The Center for Economic Forecasting doesn’t foresee any major change for the Inland Empire economy over the next 12 months and expects business activity to rise between 2% and 3%. The increase in the regional business activity in the second quarter of the latest available data represents a significant decline in growth from recent quarters.
UCR School of Business locates the next downturn coinciding with the Federal government grappling with the nation’s growing structural deficit, the fundamentals in the private sector appear to be strong. Potential strain between the U.S. government and the bond market is identified in the eventual tough political choices that foreign lenders will have to make.
The impact of rising rates is apparent in sales activity. Home sales in the region were down significantly across major segments of the market. Sales of existing single-family homes were down 9.3% through the first half of this year, but prices increased 17.9% over the same period. Steep declines in sales also occurred in the existing-condos segment of the market, where year-to-date sales dipped 19%.
The School of Business also reports that the cost of owning a home in the Inland Empire is distinctly lower when compared to other areas of the state and California overall. It is noted that a general rule is that home prices are not based on local household incomes, but rather the income of people who want to live in a particular area. The Inland Empire roughly matches the statewide figure after adjusting for differences in earnings. In other words, the inflation-adjusted average hourly earnings for private-sector workers in California are 33% higher compared to the Inland Empire, but the cost of owning a home in California is 35.7% higher compared to the Inland Empire.
The UCR economic forecast can be found here.