DIVERSE ECONOMIC PICKUP FORESEEN

UCLA projection for 2014: more county jobs, rise in home prices, incomes

3.3%

Expected rise in average per-capita income in 2014 from $51,870 last year to $53,626

San Diego County’s economy will see diverse growth this year, but it won’t be until 2016 that the labor market tightens up.

That’s according to an economic forecast released Wednesday by the Anderson School of Management at the University of California, Los Angeles, which included a wide range of predictions for San Diego County. While the school releases national and statewide economic forecasts each year, this is the school’s first San Diego County forecast in some time. Overall, the local forecast says job growth will pick up, home prices will increase, and incomes will rise.

“All cylinders of the San Diego County economy appear to be firing now, and that includes technology, tourism, construction and real estate,” the forecast says.

Still, San Diego County’s unemployment rate is elevated, at 7 percent. This year’s job growth will only tick up slightly, pushing the jobless rate down to 6.6 percent by the end of 2014. The forecast says county employers added 33,000 jobs in 2013, and will add another 36,000 in 2014, for 2.7 percent growth. The job gains will be led by technology and business services, but unemployment won’t touch 5 percent until 2016.

“We’ve got a recovery in jobs that doesn’t account for the jobs that are needed for just the population growth over that period of time,” said Jerry Nickelsburg, a senior economist at UCLA. The forecast says San Diego County’s population should grow by 3,874 people in 2014, to 3,209,846 residents — and about 47 percent will be employed.

In residential real estate, the forecast says home values will appreciate once again in 2014, but not as quickly as they did over the past two years. Throughout the year, the median home value will average $455,000, which would be a 10.5 percent increase over 2013. For comparison, values rose 18.5 percent from 2012 to 2013.

When it comes to income, San Diegans appear to be in store for a raise. Average per-capita income will rise to $53,626 in 2014, up from an average $51,870 last year. That’s a 3.3 percent increase, nearly double the expected inflation rate of 1.7 percent.

Statewide, UCLA says the best thing California has going for it is the outlook for the global economy, with growth returning to Europe and Japan, and economies picking up speed in China and India. Nickelsburg said he expects California’s job growth to be about 2.2 percent.

Written by, 

Jonathan Horn

JOB GROWTH REVS UP IN MARCH

Professional, technical sectors and construction lead the charge

San Diego County enjoyed widespread job growth in March, as the unemployment rate ticked down to 6.9 percent, the state reported Friday.

Last month, 11 of the 12 industries tracked by the Employment Development Department increased their number of employees, from tourism to construction to education and health services. In all, employers in San Diego County added 12,700 people to nonfarm payrolls in March, bringing the unemployment rate down from 7 percent in February.

“San Diego’s economy went out like a lion in March, showing solid momentum in the job market,” said Lynn Reaser, chief economist at Point Loma Nazarene University.

Over the past 12 months, employers have added 32,600 people to payrolls, for 2.5 percent annual growth. That outpaces Orange County, Los Angeles, the state and the nation.

The annual job gains were led by the high-paying professional, scientific and technical services sector, which has added 6,700 jobs since March 2013. The construction field, which pays middle-class wages, is up 9.9 percent in the past 12 months to 64,600 workers. Construction jobs bode well for the rest of the economy, said Esmael Adibi, economist at Chapman University.

“I cannot think of any other industry with as big of a multiplier than construction, and especially when it comes to residential,” he said. “You just go into the house and there’s a whole bunch of things you have to do. It’s not a done deal.”

Despite the widespread growth, the jobless rate remains elevated at 6.9 percent. But that could be a product of more optimism among job seekers.

“The unemployment rate looks like it’s high but that’s because more and more people are entering the labor force,” said Alan Gin, economist at the University of San Diego. “Some of those probably were discouraged previously. Now things are looking better so they’re coming back to the workforce.”

San Diego’s job outlook got a huge boost last month, when the state revised 2013 data to show an extra 30,000 jobs. That was a far cry from what was reported throughout most of last year. “It looked like we were in a big slump but then when they revised the numbers everything turned out OK again,” Gin said.

In March, the labor force had a record 1.6 million people now working or looking for work. In the last year, the number of people unemployed in the county has fallen by nearly 11 percent to 110,700. A year earlier, the unemployment rate was 7.8 percent.

Looking forward, Gin said he expects between 30,000 and 35,000 payroll jobs to be added in 2014, which would be similar to the 32,800 added last year. He said he sees the unemployment rate falling below 6 percent by the end of the year.

Reaser said the growth would have widespread impact.

“San Diego’s positive signs in the job market could be a sign of improving confidence on the part of the region’s businesses and will be an important driver of consumer spending, homebuying, and other vital aspects of the economy’s return to full health,” she said.

Still, there’s room to grow. Earlier this week, the University of California, Los Angeles released a forecast that was bullish on San Diego’s economic strength, but said there would be tightness in the labor market until 2016, when the jobless rate is expected to touch 5 percent.

Adjusted for seasonality, such as tourism hiring for spring break, county employers added 7,100 jobs in March. Gin’s adjustment to the unemployment rate kept it the same, at 6.9 percent, while Reaser had it down to 6.8 percent.

Statewide, the unemployment rate held steady at a seasonally adjusted 8.1 percent in March while nearly 12,000 jobs were added. California’s jobless rate in March was down from 9.2 percent a year ago but remains above the national rate of 6.7 percent.

The 11,800 nonfarm payroll jobs created in March means the state has gained 1.2 million jobs since the economic recovery began in 2010. The information sector led the way with 7,000 new jobs.

Other sectors showing gains were: mining and logging; construction; trade, transportation and utilities; professional and business services; educational and health services; and government.

More than 1.5 million Californians remain unemployed.

The Associated Press contributed to this report. 

Written by, 

Jonathan Horn

San Diego Union Tribune 

Peak Homebuying Season Starts Slowly

San Diego County’s housing market is off to one of its slowest starts to peak buying season, which began in March.

Last month, 3,057 homes sold for a median $427,000, real estate tracker DataQuick reported Tuesday. That’s a boost in activity from February’s 2,541 sales at a median $410,000, but it was a nearly 20 percent drop from the sales in March 2013. Last month was also the slowest for a March since 2009, toward the end of the Great Recession. March is generally the month in which activity in the housing market picks up, as weather improves and some families plan to move during the summer.

DataQuick analyst Andrew LePage said there are a variety of reasons for this year’s slow start.

“The inventory of homes for sale remains thin in many markets. Investor purchases have fallen. The jump in home prices and mortgage rates over the past year has priced some people out of the market, while other would-be buyers struggle with credit hurdles,” LePage said in a statement, “Also, some potential move-up buyers are holding back while they weigh whether to abandon a phenomenally low interest rate on their current mortgage in order to buy a different home.”

Last month’s median $427,000 was still a 12.4 percent jump from March 2013’s $380,000 price tag, but the value gain continued an overall trend of slowing annual appreciation. In June, for instance, when the median was $416,500, home values were up 24.1 percent from a year earlier.

Norm Miller, a professor of real estate at the University of San Diego, said it’s expected that real estate appreciation would slow. He said, however, that the housing market is returning to normalcy due to a decline in bank-owned home sales. Foreclosure resales made up 5 percent of the homes sold in March, whereas in March 2011 they made up 33.2 percent of transactions.

“As you lower the distressed sales, it looks like sales volume is down, but the point is it’s not really down. It’s just that these distressed sales are down and regular sales are probably doing just fine,” said Miller, noting that the historical appreciation rate is two to three percent above the inflation rate.

Increasing mortgage rates may also be keeping prices from appreciating drastically. Rates for a 30-year-fixed mortgage rose to an average 4.34 percent in March, up from 3.57 percent a year earlier, according to Freddie Mac.

In March, there were 6,223 active listings in the county, up from 4,265 a year earlier, the San Diego Association of Realtors reports. By comparison, there were more than 12,000 listings in March 2011.

In Southern California, home sales hit their lowest levels for a March in six years. Los Angeles County home values are up 14.5 percent to a median $435,000, while Orange County prices are up 14.9 percent to a median $580,000.

Written By Jonathan Horn
U-T San Diego

Survey: Consumer Confidence in Housing Hot This Spring

Consumer attitudes are reflecting greater optimism in the housing market heading into real estate's traditionally strong spring selling season, according to Fannie Mae's March 2014 National Housing Survey.

In the poll of 1,000 people, 38 percent say it's a good time to sell a home, up from 26 percent a year ago. The poll also shows that 69 percent of those surveyed say it's a good time to buy, and 52 percent say it's easier today to get financing for a home.

Americans also feel more confident about their personal finances: An all-time survey high of 40 percent say their personal financial situation has improved during the past year.

"The housing recovery continues to proceed in fits and starts," says Doug Duncan, Fannie Mae’s chief economist. "Rising mortgage rates and a lack of supply have dampened housing market momentum. However, we see several positive signs going into this year's spring home-buying season, compared with last year. For example, consumers are less pessimistic about their personal finances and more optimistic about the current selling environment and their ability to get a mortgage. Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track. Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers."

However, consumers' home-price expectations softened a bit in the latest survey. The average 12-month home-price-change expectation fell from last month, reaching 2.7 percent, the survey shows. Also, slightly fewer respondents — 48 percent — said they thought home prices would rise in the next 12 months.

Source: Fannie Mae

DAILY REAL ESTATE NEWS | TUESDAY, APRIL 08, 2014