Finally, a positive report on the local economy. 2011 was the
turn-around year and 2012 will be a continuation of that pattern,
despite high fuel prices.
We project that in 2012 the County will add more than 20,000 new jobs
across all sectors of the economy. Even construction jobs will
increase (more on that later). The unemployment rate should decline
to the 8.0% level and first time claims should recede to
30,000-35,000 by year end (compared to 43,000 now).
Foreclosures will continue to decline. The mass of foreclosures that
took place during the past three years related almost in entirety to
loans that were created in the mid 2000's. Homes purchased since the
3rd quarter of 2007 have had a pre-recession level of foreclosures.
Based on the Federal commitment, we project that mortgage rates will
remain low throughout 2012, although qualifying will remain
challenging. We expect no help at all from the Feds on that problem.
Nonetheless, we anticipate that the resale market will remain strong
with annual resales surpassing 30,000 units. We also project that
prices will stabilize Countywide and actually rise in the more
This will be the year when solvent homeowners who have wanted to sell
will finally have the opportunity to test the market. It is
imperative that the market-rate sector participates in the resale
market in order to maintain the sales pace of 2011.
Traditionally, a market in balance has a six month supply of resales.
Based on SDAR's numbers, the supply has shrunk to less than a
The number of new homes to be built in San Diego County this year
will be in the 2,000+ range with perhaps another 600-700 new
condominium units (most of them on the Otay Ranch in Chula
Vista). Most of the single-family homes will be in North County
and be in the $600,000-900,000 price range.
Most of the construction this year will be rental apartments. There
are some 3,000+ apartments now under construction with another 3,000
expected to initiate construction in the next 18 months; hence the
increase in construction employment.
Given the anticipated job gains and routine births over deaths,
another 12,000+ households will be created in 2012. These households
will typically rent, but eventually will want to buy. As rents
gradually accelerate, renters feel the pressure to buy. And rents
will rise in 2012 as vacancy rates recede and landlords try to catch
up with rising costs.
Overall, 2012 should be a very likeable year filled with good
economic news and a return of consumer confidence. The confidence
level can already be seen in retail sales, auto-buying and government
sales tax revenue collections.
Courtesy of SDAR.