Continued strength in the construction business led the University of San Diego Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County to a 0.5 percent increase in July, professor Alan Gin said Wednesday.
Permits for construction of more than 1,000 residential units were issued by governments around the region last month, Gin said. The total put the pace of permit issuing ahead of last year’s rate.
Other sectors that gained in July were consumer confidence, the outlook for the national economy and local stock prices. Combined, those outweighed negatives in employment and help-wanted advertising, according to the professor.
Labor demand, measured through help wanted ads, has dropped five straight months, Gin said.
He said he projects solid economic growth for the rest of this year and through at least the first half of 2018.
“One potential problem for the local economy is the soaring price of housing, both in terms of purchasing and renting,” Gin said.
“While this is good for people who own property, the local economy is hurt because companies either have trouble attracting workers or have to pay their workers more, thus increasing labor costs,” he said. “The reason for the surge in housing prices is simple supply and demand, with demand strong and supply tight.”
He said that since local employment hit bottom in 2010, almost 145,000 jobs have been added to the local economy.
“To accommodate those workers and their families, about 115,000 residential units should have been built,” Gin said. “Instead, only about 47,000 units have been authorized by building permits, leaving a shortage of 68,000 units.”
He said the demolition of older housing and conversion of around 10,000 units for use as short-term vacation rentals has tightened the market even further.
With last month’s increase, the index stood at 145.1, the highest mark in at least 17 years. It has increased eight of the last nine months with the exception of April, which was flat.
—City News Service
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