Housing Forecasts for Southern California

The annual economic report from UCLA Anderson School of Management is out as of yesterday in a series of reports given at a conference. Southern California has job growth, adding 30,000 jobs in six counties, and increase in tourism, but state budget may have reductions in local government and real estate prices are high (not news). Solid employment growth should continue. Northern California is a different story and the disparity between the two regions will continue for years. Read more here.

But in other indepth views, and further deflating the bubble market opinion, a major annual academic study says the housing industry is poised for yet more growth -- 10 more years worth, at least. Citing greater roles among women, minorities and immigrants, Harvard's Joint Center For Housing Studies' "2004 State of the Nation's Housing Report, says, while fast appreciating home rates have made it more difficult for some to buy, shifting demographics will increase the pressure on the low-end starter home and rental markets as well as move-up and second home markets.

And Harvard's study is followed by a similar 10-year forecast offered by Homeownership Alliance, an association of 18 national housing organizations.

From Harvard's Joint Center come new projections that suggest household growth between 2005 and 2015 will be at least 10 percent higher than previously projected -- bringing the total increase to more than 13 million households, due to demographic factors (immigration) which propel housing production even higher. This includes demand for second homes and replacement units if immigration continues at the present rate. Important to repelling bubble market arguments is the fact that even with fast appreciating home prices, incomes have kept pace as low interest rates helped stretch household dollars. But affordability issues have increased and rising interest rates could make matters worse.

However, certain markets in several states, including California's, may be overheated, concedes director Nicholas Retsinas.