Meyers Research found that the region is being hamstrung by pricing issues such as limited land supply and rising construction costs.
Several factors, mostly involving pricing, have prevented a full recovery of Southern California’s housing market in the six years since the recession.
Meyers Research Chief Economist Kevin Gillen spoke at a HomeAid charity luncheon last week and broke down some of the major reasons for the stunted recovery in the region.
A limited land supply created an imbalance with supply and demand, which increased home prices. Construction costs, including labor and materials, are become more expensive. The rising home prices are outpacing wage growth in Southern California, and new homes are becoming an “elite” good, widening the gap between the haves and have-nots.
Gillen said that 2016 will still be a decent year, expecting modest increases in GDP growth, job growth, and price appreciation.
The national economy continues to recover. Gillen said that consumer confidence is improving, inflation is increasing, and the labor market is seeing gains. A slowdown may be coming soon though, as Gillen said that only three expansion cycles have lasted longer than the current one. Many experts say a dip will start in 2018.
Also during the event, a panel of financial analysts and experts said that California boasts some of the nation’s top housing markets, including the Bay Area, Orange County, San Diego, and Los Angeles (Phoenix and Texas were also named as top market picks).
A panel of building industry leaders discussed how Millennials are delaying life events, including buying homes, and how their building firms are prepping for a 2017-18 economic downturn. Builders should grow conservatively by seeking deals on shorter timelines and keeping relationships with patient capital. Stay ahead of the game, the panel concluded, and don’t get greedy.
The event raised $46,000 for HomeAid, a non-profit provider of housing for homeless people.
Meyers Research chief economist Kevin Gillen speaking at the HomeAid event. Photo courtesy Meyers Research.