San Diego is one of the most desirable spots in the world to live, so many can't believe why anyone would want to move out of the area or why others aren't flocking to the area. One of the main reasons is that it is too expensive and many are losing their jobs in key industries like real estate. The article below describes how declining home prices are leading to massive lay-offs all throughout the real estate industry. The real question that everyone is bracing for is how much will the declining real estate market effect the rest of San Diego.
County unemployment hits a six-month highUNION-TRIBUNE STAFF WRITER
March 3, 2007
Construction and real estate layoffs helped push San Diego County's unemployment rate to its highest point since last July, according to data released yesterday by the California Employment Development Department. The county lost 23,400 jobs from December to January, but most of the losses were caused by seasonal reductions at retail shops and restaurants related to the end of the holiday shopping season.
The county lost 23,400 jobs from December to January, but most of the losses were caused by seasonal reductions at retail shops and restaurants related to the end of the holiday shopping season.
“The housing sector is really starting to have an impact on our overall year-to-year job numbers,” said Alan Gin, economist at the University of San Diego.
Gin worried that the real estate downturn is affecting the retail market. From January 2005 to January 2006, 2,500 retail workers lost their jobs, mostly in department stores.
“When you've got fewer people working in construction and fewer people buying homes, you've got fewer people shopping in the community, and that can translate to fewer retail jobs,” Gin said.
The report showed that only 13,000 jobs were created between January 2006 and January 2007, which is low for a county this size.
“Not too long ago, we were adding about 20,000 jobs per year, and there have been times in the past when we've added as many as 50,000,” said Kelly Cunningham, an economist with the San Diego Institute for Policy Research.
The county's unemployment rate rose to 4.3 percent, compared with 3.7 percent in December, which typically has a low unemployment rate. While the jobless rate is still low by historical standards, it is slightly higher than the January 2006 rate of 4.1 percent.
In comparison, the state unemployment rate – adjusted for seasonal fluctuations – was 4.8 percent in December and January, down from 5.1 percent in January 2006.
Statewide, employers cut payrolls by 4,500 jobs from December to January, mostly due to losses in the leisure and hospitality industry, the Employment Development Department reported.
During the year ended in January, California employers added 251,400 jobs, a 1.7 percent increase, compared to a 1 percent increase in San Diego County. Statewide, construction firms added 4,900 jobs during the year. Part of that growth came from non-residential construction and part was because the housing sector grew strongly during the first half of the year.
Since the housing market peaked in August, the state has lost 9,100 residential construction jobs and 39,500 specialty trade construction contractors, as well as 3,800 real estate jobs.
Howard Roth, chief economist for the California Department of Finance, predicted that the housing market will continue to decline in the state through at least June. He said the slowdown is having an impact on the state's income tax revenue.
In January, the state took in about $8 billion in income taxes – $1 billion less than previously forecast. Roth said that part of the drop was due to declines in the money earned by real estate brokers and professionals in related industries.
“The slowdown in the California and national housing sectors is not yet over,” Roth told a meeting of San Diego's Chartered Financial Analysts on Thursday. “And it has turned out to be worse than was expected.”
On the other hand, Roth said that because San Diego was one of the first areas of the nation to experience a slowdown, it will be one of the first to stage a comeback. By 2008, the statewide market should recover, he said.
There was some good news about local employment yesterday. A survey of small businesses in the county released by Union Bank showed that 98 percent do not anticipate cutting their payrolls in 2007 and 29 percent plan to increase their staffing levels. But the number of businesses planning to hire new workers was 9 percentage points lower than last year.
“Given the optimism expressed by respondents, I am a little surprised that more businesses are not planning to add employees,” said Union Bank economist Keitaro Matsuda. “The extremely tight labor market and rising wages are perhaps making small businesses rely more on technology for productivity gains.”
Marney Cox, economist for the San Diego Association of Governments, said the county's diverse employment base will keep job growth steady, even if it is significantly slower than in previous years.
“When some pieces of our economy turn down, they're able to pass the baton to others,” he said.
He pointed to job growth in telecommunications, which reversed previous declines with the addition of 800 jobs last year, as one hopeful sign.
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