California's Changed Position in U. S. Residential Building and Mortgage-Lending Activity

The population figures are based on annual estimates of the California Department of Finance and the U.S. Bureau of the Census for July 1 of each year. The analysis throughout this section uses California's share in the U.S. population as a reference point. If households (not reported annually) are taken as a basis, California's share is somewhat greater without changing the basic relationships significantly. This is evident from the following census figures for the state as a percent of U.S. totals:

Between 1965 and 1966 housing units authorized by California building permits declined by 41 percent, while housing starts in the U.S. dropped by 20 percent. The credit crunch of 1969, however, had no marked impact on residential construction in either California or the United States, because of massive intervention by federal housing credit agencies and the expansion of housing subsidy programs legislated for the most part in 1968. New housing units in California increased between 1968 and 1970, and housing starts in the U.S. declined only fractionally.

Residential construction expenditures evidenced by building-permit valuations show relationships similar to those indicated in housing starts. Hence, there is no need for presenting yet another statistical series.

Annual percentage increases in population exclusive of members of the armed forces are estimated as follows:

Divorce and marriage rates per 1,000 population were as follows: The California divorce rate is probably understated, since the proximity of Nevada and its lenient divorce laws permit a disproportionate number of Californians to be divorced easily there. The higher divorce rate probably accounts in part for the fact that single-person households were 17.6 percent of all households in California, as against 13.1 percent in the U.S. in 1960, and 21 percent as against 17 percent in 1970. The marriage rate for California may also be somewhat understated, again because of Nevada's proximity. The projection of a California marriage rate not exceeding the national rate is based on the age composition of the population in 1970. Persons fifteen to twenty-four years of age represented 17.8 percent of the state's population as against 17.5 percent for the U.S. Persons under fifteen were 17.6 of the total in California, as against 28.5 percent in the U.S. Source for marriage and divorce rates: U.S. National Center for Health Statistics, Vital Statistics of the United States.

Based on Table 1 and reports for southern California by Security Pacific National Bank. Southern California includes the following counties: San Luis Obispo, Santa Barbara, Los Angeles, San Bernardino, Inyo, and all counties south of these.

In 1970 persons 65 years of age and over represented 9 percent of California's population as against 9.9 for the U.S. In 1960 the figures were 8.8 percent and 9.2 percent, respectively, and in 1960, 8.4 percent and 7.5 percent, respectively. The senior-citizen population in California has grown at a less rapid rate than in the United States.

Based on U.S. Bureau of the Census data on housing starts by major regions; California has typically represented half or more of the new housing units authorized in the West.

Savings and loan associations specialize in home financing, so their lending activity may have been adversely affected by the shift toward multifamily housing construction. This has been a nationwide trend but more pronounced in California than in the country as a whole. However, loans on new property of all types average at the most two-fifths of the amount of all mortgage loans made by S & L's. Hence, the changing mix of residential construction was probably a minor factor in the relative decline of net lending by California associations.

Thus, time deposits of more than $100,000, or certificates of deposit, increased from 9.4 percent of total time and savings deposits of insured commercial banks in the U.S. in July 1969 to 22.9 percent in July 1973. Because adjustments for large-denomination CD's would be difficult for the period prior to the mid-1960s, the data in Table 6 include time deposits of all types. The average maturity of time deposits of less than $100,000, accounting for over one-third of the savings and time deposit total in recent years, has lengthened. Deposits for more than one year in this category accounted for 59 percent of the total in July 1973 as against 41 percent in July 1970. Data are from periodic reports in Federal Reserve Bulletin.

The reorganization of FNMA in 1954 divided its operations into three parts: (1) secondary market, (2) special assistance, and (3) management and liquidation of the pre-1954 loan portfolio. The secondary-market operation has been by far the largest and also a continuous activity. Special-assistance and management and liquidation functions were transferred in 1968 to the Government National Mortgage Association. Although FNMA was converted to private ownership in the same year, it remains oriented to public service specified in federal law and is therefore included here as a federal credit agency. The Federal Home Loan Banks, discussed in the next paragraph, are also privately owned, yet perform services defined in federal legislation.

For FNMA holdings as well as Federal Home Loan Bank advances the tables show outstandings rather than net changes for individual years or groups of years. Annual net changes in these cases are erratic and frequently negative.

FHLB advances do not necessarily represent funds invested in mortgages. They may be obtained in part to help savings and loan associations meet savings withdrawals of liquidity requirements. However, in the absence of advances the associations would have been forced to reduce their lending activity. Hence, the advances are for our purpose considered funds potentially available for mortgage investment.

Historically, California S & L's have been net sellers of mortgage loans to out-of-state associations or other investors. This position was reversed in 1971 and 1972 when the lendable funds obtained by California institutions from savings growth, loan repayments, and Federal Home Loan Bank borrowings exceeded the local mortgage demand that the associations were willing to meet.

For previous analyses see Grebler Leo , “California's Dependence on Capital Imports for Mortgage Investment,” California Management Review (Spring 1963), pp. 47–54; and Case Fred E. , “California's Continuing Need for Mortgage Capital,” CMR (Winter 1967), pp. 80–90. These analyses were based on stock data rather than the flow data used here, and both the methods of estimation and the types of institutions included vary from those in the present article.