Market Watch: Ken Rosen Gives His Read On The Economy and Marin County Real Estate
I recently attended a luncheon where the guest speaker was Ken Rosen, an economist and the Chair for the Fisher Center for Real Estate and Urban Economics at UC Berkeley’s Haas School of Business. He is a vey well known local economist, and was giving his predictions for the economy for 2012, as well as for the national and local housing markets. He talked a lot about Bay Area real estate, which of course has implications for Marin County Home Sales as well.
Given what we have endured the last three years, it was relatively optimistic! I took lots of notes, here are the highlights:
-Expect 2.5% GDP growth in 2012, and a continued slow, choppy recovery. The likelihood of this is 65%; likelihood of a double-dip recession about 30%; likelihood of a strong recovery, 5%.
- The 10 year bond is way too low, as are interest rates tied to it. If you haven’t refinanced yet, do it now, we won’t see these rates again for a very long time.
-Unemployment is much worse for high school graduates (18%) than college graduates (4.4%). This is caused by government policy that causes companies to outsource to China.
-Employment prospects in the Bay Area have been and are projected to be strong, with Silicon Valley and San Francisco leading the way, both driven by technology.
- Two of the top five markets for housing sales for 2012 are in the Bay Area: San Jose and San Francisco.
- Rental prices are up 4.2% nationally, but last year were up 14% in San Francisco! This is driven by the children of the baby boom tunring 18 and moving out; it is projected to be very strong for the next four years.
-The Federal Reserve says they don’t want inflation, but their monetary policy (expect QE3 to be announced next year) indicates otherwise. Expect 3-5% inflation in the next few years, which will affect home prices.
- Interest rates will gradually rise through 2012, but not dramatically.
- Home prices will rise about 3%, and then around 3% a year for the next few years.
We believe the tech hiring boom in the City is already starting to drive house sales in Marin County, and expect it to do more so in 2012.
