Northern California Regional Economic And Housing Trends And Forecasts
Northern California Regional Economic And Housing Trends And Forecasts
Northern California Regional Economic And Housing Trends And Forecasts
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Home Page > News and Society > Economics > Northern California Regional Economic And Housing Trends And Forecasts
Northern California Regional Economic And Housing Trends And Forecasts
Posted: Mar 10, 2010 | Views: 601 |
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Employment Trends and Forecasts
The main long-term foundational driver in terms of housing sales volume and price support is a given region’s employment base. The following trends and a five year forecast of employment and unemployment levels for Northern California.
This region is forecast to lose 344,008 non-farm jobs during 2009 – a 4.1% loss of the total non-farm job base, for the biggest loss in decades. During Year 2010, an additional loss of 69,433 jobs is forecast. Thereafter, the impact from the national stimulus package will increasingly be felt, and combined with improved financial markets, should lead the national economic recovery towards regional economic expansion. By 2014, a healthy 2.1% growth rate is forecast for non-farm jobs in this region.
After reaching historic levels estimated at 12.1% unemployment in 2009, it is forecast to peak at 12.4% in 2010, before gradually receding toward more normal levels thereafter. State budget woes have intensified high unemployment levels.
Housing Construction Trends and Forecasts
Levels of housing construction in the Northern California closely correlate with residential permit activity. Builders cut back sharply on construction after the housing bubble burst, causing the severe decline in permit activity in 2008. Residential permit activity is anticipated to keep declining through 2009, dropping to historic lows in 2010 and remaining low through 2011.
Permit activity is expected to be at extremely depressed levels for the following two to three years before gradually increasing to improved (but still low) levels by 2013. A decline in previously permitted housing units in the outlying areas magnified the plunge.
Gradual incremental growth in the housing stock is projected due to limited development opportunities in key areas, oversupply in outlying areas, and the recessionary impact on funding and feasibility for development. Incremental increases in housing stock will be far lower than historical patterns.
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Housing Price Trends and Forecasts
Declines in housing values during 2008 were devastating, with less severe drops estimated in 2009 (mostly having occurred in the 1st half) with stabilization projected during the 2nd half of the year. By 2010, demand pressures will likely cause prices to conservatively increase by 1.7%.
Median home prices have fallen 42% from their peak in 2006, to a level similar to the median price in 2002-03. Following a bottoming out in 2009, mild price appreciation patterns beginning in 2010 are likely to be relatively gradual during the next few years, but will build momentum as the economy begins to improve, distressed inventory is absorbed, and economic expansion returns.
By 2014, the median home price is forecast to increase a healthy annualized 8%. Despite this increase by 2014, the resultant forecast median price will remain well below the peak unsupportable level achieved in 2006.
Mortgage Rate Trends and Forecast
Years 2009 and 2010 will be the lowest years in terms of mortgage rates in over two decades. The super low home loan rates have been made possible by the Federal Reserve’s extraordinary efforts to prop up the housing market and the overall economy in the wake of the global financial crisis.
A window of opportunity exists to refinance or purchase a home at historically low rates, allowing for much more relatively affordable housing costs for most buyers. By 2011 mortgage rates are likely to increase as economic growth increasingly stimulates inflationary pressures, and as the world demands higher payments to service the nation’s enormous debt load.
Household Income Trends and Forecasts
Increases in median household incomes are likely to be marginal during Years 2009 and 2010 – a reflection of the current economic downturn. Thereafter, income growth is likely to begin to normalize, reaching an annualized 2.8% gain by Year 2014.
The number of households making between 0,000 and 0,000, and above 0,000, per year is likely to increase dramatically during the next five years as the population matures and as economic growth resumes.
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Mark Boud -
About the Author:
Real Estate Economics is a leading provider of real estate consulting services and online research tools. Working with home builders, lenders, investors, developers and others in the residential development industry, the team at Real Estate Economics has created the most comprehensive and insightful consulting services and online information tools available.
Real Estate Economics was founded in 1995 by Mark Boud, a well respected real estate economist. The company’s main office is in Irvine, California, with satellite offices in Sacramento and Phoenix. A team of highly experienced consultants at Real Estate Economics provide market analyses, feasibility studies, land optimization studies, supply/demand analyses and site-specific market reports for a diverse set of clients throughout major markets in the United States (with special emphasis in southwestern markets and Hawaii) and select international markets. This team of consultants has the experience and knowledge to understand the changing market conditions and opportunities unique to each area they serve.
Mark Boud
Real Estate Economics
http://www.RealEstateEconomics.com
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employment trends, employment forecasts, nothern california, economic trends, non farm jobs, residential permit activity, housing supply, housing demand, median home prices, distressed inventory, housing stock, housing construction, forecast
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