Californians are optimistic about the coming year

A survey reports Californians living closer to the coast tend to be more optimistic than those remaining inland. 48% of those in Sacramento and 47% of those in Fresno believe job growth will improve in the next 12 months, lower than 61% of Los Angeles residents, 56% of San Franciscans and 53% of San Diego dwellers who agree.

first tuesday take: Little wonder that inland Californians are less optimistic than their wealthier coastal dwelling brethren.  It seems money ebbs and flows like the tide from the oceans.  Before it can run up the alluvial fans leading to the valleys, it first hits the coastal areas.  As the tide of money recedes in a business recession, the valleys dry up first.

However optimistic Californians may be, their spending habits on housing are not reflecting it. Most potential homebuyers are ready and willing to buy homes, and would do so immediately – if they only thought they were able. Noise about tighter lending standards has most feeling they now lack funds for a down payment or do not qualify for a mortgage. Yet it still stands that decent credit gets an employed person a mortgage.  [For more information regarding consumer confidence, see the July 2011 first tuesday Market Chart, Homebuyers feel ready and willing to buy, but not financially able and the July 2011 first tuesday article, Jobs are scarce whether or not you can sell your home.]

Until consistent job growth returns to around 400,000 annually and has held that pace for a couple of years (probably by 2015), the most likely interim result we can expect of this low consumer confidence will be continually low volumes of home sales. We are living Japan’s 1990s real estate experience, and prices will rise only after sales volume first rises for roughly 12 months. [For more information regarding statewide employment, see the July 2011 first tuesday Market Chart, Jobs move real estate; for more information regarding Japan’s experience in 1990s, see the October 2010 first tuesday article, Deflation’s push on the real estate recovery.]

Although heavy job loss and reduced work hours have produced an overall lack of personal liquidity (read: cash) directly resulting in an increase in foreclosures, 90% of Americans still believe homeownership is a sacred pillar of the American Dream. Because of this fact, most who lost their homes to foreclosure will make another go of it once they find a job and rebuild their sense of financial security ―whether or not owning is the wise decision. [For more information regarding the American Dream, see the July 2011 first tuesday article, Like myths, this old dream will never die.]

Re: “Survey finds coastal Californians more upbeat on economy than inland dwellers” from the Sacramento Bee