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Challenges remain for California realChallenges remain for California real estate
Wednesday, 02 December 2009
At a realtor tour meeting of the Silicon Valley Association of Realtors last week, California Association of Realtors Vice President and Chief Economist Leslie Appleton-Young told realtors to be aware of the following:
• The state of commercial real estate, now stressed in every category, is expected to worsen as commercial loans mature and more defaults occur in this sector.
• Consumer confidence will not see much improvement because the public will continue to be concerned about unemployment and future job prospects. The index fell from 53 in September to 47 in October.
• The unemployment rate will continue to drop. Appleton-Young said continued job losses are her biggest worry. She expects the jobs sector "will get worse before it starts to get better." She doesn't see that happening unless new jobs are created.
• The budget deficit will continue to be a problem. The most recent estimate is that the state will be $20 billion short next year. While the federal government continues to inject stimulus money into the economy, the state is doing the opposite by cutting services and furloughing employees.
• Industries like construction, manufacturing, retail and wholesale have been hit hard this year, with a similar trend expected next year. Construction is an issue for California.
"We're not building enough to sustain demand and meet the needs of a growing population," Appleton-Young said.
• Expect more foreclosures and price compression affecting the high-end market, as more loans reset. The high-end market should experience double-digit declines over the next 18 months.
A total of 135,431 default notices were sent out during the January- to-March period.
State news release about February jobless statistics
The county's jobless rate reached 16.4%, up from January's 15.7%, according to preliminary figures. Both figures were higher than the state's February unemployment rate of 10.5%.
Unemployment percentages from January to February increased in other Valley counties. The February rate in Tulare County was 17%, up from 16.1% in January. Madera County was at 13.8%, up from 13.1%. Kings County was at 16.3%, up from 15.6%.
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