

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Pacific Union CEO Mark A. McLaughlin Named to List of Real Estate Influencers

Pacific Union is honored to share the news that company CEO Mark A. McLaughlin has been named to an esteemed list of industry influencers for 2017.

Inman’s The Real Estate Influencers of 2017 list honors real estate industry executives and professionals who are changing and disrupting the industry. The honorees include entrepreneurs from all walks of the real estate industry as chosen by the publication’s readers and editorial staff, as well as outside suggestions.

“They are not cut from the same cloth, they do not speak the same language and they do not always necessarily share the same values,” Inman Publisher Brad Inman says. “But they influence the industry by their work, through their followers and by expressing their opinions.”

McLaughlin, who purchased the company in 2009, was named to the list for his industry innovations. Under McLaughlin’s leadership, Pacific Union has grown to the ninth-largest residential real estate firm in the United States by 2015 sales volume, with nearly 700 real estate professionals in 28 offices throughout Northern California. He led the 2015 acquisition of urban residential sales and marketing firm The Mark Company and the December 2016 merger with Los Angeles-based brokerage John Aaroe Group. Combined, the three companies supported a 2015 sales volume of $10.5 billion.

“It is an honor to be recognized by Inman,” McLaughlin says. “Pacific Union’s trajectory is a direct result of our shared vision. It is our team’s perspective that vision is only powerful when it is debated, shaped, and executed as a team.”

We’d also like to congratulate John Aaroe and Jim Walberg for their inclusions on the list. As founder of John Aaroe Group, Aaroe has grown the brokerage into the top five in the Los Angeles region for sales volume. Walberg is a Pacific Union real estate professional based in our Danville office who has served the Bay Area real estate community for more than 30 years and earns accolades for his adoption of technology and social media tools, as well as his extensive international client base.


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The top 20 home design trends of 2017

What sellers and stagers should know about the trends ahead

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