Economic Turnaround Underway in 2011
A Summary of the 2011 Santa Barbara County Real Estate and Economic Forecast
By Steven R. Battaglia
Santa Barbara, California, March 4, 2011 - Mark Schniepp, Director of the California Economic Forecast, shared an encouraging presentation entitled "Turnaround Underway" at the 2011 Santa Barbara County Real Estate and Economic Forecast on March 3, 2011. The title sums up his forecast well. In short, the recession is over, and we have been in recovery for most of 2010, so we can expect to see concrete signs of a turnaround in 2011. The Gross Domestic Product (GDP) for the nation has shown positive growth since the 3rd quarter of 2009. In addition, we have seen positive job growth in the private sector over the past three months. While this is good news, many are still concerned about the high unemployment rate.
Mr. Schniepp cited statistics showing that the U.S. entered into positive job growth territory in the Spring of 2010. Seeing recognizable job growth this early in the recovery is significant. He presented a graph comparing the current economic recovery with those of the prior three recessions, noting that in past recoveries, we didn't see job growth as early and as strong as this recovery though it will still take a while for unemployment numbers to come down. In his written report, Mr. Schiepp graphed and emphasized the strong growth in temporary jobs through 2010, stating, "Temporary help employment has soared, verifying the notion that firms need to hire workers but are resistant to hiring them permanently yet. Temporary help employment will ultimately give way to permanent hiring as firms become convinced that their rising rates of sales growth are real and here to stay."
Mr. Schiepp noted that apartment vacancy is declining, which is a good sign, and expects 2011 to be the end of the housing crisis. Mortgage defaults are also in decline, which will slow the foreclosure rate. Home sales on the South Coast were up 8 percent in 2010 from 2009, and we can expect to see a lesser percent of distressed sales and continued but slow rising home prices.
During the recession, our household density increased to a 10-year high of over 3.1 people per household, mainly due to children returning home as well as families doubling up in order to make ends meet. As the recovery continues and we see more job growth, expect to see these households separate, prompting an increased demand for housing. This will bode well for apartment owners and for residential home sales.
In conclusion, Mr. Schniepp reiterated that 2011 will be the turnaround year with continued growth in GDP, more jobs, and a stabilizing housing market.
For more details on this presentation, please contact Mr. Battaglia at 805.680.6431.