Tired of hearing TV pundits decry California as a no-hope state with a dysfunctional political system? A recent report from the New York Times begs to differ. The article paints a hopeful, optimistic picture for the future of the Golden State.
The 2007 financial crisis and the subsequent global recession hit California particularly hard – not entirely unforeseen, considering California is the 8th largest economy in the world and accounts for 13.06% of the U.S.’s GDP. Due to its size and importance in the nation’s overall economic output, California will always be hit hardest by national or international recessions (or, in the case of this current recession, both!)
Long derided for having some of the worst unemployment figures in the country, California’s employment outlook may be improving, at least according to these stats posted in The Employment Development Department’s website. The figures, although far from ideal, are none the less encouraging: they show the state unemployment rate at 10.2% in September 2012 and 10.1% in October 2012. Contrast this to the 11.5% jobless rate for October 2011. The last time the unemployment rate was this low was all the way back in February 2009.
Naysayers will be quick to point out that an unemployment rate of over ten percent is nothing to be proud of, especially when compared to the U.S. national average of 7.9%. While this is true, public policy experts point out that the declining unemployment rates are not just an isolated blip, but rather a sign of things to come. This fact-sheet from the Public Policy Institute of California reminds us that by the end of 2012 California’s unemployment rate is not only falling faster than the national average, but more new jobs are being created at a higher rate than the rest of the country – and these trends are set to continue into 2013.
It’s no secret that the California’s real-estate market has been hit particularly hard by the recession. Home values have declined substantially from their bubble-inflated highs of the mid-2000’s. The median value of a single family home in California has gone down 42% from their peak in January 2006 – compare that to the national average of 15.4%.
But even the battered housing market is showing signs of improvement heading into 2013. Figures from the Public Policy Institute shows us that single-family homes in California have gone up 5.9% in value over the one year period ending in October 2012 – overtaking the national average of a 5.1% increase in home prices.
Southern California is leading the way in the housing recovery. Home prices in Southern California have gone up an average of 16.7% (13.7% in San Diego) over a one year period ending November 2012. The volume of sales have also gone up – 2,401 more homes were sold in November 2012 than November 2011, or an increase of 14.2% (22.4% in San Diego.) [source]
As with unemployment, the real estate situation is expected to get better in 2013 and beyond – at least in Southern California.
We’re not out of the woods yet, not by a long shot, but we can confidently say that the worst is behind us. As we head into 2013, the economic prospects of the Golden State look better than it has in a long time.
California – Not as Bad Off as You Think!