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Tourism and Business Sectors Drive Growth in Anaheim HMA

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Tourism and Business Sectors Drive Growth in Anaheim HMA

Map illustrating the boundaries of the 10 regions defined by HUD and their included states.The Anaheim-Santa Ana-Irvine, California Housing Market Area, which is located in HUD Region IX, has been experiencing economic growth since 2010, but the growth rate has slowed over the past year to less than the national average.

HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.

The Anaheim-Santa Ana-Irvine Housing Market Area (Anaheim HMA) in southern California encompasses Orange County and borders Los Angeles, San Bernardino, Riverside, and San Diego counties. The Anaheim HMA has a population of approximately 3.2 million and includes the major cities of Anaheim, Santa Ana, and Irvine.

Tourism is a large part of the southern California economy, particularly in the Anaheim HMA, which is home to three amusement parks: Disneyland, Disney California Adventure Park, and Knott’s Berry Farm. The three amusement parks make the HMA is a popular tourist destination; in 2016, more than 47 million people visited the area and spent an estimated $11.6 billion, fostering a robust leisure and hospitality sector. A recent Comprehensive Housing Market Analysis shed light on economic and housing market conditions in the Anaheim HMA.


  • Low Unemployment Rate Despite Slow Growth

    The economy in the Anaheim HMA has been growing since 2010, but the growth rate has slowed over the past year to less than the national average: nonfarm payrolls increased by 22,400 jobs, or 1.4 percent, over the past year, slightly less than the national growth rate of 1.6 percent and less than the southern California regional average of 2 percent.
    This slow growth can be attributed in part to job losses in the manufacturing sector, which saw a decline of 800 jobs, or 0.5 percent, over the past year. Restructuring by the Boeing Company accounted for 200 of these lost jobs. Nevertheless, employment gains in the professional and business services, leisure and hospitality, and construction sectors offset the losses in manufacturing. Multiple area companies expanded, adding 6,000 jobs during the past year.
    Despite the Anaheim HMA’s slow economic growth rate, its average unemployment rate, at 3.8 percent over the past year, is lower than that of the southern California region (4.2%) and the nation as a whole (4.7%).

  • Expansions in Tourism and Business Sectors Will Drive Employment Growth

    Even with three theme parks, the Anaheim HMA’s leisure and hospitality sector, which accounts for 13.4 percent of employment in the HMA, is only its third-largest employment sector. The professional and business services sector and the wholesale and retail trade sector account for 18.8 percent and 14.7 percent, respectively, of area employment. Since 2000, however, the leisure and hospitality sector has been among the area’s fastest-growing sectors, accounting for 38 percent of employment growth in the HMA, behind only the education and health services sector.
    The Walt Disney Company, with 29,000 workers, is the largest employer in the HMA, and the company is expanding Disneyland to add a section with a Star Wars theme. The $1.1 billion expansion will be completed in 2019 and has added approximately 1,700 construction jobs. Other notable projects include the expansion of the Anaheim Convention Center, which has added 1,860 construction jobs. In addition, recently completed hotels in the Anaheim Resort district have added 400 jobs to the area.
    Employment growth is expected to continue over the next 3 years at a rate of 1.1 percent annually. Expansions in tourism and business services will lead employment growth during the period.

Housing Market

  • Balanced Housing Sales Market Amid Low Homeownership Rates

    The sales market in the HMA is balanced, with an estimated vacancy rate of 1 percent. The low vacancy rate is due in part to reductions in home inventory and decreases in home construction in the HMA during the late 2000s. There were 35,900 home sales in the Anaheim HMA in 2017, down 1 percent from 2016. Since 2010, homeownership rates have declined by 4 percent to 55.4 percent, which is much lower than the national homeownership rate of approximately 64 percent.
    Over the next 3 years, demand is estimated for 9,175 new homes. The 1,525 houses currently under construction and a portion of the 37,100 other vacant units that may reenter the market will satisfy some of this demand.

  • High Demand for Rental Units

    The rental market in the HMA is tight, with an estimated vacancy rate of 3.6 percent. The demand for rental units in the area is high, as the increase in rental households has outpaced the construction of rental units. Nearly 30 percent of single-family homes in the HMA are rental units. Investors convert single-family homes into rental units to provide a more affordable housing option in response to high home sales prices. Since 2010, half of all multifamily construction projects have taken place in Irvine and 10 percent in Anaheim. In Irvine, more than half of the University of California, Irvine (UCI) student body lives off campus, which helps explain the concentration of multifamily construction activity in the area. UCI plans to house 50 percent of students by 2021 and is currently constructing housing projects that will add 1,894 beds to the campus in 2019.
    Over the next 3 years, demand is estimated for 11,550 new rental units. Currently, 5,100 units are under construction, and these will help meet the forecasted demand for rental units in the area.

Published Date: 20 February 2018

The contents of this article are the views of the author(s) and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.