In 2009, the U.S. Congress passed and President Obama signed the American Recovery and Reinvestment Act (ARRA). You may recall the phrase “shovel ready projects” or saw the big green signs along local freeways touting infrastructure work to be done locally. The initial price tag was about $787 billion. There first object of ARRA was to save and create jobs. The key connection between ARRA and the value of your home lies in that one word: jobs. Jobs means good income which potential buyers can use it to buy homes. Recently, the folks at www.propublica.org reported in where the $787 billion went during the last three years. It’s a report card of sorts. It makes for some interesting reading. It shows who got the most help and used that help to best preserve property values through job creation and retention.
-HOW DID CALIFORNIA DO? Our state received about an average amount when compared to other states. We received about $1,700 per person or $63.3 billion. And, how did this money impact our state? For starters, theCalifornia unemployment rate went up from 9.0% in December 2008 to about 10.9% by December 2011. In comparison, the national unemployment rate went from 7.4% to 8.5%. At the same time, homes inCalifornia depreciated by more than 20%. In some areas the depreciation was over 50% While this looks bad at first glance, the big question is where would home values and the job market be today without the federal stimulus?
-DID CALIFORNIA GET ITS FAIR SHARE? The most money per person went to those lucky folks inAlaska ($4,098 per person which is almost 2.5 times whatCalifornia received). Even with a huge infusion of funds,Alaska’s unemployment rate went from 7% to 7.7%. Ouch! Almost half the states received more help thanCalifornia. Again, a question: Where wereCalifornia’s representatives inWashingtonD.C. when ARRA funds were being spent? (BTW,Florida was the least fortunate state with $1,247 per person. It’s interesting thatFlorida andCalifornia were devastated by the housing bubble and yet received minimal help)
-DID CONTRA COSTA GET ITS FAIR SHARE? Our county received $476 per capita which is the second lowest amount out of 58 California counties. OnlyColusaCounty, which had a huge unemployment rate of 23%, received less federal help. The biggest receiver of funds wasMt.DiabloUnifiedSchool District which received almost $17.6 million to help with the school district budget. Which counties did received the most help? Look atSan Luis ObispoCounty. SLO received $6,318 per person! Unemployment dropped from 9.8% t o 8.8%. The biggest single project in that county went to Sunpower Corp to the tune of $1.37 billion for the construction of California Valley Solar Ranch. It’s supposed to create about 350 jobs (that’s about $3.9 million per job created-another big Ouch!)
-WHAT DID CONTRA COSTA ACHIEVE WITH ITS FUNDS? Here comes the good news. With the second lowest amount of funds to any county inCalifornia, theContraCostaCounty unemployment rate dropped from 11.1% to 9.3%. In other words, CCC unemployment rate was down 16.2%. The only county inCalifornia with a greater reduction in unemployment wasSanta Clara which went from 11.3% to 8.7% (a reduction of 23% thanks toSilicon Valley!) The reduction of the unemployment rate in our county during difficult times means good things for the county in general and the value of homes in particular. Good paying jobs creates consumers who buy tires and go to restaurants and buy materials for home remodeling projects. Good paying jobs means an increased demand for more housing units. We should see increased home construction soon. Those construction projects create more good paying jobs which creates more consumers to buy tire, good to restaurants etc. etc.
Contra Costa got the short end of the stick on the ARRA but we took that stick and created an environment to put our area in the lead during the coming economic recovery.