Home Front

A blog about the economy and the Sacramento-area real estate market.

January 15, 2010
It's going to be slow around here for awhile
This morning I sat through a very interesting economic forecast sponsored by the Sacramento Sierra chapter of the Appraisal Institute. Speakers were Garrick Brown, Sacramento researcher for commercial real estate brokerage Colliers International, Greg Paquin, president of the home building industry consultant firm, The Gregory Group, and Chris Thornberg, owner of Beacon Economics in LA.

Here are some facts and points that stood out for their contention that it's going to be slow around here (Sacramento) for another three or four years to work off the excesses of overspending, overbuilding and racking up too much debt during the boom.

Sacramento-area jobs lost during recession: 90,000

Jobs lost statewide: 1 million

Number of state jobs lost so far in Sacramento: 2,500

Percentage of empty office space in the region: 15.8

Percentage of area retail space sitting empty:  12

Percentage of industrial space sitting vacant: 11.6

Region's home sales in 2009: 2,814

Percentage of area new-home sales under $400,000: 83

Number of area new-home projects: 125

Number of new-home projects in 2005: 375

Region's unemployment rate: 12.4 percent, possibly rising to peak of 13.5 percent. State budget crisis impact on capital economy is a wild card.

 

Expectations for Sacramento area

Two to three years of no new commercial construction.

Four to five years of very little small business formation.

Remaining uncertainty about scale of residential foreclosures

No "tsunami" of commercial foreclosures; will come in waves for next five years.

Slight rise in new home construction after 2009 bottom.

No double-dip recession likely

Interest rates rise in 2010

 

Sources: Colliers International, The Gregory Group, Beacon Economics, California Employment Development Department.

 

 


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