California’s unemployment rate, currently at 12.4 percent, will not return to single-digit levels until 2012 and the state’s inland areas will continue to be impaired by excess housing inventory and state budget cuts, according to a forecast released Tuesday by UCLA’s Anderson School of Business.
California’s economic recovery is contingent on consumer shopping behavior nationwide, as retail spending drives traffic at California’s ports and logistics centers, which are both substantial employers throughout the state, the report said. However, consumers are unlikely to increase spending until businesses begin hiring again, which many economists believe will only happen gradually over time.
The coastal areas of the state will benefit from growth in health care, education, and technology, while inland areas will be constrained by excess housing inventory and state budget cuts, impacting rural inland areas where government workers account for a significant percentage of the workforce, according to the forecast.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently issued its mid-year housing market forecast. Based on C.A.R.’s forecast, the median home price in California is expected to rise 9.1 percent this year compared with last year, while sales of existing, single-family homes will decline 4.7 percent. Rates on 30-year, fixed-rate mortgages will rise to 5.3 percent compared with 5.1 percent in 2009 and 15-year mortgages will average 4.2 percent compared with 4.7 percent last year, according to the forecast.
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