first tuesday insight
California’s home sales have been stuck on a slowly upward tilting bumpy plateau since the recession officially ended in 2009. A number of factors have had minimal influence on the market (such the 2009 Federal stimulus and speculator interference in 2012). But why hasn’t the recovery taken off yet? It all has to do with jobs.
Jobs must be completely restored before California’s housing market will be able to enter a sustainable recovery. A buyer’s creditworthiness is based first on their income. Thus, potential buyers without a job are unable to qualify for purchase assist financing.
Jobs performance is highly localized, depending largely on a region’s industries. San Francisco, with a large technology industry, is the only major county to have fully recovered all jobs lost since the recession. Other counties which were dependent on the housing and construction industry during the Millennium Boom, such as Riverside and Los Angeles, still have a long way to go.
As of November 2012, 832,300 jobs are still needed statewide to return to 2007 employment levels. With population growth, this number is closer to 1 million. At least 350,000 jobs must be added year-over-year for 18-24 months before all jobs will return. This will likely occur in 2016.