Fiscal Year 2013-2015 Special Budget Meeting

Page 2 FY 2013-2015 BUDGET HIGHLIGHTS II. FINANCIAL/ECONOMIC MARKET CONSIDERATIONS Consistent with national, state, and regional economic market trends, the City of Oakland economy is showing signs of stabilization and modest growth. Key Oakland Economic Indicators at a Glance Recent economic indicators confirm modest economic recoveries for Oakland:  Vacancy rates have decreased across all commercial sectors, with the industrial sector falling to its lowest ever of 4.7%. Commercial and retail vacancy rates are declining.1  From calendar years 2009 to 2012, retail sales increased 23.1%. In calendar year 2012, the gain in taxable retail sales from 2011 alone increased by 7.6%.2  In calendar year 2012, the City experienced a net increase of 5.3% (823 net new) Residential and commercial businesses in Oakland (non-rental businesses).3  Property transfers continue on an upward trend. In 2012, there was an average of 749 transfers per month for all properties, compared with 712 per month in 2011.4  Employment in Oakland in January 2012 was 175,100; in January 2013, employment grew to 181,500, for a net gain of 6,400 jobs.5 Housing Market Activity Oakland’s housing market is complex. The rate of foreclosure activities has significantly decreased in Oakland. However, there are still many Oakland residents in or at risk for foreclosure and the number of underwater borrowers is also high. Notices of Default have decreased 64.1% since the prior year, and the rate of short sales has increased 35% from 2011 to 2012.6 Like state and national trends, the number of short sales in Oakland has impacted the market. Additionally the significant number of foreclosed home purchases by investors has also contributed to higher home prices and a larger rental market. Additionally, newly constructed condominium units that were converted to rental units are now returning to the sale market. Vacancy rates in rental markets are low, with rents rising. According to the data published by real estate trends site Realtor.com, the average U.S. home spent 84 days on the market last month. In 10 housing markets, homes spent 48 days or less on the market before being sold. In Oakland, homes spent just 24 days on the market. 7 In terms of new housing, construction starts remain slow, but major housing developments proposed in Oakland are expected to come on line in the next several years. For example, Brooklyn Basin Development (Oak to Ninth development), along the Embarcadero adjacent to Jack London Square, where construction will begin in spring 2014, will contain 3,100 new units of housing, as well as 30 acres of open space and 200,000 square feet of commercial space. The City is positioned now for a “10k 2.0” initiative. 1 Colliers International 2012 4th Quarter Report 2 HdL Companies 3 City of Oakland Business License Office 4 HdL Companies 5 State of California EDD 6 ForeclosureRadar http://www.foreclosureradar.com/california/alameda-county/oakland-foreclosures 7 http://www.foxbusiness.com/industries/2012/07/25/american-cities-where-homes-sell-fastest/