San Diego Economy, Real Estate Likely to Remain Unsettled
- May 08, 2008
The San Diego area’s economy will remain beset by job losses in real estate and weak growth in other sectors for at least another two quarters, according to the annual UCLA Anderson Forecast from the University of California–Los Angeles Anderson School of Management. The report was presented this morning at the UCLA Anderson Forecast San Diego Conference to an audience from the San Diego business community. “Our forecast for the next two years looks for real estate weakness to gain the upper hand in the next two quarters, leading to small losses in non-farm payroll employment, a modest spate of increased unemployment, and very weak growth in incomes and local output,” co-authors Ryan Ratcliff, an economist with UCLA Anderson Forecast, and Alan Gin, associate professor at the University of San Diego, said in a prepared statement. “By the end of 2008, we should start to see the light at the end of the tunnel, as real estate job losses taper off and the housing market begins to stabilize.” Ratcliff and Gin noted that because of a high concentration of mortgage finance jobs and a major contraction in construction, San Diego has experienced bigger declines in real estate–related employment than has California as a whole. Nonetheless, they point out, this vulnerability has been offset by above-average growth in government and tourism employment, resulting in job growth in San Diego being essentially flat since August 2007. The forecast states that a resale market dominated by distress sales is the main cause of a drop of between 8 and 16 percent from peak in the median sales price of an existing home in San Diego. Further, the report notes, “In the first quarter of 2008, the number of homes repossessed by lenders actually exceeded the volume of home sales.” Ratcliffe advised that even once the foreclosure surge has run its course by roughly year’s end, the residential market could well remain unsettled until the middle of next year.