Event Coverage
2014-2015 California Economic and Market Outlook by Leslie Appleton-Young
Silicon Valley is the Gem of California
At the October 29 Silicon Valley Association of REALTORS® Economic Seminar and General Membership Meeting, California Association of REALTORS® Vice President and Chief Economist Leslie Appleton-Young told SILVAR members that the U.S. economy is doing well, having recovered the 8.8 million jobs the country lost during the downturn. Silicon Valley continues to lead the job growth in California, and while different regions in the state take pride in their own uniqueness, Silicon Valley is "truly the gem of California."
All economic indicators, though not stellar, are positive. "The economy is not yet quite in gear, but we'll take it. It's definitely an improvement,' said Appleton-Young.
California has come a long way since 2009, when distressed sales made up most of total home sales; today, equity sales account for 91 percent of total sales. In Santa Clara County, distressed sales accounted for only 3 percent of total homes sold in September.
Even a gem has its repercussions, said Appleton-Young, because higher home prices are impacting affordability for first-time home buyers. She explained inventory is a major driver of California's housing market and right now, there isn't much of it, especially in Silicon Valley. Home sales have been flat since the spring of 2014 because inventory is so tight that the strong demand has caused prices to rise higher than they should be, making it near impossible for first-time buyers to enter the marketplace.
Appleton-Young cautioned that the market cannot stay healthy if first-time buyers cannot get into homes. "They are being priced out of the opportunity to grow wealth in their lifetime," she lamented.
California needs 165,000 new units a year to meet the state's demographic demand, she added. California housing permits were up 43 percent last year from 2012, but most of the permits were for multi-family units.
Appleton-Young forecasts next year will be more of the same. While forecasters have been expecting interest rates to rise, she believes if they do rise, they won't rise by much; in fact, she won't be surprised if they drop a bit. There will be more sales growth, but she repeated that much will depend on inventory.
"It's all going to be about inventory," said Appleton-Young.
SEE 2014-2015 CALIFORNIA ECONOMIC AND MARKET OUTLOOK
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