Orange County Real Estate Market Changing

1. From 1945 to 1979, incomes increased at the same rate for all tax brackets. Since 1979, a larger percentage of the population is continuing to become more and more affluent! From 1980 to 2004, the median income rose by 18% but...
   • the top 20% of incomes grew by 59%
   • the bottom 20% of incomes grew by only 7%
   • the top 1% of incomes grew by 200%

2. Today the top 10% of wage earners receive 45% of all household cash income, and 85% of the nation's wealth resides in the richest 15% of Americans! (note: the bottom 50% hold only 2.5% of the nation's wealth)

3. Over the next decade, there will be a 25% increase in the population who are over 50 years of age. They have more money than any preceding generation, due to having duel incomes, equity growth, and record inheritances! This age group is spending $1.7 trillion dollars annually!

4. This helps to explain why, last year, 27.7% of all sales (2.3 million) were for investment purchases while 12.2% of all sales (1.0 million) were for 2nd homes!

5. The Federal Reserve reports that consumers have $5 trillion dollars in liquid cash sitting in banks or savings and loans. By April of 2006, they had $53.83 trillion dollars of household net worth!

A Strong National Economy

1. June marks the Federal Reserve's 17th straight rate increase and yet they still cannot slow this economy down! This should be the end of rate hikes for the rest of the year.

2. Since 2003, the U.S. has created 3.9 million new businesses and 5 million new jobs.

3. Business spending is growing at its fastest pace in six years, (1st Qtr. earnings were $1.65 trillion dollars), which helps explain how the GDP for the 1st quarter expanded at an amazing 5.6%! That makes 12 out of the last 13 quarters (4th Qtr. ‘05 was 1.7% due to the hurricanes) in which the GDP has exceeded 3%! Corporate cash is at a historical high of $2 trillion dollars due to 15 straight quarters of double digit (year to year) earnings.

4. Personal income has been growing at twice the rate predicted by economists. So with consumers making up 70% of the economy and business spending growing, these forces are propelling the economy upward with a "one-two punch". The economy should continue to grow at a rate between 3.0% to 3.5% for the rest of the year.

5. Since1980, the Gross Domestic Income has risen 66% and is now at $12.6 trillion, helping to shrink the federal deficits – although you hear only about record deficits! Today, debt is only 2.7% of the GDP, compared with 6.0% in ‘83 and 4.7% in ‘92!

6. Increased tax revenues have the Budget Office reducing the deficit by $320 billion this year. In April, the U.S. Government had a budget surplus of $119 billion and all but 4 states in the nation are running state budget surpluses.

7. As of June, we have employed 1.8 million new workers over the past year. We have averaged over 2 million for the last two years – all adding tax receipts to the Treasury. If you add in the self-employed, we added another 1 million workers last year!

8. June's unemployment rate of 4.6% is the lowest since 2000, and since 3% of the population won't work even if you give them a job, we are at nearly full employment.

9. In the U.S, incomes exceeding $100,000 (+) are growing 6 times faster than the population. For the first time, there are over 1 million people living in $1 million dollar homes and 1/3 of them own a 2nd home!

A Strong California Economy

1. California produces 15% of the nation's GDP. One out of every eleven workers in the U.S. is employed in this State - 16,874,000 workers!

2. Our employment growth is at 1.5%, adding 223,000 jobs last year. However, our self- employment growth rate is 11.1%, which added another 218,000 jobs.

3. California has one of the most diversified economies in the world, serving the Pacific Rim through trade, a growing service sector, and expanding electronics and manufacturing. Add high-tech, the financial sector, bio-tech, tourism, agriculture and government, and it is easy to see why California is one powerful state!

4. In southern California, there are over 10 million people employed, plus another 1.5 million that are self employed. May's unemployment rate for southern California's six counties was only 4.01%!
   1. Los Angeles has the highest at 4.9% while "The OC" has the lowest at 3.2%.
   2. San Diego was at 3.7%, Ventura was at 3.8% while Riverside came in at 4.2% and San Bernardino posted a 4.3% unemployment rate.

5. High employment numbers have allowed the state to post record surpluses! As of May, the State had a $7.5 billion dollar surplus – above budget projections.

6. In southern California, 95% of companies employ fewer than 50 people! Today's technologies enable companies to become highly productive with fewer people, ending the boom-bust cycle and its massive lay-offs.

7. This helps to explain the following:
   • 48,666 million-dollar homes were sold in California last year, which was a 47% increase over last year! That's 1 out of every 13 sales in the State!
   • There are over 450,000 million-dollar homes in California! Last year in Orange County, there were 7,342 homes sold, which represented 15% of the real estate market. In Los Angeles, just over 10,700 million dollar homes sold!
   • Think of the cities of Inglewood, Compton and Watts. Now think of housing prices appreciating 30% to 40% yearly in those cities!

A Strong Orange County California Economy

1. There is a great demand for living and working in Orange County.
   • OC ranks #5 (in the U.S.) in the number of jobs (1.5 million); in addition, approximately 300,000 additional jobs are held by the self employed.

   • OC ranks between #5 and #9 in the nation (year after year) in creating new jobs! Growth is expected to pick up the latter part of this year, totaling 26,000 new jobs.

   • Ranks # 1 in the state, #2 in the U.S., with an unemployment rate of 3.2% because of the Triple Endowment – entrepreneurial culture access to capital educated talent.

   • Since 2000, it is the 8th fastest growing county in the nation. It ranks #7 as the most dense county in the U.S. and 2nd with the most population (1% of the U.S.)

   • Ranks # 8 in the nation in manufacturing, with 184,800 jobs. With all the new commercial construction, the vacancy rate is at a 5-year low!

   • There are currently 42 high-rise condominium towers under construction or in various stages of pre-development in Orange County.

   • OC ranks #3 in the U.S. in Asian business and #3 in Asian population in California.

   • In the past 20 years, Orange County developers built 260,000 homes, condos, and apartments. In the next 20 years, OC will build 56,000 units, then all the land will be gone!

2. OC has a dynamic economy in one of the most desirable locations in the world. Most of the Orange County real estate was developed under strict zoning guidelines, and our population growth should continue to keep upward pressure on the housing market!
   • 43 miles of beautiful shoreline and 51% dedicated open space.
   • 14th largest market in the U.S. and ranks #3 in retail sales (per household).
   • A magnet for tourists, attracting 44.7 million visitors spending $7.7 billion dollars.
   • The median age is 34.2, and the county has one of the highest household incomes in the U.S.
   • 11% of the households in OC have a new worth exceeding $1 million dollars!
   • OC ranks #3 in the U.S. with 113,299 millionaires, and there are 5 billionaires!