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Experts forecast ongoing economic stability in SCV

Posted: March 6, 2014 7:09 p.m.
Updated: March 6, 2014 7:09 p.m.

Mark Vitner eenior economist at Wells Fargo speaks about what's ahead for the U.S. economy and commercial real estate at the 2014 Economic and Real Estate Outlook Conference held at the Hyatt Regency Valencia on Thursday. Signal photo by Dan Watson.

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There will be less economic uncertainty and stronger growth in the U.S. economy this year, said experts at the 2014 Economic and Real Estate Outlook Conference in Santa Clarita on Thursday.

“More regions across the country are coming back this year,” said Mark Vitner, senior economist for Wells Fargo.

Looking at national and local issues, economists said they expect to see some slowing from the kind of growth people experienced recently. But, they noted, the changes only reflect a stabilizing, or “normalizing,” of the market.

Job growth is expected to continue, but income and wealth inequality remain potent issues, Vitner said. Also, whether interest rates go up or down will be a key consideration for many this year.

Looking at the residential and commercial real estate market in Santa Clarita, the office market has improved, said Nigel Stout, executive vice president with Jones Lang LaSalle.

“The vacancy rate is down to 16.3 percent from a high of 29 percent at the peak of the recession in Santa Clarita,” Stout said.

The industrial market, nearly dormant during the recession, is about to improve with three new commercial developments breaking ground this year, said Craig Peters, executive vice president of CBRE.

Vacancy rates have lingered around 1.3 percent, Peters said. A healthy market should be 5 to 7 percent.
“Prices will go up, but demand still exceeds supply,” Peters said.

Older, less efficient buildings in surrounding areas push more companies to look at newer buildings in the SCV, he said.

After a turnaround in the residential market last year, homes now need to be priced and marketed well, said Neal Weichel, broker with RE/MAX.

With the absence of distressed housing deals, investors have left the market and buyers have more options, Weichel said.

“Sellers have unrealistic expectations as to what their home is worth,” he said, referring to comparisons homeowners make using online websites that estimate the value of a home in a given area.

Overall, pointing to a number of regional and Santa Clarita indicators, the economy appears to be back to pre-recessionary levels, said Mark Schniepp, director of the California Economic Forecast.

When put in perspective relative to inflation, however, markers like income and spending power show that the economy is almost, but not fully, back to normal.

But there is reason to be optimistic just looking at the local area — last year real estate had the best year since 2006, home prices jumped 15 percent and condo prices soared 34 percent. Also, the SCV gained 2,300 jobs, he said.

“Optimism is good because people tend to behave as they think,” Schniepp said.

For the region to continue gaining ground, however, more growth must occur to transform Santa Clarita from a bedroom community to a true job center.

“Growth is given such a bad name, but it’s necessary to create jobs.” Schniepp said.

jana@signalscv.com
661-287-5599

 

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