Despite rising prices in some California markets and low interest rates, the state’s housing market won’t begin a meaningful recovery until the second half of 2013, according to a new UCLA forecast.
UCLA economists said California’s economy will experience slow and steady gains throughout 2012. More accelerated growth will take place in 2013 and 2014, adding tens of thousands of jobs as the housing market begins to recover.
The quarterly UCLA Anderson Forecast estimates the state unemployment rate of 10.8 percent will drop to 9.7 percent next year and 8.3 percent in 2014. That’s still above the U.S. unemployment rate of 8.2 percent this year and 7.9 percent in 2013.
“While this news is a near-term downer, we are expecting 2013 and 2014 to be years in which the California housing market grows more rapidly than the U.S.,” the report says.
California real estate markets are “either still in the trough or still declining toward it. While there is some data giving rise to optimism, there is no real indication that the housing market is on the cusp of a recovery,” wrote senior UCLA economist Jerry Nickelsburg. “We expect a modest growth in housing starts for the balance of the year at approximately one quarter of the U.S. rate. This will be predominantly multi-family housing. In 2013, we forecast a 40 percent jump in permits, slightly above the U.S. rate and a dramatic rise to 130,000 permits in 2014, double the U.S. rate.”
UCLA’s forecast underscores the central role that housing has played in the recession — and the extent to which it’s been a drag on the recovery. Still, there will be no recovery until the glut of foreclosures and short sales are cleared in California.
Nickelsburg said the housing market is still distressed, and will remain so for a while.
“The number of foreclosures, particularly in inland California, remains high,” he wrote. While the numbers are dropping, he doesn’t foresee an “early conclusion to the end of the foreclosure/short sale nightmare particularly in the inland counties.”
Readers what do you think? Has California’s real estate markets recovered? Or will it take several years for California’s real estate reset?
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