Napa and Sonoma rebuilds lead in the rise of building permits
Bay Area job growth accelerated in the past three months and unemployment levels and rates fell sharply compared to a year earlier. More good news came in rising residential building permits and a surge in labor force growth. But very low unemployment rates and record levels of labor force participation rates raise questions as to where the workers will be found to fill the planned job growth.
The Bay Area Again Outpaces the Nation in Job Growth
Continuing strong job growth in September pushed year over year Bay Area job growth to +2.4% compared to 1.9% for the nation and 2.0% for California.
Unemployment rates are sharply lower in September 2018 compared to a year throughout the region with a 2.6% regional rate in September. The number of unemployed residents fell by 20,800 between September 2017 and 2018 and there are now fewer than 110,000 unemployed residents in the region. Labor force growth surged to nearly 50,000 driven by record levels of participation by all age groups over 25.
Year over year job growth bounced up in September to over 90,000. Slowing labor force growth from boomer retirements will probably push job growth levels lower over the coming years.
Housing permit levels continued an upward trend in 2018 though the pace of growth has slowed in recent months. Permit levels are up 18% in the first eight months of 2018 led by strong gains in Contra Costa, Napa and Sonoma counties. And project approvals are also rising throughout much of the region.
Recent job growth has been supported by declining unemployment and an increase in labor force participation—two factors that do not increase housing demand. But the region has reached the point where future labor force growth will need to come mainly from new residents and new housing
The next needed steps involve lowering the cost of building new housing, changing zoning to allow more and less expensive housing to be built and, hopefully, state funding to offset some costs of housing.
Perhaps the hardest challenge to overcome is the lack of affordable housing for middle income residents who are not eligible for subsidized housing even if it were available in sufficient quantity.
The bottom line, which should be understandable to Bay Area Council members, is that it is really hard if not impossible under current rules to build housing that is affordable to middle income residents yet pencils out for developers.
For readers who want to follow the recommendations of the Committee to House the Bay Area (CASA), look at the recent meeting packets for July and September at https://mtc.ca.gov/our-work/plans-projects/casa-committee-house-bay-area/casa-meeting-schedule.