San Bernardino County Economic Update

Population Estimate for Mid-Year 2009

According to California Dept. of Finance, the County's population grew by just 9,952 between 7/1/08 and 7/1/09.  That's the first time in at least 29 years that the County's population grew by fewer than 10,000 people.  The growth rate of 0.48% is the lowest among the seven counties of Southern California, and is nearly half the rate of the State's average (0.93%).  What's more worrisome is the trend in net migration (people moving in minus people moving out), which was        -11,500 during that period.  Traditionally the County draws in large number of migrants, both domestically and internationally.  However, since the housing crisis began, the County has seen a worsening trend of negative net domestic migration.  Although the overall growth rate remained positive, the large amount of out-migration means that demand for housing may be lower, which will have an impact on the speed of the housing market recovery.  Migration has much larger impact on housing demand than natural increase [births minus deaths].

Link to data: http://www.dof.ca.gov/research/demographic/reports/estimates/e-2/2000-09/

Inland Empire Still Leads the State in Population Growth

For the July 1, 2007 population estimate, the Riverside-San Bernardino metro area had the fifth largest numerical growth among the nation's 100 metro areas with the largest numerical gains:

Rank         Metro Area                          Num.Growth    % Growth
1   Dallas-Fort Worth-Arlington, TX            162,250       +2.7%
2   Atlanta-Sandy Springs-Marietta, GA      151,063       +2.9%
3   Phoenix-Mesa-Scottsdale, AZ                132,513       +3.3%
4   Houston-Sugar Land-Baytown, TX          120,544       +2.2%
5   Riverside-San Bernardino-Ontario, CA     86,660       +2.2%

Normally, the two-county metro area grows at a rate of between 3% to 4%, and so the 2.2% growth rate represents a significant slowdown for the area  This was also the first 12-month period in this decade that the two-county metro area's numerical growth is under 100,000.

Among the faster-growing metro areas in California, the two-county metro area was the leader in numerical growth, and 2nd in terms of percentage growth:

Rank                      Metro Area                   Num.Growth   % Growth
1  Riverside-San Bernardino-Ontario, CA         86,660       +2.2%
2  San Francisco-Oakland-Fremont, CA            39,435       +0.9%
3  Sacramento--Arden-Arcade--Roseville, CA    28,410      +1.4%
4  San Jose-Sunnyvale-Santa Clara, CA            28,177       +1.6%
5  San Diego-Carlsbad-San Marcos, CA             26,497      +0.9%
6  Bakersfield, CA                                           18,044      +2.3%  <-- largest % growth
7  Fresno, CA                                                 13,838      +1.6%
8  Los Angeles-Long Beach-Santa Ana, CA          8,753      +0.1% <-- smallest % growth
9  Visalia-Porterville, CA                                   7,798      +1.9%
10  Stockton, CA                                               6,375      +1.0%

Basically, the two-county metro area accounted for over 70% of the population growth in the Southern California region.  So although the growth has slowed most likely because of housing market concerns, the two-county metro area remains the location of choice for many.

What do these numbers imply?  Population growth is slowing, and so builders who planned their projects on the 100,000+ growth rates will have to rethink their near-term projections.  There are enough vacant housing units in the two-county metro area to house the additional residents for six years even without building another unit (assuming no increase in growth rate and all vacant housing units are available for use).  This will put further downward pressure on housing prices.

Once housing prices stabilize (i.e. hit the bottom) and mortgage market returns to a more liquid state, population growth rate should rebound.  When will housing prices hit the bottom is anyone's guess, not to mention that no one knows what the "bottom" price level really is.  The metro area will continue to get people priced out of the nearby coastal counties.  If the area cannot boost its employment base, then many of these new residents will have to tolerate long commutes to coastal counties for their jobs.

Furthermore, if the metro area can no longer draw in new residents from outside the Southern California region with its relatively cheaper housing options, it will have to draw in new residents by providing better job opportunities.  Either way, economic development efforts have never been so critical to the region's future and the quality of life of its residents.

Press release: http://www.census.gov/Press-Release/www/releases/archives/population/011671.html