It’s all happening in the city, eventually
By Tara Tran • Jun 23rd, 2011
California’s big cities are projected to lead the way in the state’s job recovery and the Bay Area is forecasted to be the starting point for the state’s employment resurgence. The Silicon Valley boom is no small part of that push.
However, a bifurcated recovery is expected throughout California. In contrast to the state’s inland and central valleys where the local economy depends more on residential construction and commuting, the Bay Area and other like-minded California coastal hubs are likely to experience more job growth on account of their diversified and technology-driven industries.
Although a job upturn will be slow, economists of the UCLA Anderson Forecast predict employment in California will grow 1.7% in 2011, 2.4% in 2012 and 3.1% in 2013.
The UCLA Anderson Forecast of employment does not parallel first tuesday’s forecast for the next several years. We believe 2011 will be very weak in job growth through the beginning of 2012. Parts of the nation are getting up to speed, but we are not ready to take off just yet. Much corrective action is needed before we can settle down for any long pleasant recovery. [For a forecast of employment in California and the implications it has for the housing market, see the Market Chart, Jobs Move Real Estate.]
The Anderson percentage predictions calculate an addition of 239,328 jobs in 2011. This would bring California’s total employment to 14,317,427 by end of 2011. California presently (as of May 31, 2011) has 14,071,600 paying jobs and we do not see anywhere near an additional 250,000 jobs coming in by the end of 2011 as would be needed to meet the Anderson forecast. But we will see – it would definitely be nice for rental properties.
Anderson forecasts California will have 14,661,045 jobs by end of 2012 and 15,115,538 by end of 2013. One half year more of that kind of job growth and by mid-2014 we will have recovered all the jobs lost since the December 2007 peak of 15,348,200 jobs. first tuesday senses the full recovery in jobs will not come for another two years, in 2016. December 2011 numbers will enlighten all of us as we simply do not now know what consumer confidence numbers will show after a year of this most sluggish recovery.
The Anderson numbers seem high to us, but this volume of job creation in California is not out of the question. February, March and April of 2011 each saw an increase of at least 36,000 jobs. Only at that pace would we would easily attain the Anderson numbers.
California employment trends also forecast changes for demographics since wherever these jobs do appear, people will follow. This job forecast for coastal communities holds weight, especially since California’s job-hungry and mobile-minded Generation Y (Gen-Y) continues to express its preference to live in more intimate, low-maintenance housing closer to their work – essentially a life in the city. It’s only a plus for them as the city is just the place where the more technical jobs they want will be. [For more information on the coming role of Gen-Y in California real estate, see the October 2010 article, The demographics forging California’s real estate market: a study of forthcoming trends and opportunities – Part I.]
With employment scarce and the demand for work frantic, expect California’s demographics – led by Gen-Y – to shift significantly from its post-1980 suburban sprawl. Also a word to agents, brokers and investors: anticipate the demand for rentals and multi-family housing condo sales to go up – in the city, that is.
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