The Inland Empire economy will bear up well going into 2020, with job growth continuing, albeit at a slower pace, and the only drag appearing in the real estate market, where housing stock is low and costs are high, according to a UC Riverside School of Business report released Wednesday.
“The IE economy has been gaining momentum in recent years, and although there has been a slowdown, based on everything we see happening today, all the hand-wringing over a coming recession is just that — nothing on the foreseeable horizon would have a big enough or rapid enough impact to knock the region, or the nation, into a downturn,” said Christopher Thornberg, director of the UCR Center for Economic Forecasting.
“Although there is always the potential for some yet unseen impact on the global or national level, and there are certainly long-term threats that stem from California’s statewide housing shortage, which is helping to drive labor shortages, slower growth is expected to continue,” he said.
Thornberg was joined by colleague Robert Kleinhenz and other speakers at the Riverside Convention Center in presenting the 10th annual Inland Empire Economic Forecast, this year themed, “The House That Wasn’t Built.”
The panel cited ongoing strength in the healthcare and logistics sectors as major positives for the region going into next year. However, they expressed concern about the deficit of housing and the steadily declining rates of homebuilding activity.
In Riverside and San Bernardino counties, residential building permits dropped 8% in the first half of 2019 compared to the same time in 2018, portending potential trouble.
Similar — and worse — trends were seen in the Los Angeles and San Diego metropolitan areas, according to the report.
Another bellwether on the real estate front — sales of existing single-family homes — fell 6.4% in the first six months of this year throughout the Inland Empire, the report stated. Meanwhile, the average rent for a dwelling climbed almost 4% year-over-year to $1,390 per month, figures showed.
“The consequence of high demand and low supply is, of course, upward pressure on home prices and rental costs,” Thornberg said. “Both have increased substantially in the Inland Empire over the past year, as the number of home sales has declined. This is a problem today, and unless we add housing stock, it’s going to be even more of a problem tomorrow.”
The forecasting team was impressed by the nearly 10% growth in passenger traffic at Ontario International Airport in the last year, while LAX’s numbers barely budged, and John Wayne Airport’s traffic actually declined.
The full report is available at conference.economicforecasting.org/.
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