Economist: Recovery for Ventura County housing several years out
The housing market in Ventura County and elsewhere will continue to be haunted by shadow inventory for several years. That was the view from forecasters at the Ventura County Real Estate & Economic Outlook on Sept. 8.
Other problems plaguing the residential and commercial real estate markets include oversupply, still-sinking prices and lackluster job and GDP growth.
Mark Schniepp, director of the Santa Barbara-based California Economic Forecast, said a double-dip recession is unlikely, but that the recovery will continue at a barely-there pace for some time.
“There’s not enough risk in the economy this time,” Schniepp said, after explaining why recent stock-market turmoil is not a repeat of the summer of 2008. The crisis now, he said, is a crisis of confidence as businesses and consumers hold back on spending until they get a clearer picture of where the economy is headed.
“Business confidence is shaken, but it can bounce back,” he said, adding that corporate profits and business expenditures in software and equipment are at all-time highs.
Unfortunately, that spending hasn’t yet translated into much new hiring. And for commercial real estate, that means a modest and slow recovery over the next year.
Layoffs in the government sector have played a lead role in rising office vacancy rates in Ventura County over the past year, Schniepp’s team said. Interestingly, the county’s industrial market, primarily occupied by the private sector, has improved during that time. Schniepp’s researchers predict that Ventura County’s industrial market will continue to firm up if expected job gains in the manufacturing and wholesale trade industries pan out in 2012.
The retail market has struggled for the last two years, but with consumers sitting on savings, the sector is expected to make a strong recovery next year.
Here’s a look at Ventura County’s commercial real estate markets by the numbers:
• Industrial vacancy has been above 10 percent for more than two and a half years, with the western half of the county showing more improvement.
• The county’s office vacancy rate is only marginally lower than it was at its peak. Vacancy has climbed 1.7 percent over the last three quarters, attributable solely to the western part of the county, which has offset declines in the east.
• The retail vacancy rate has hovered between 8.5 and 9 percent over the last year and a half, although it varies significantly between submarkets.
The housing market, meanwhile, continues to deal with foreclosures and a general decline in the U.S. homeownership rate.
• Median home selling prices in Ventura County dropped 5 percent to $421,870 in July 2011. Although prices have recovered from their 2009 lows and are relatively stable now, they remain well below the housing-boom peak.
• Sales volume has also flattened out after rising sharply from a 2007 low. Through the first half of this year, just 102 new homes were sold in Ventura County, down 32 percent compared to the same period last year. “Home sales going nowhere and home prices are moving laterally,” Schniepp said.
Wayne Yamano, vice president and director of research with Irvine-based John Burns Real Estate Consulting, said the U.S. homeownership rate is expected to be down to 62 percent by 2015 .
So-called “shadow inventory” — distressed real estate that has not yet been put up for sale — will continue to seep into the market for years, further holding prices down.
The silver lining? Apartment investing looks better than ever. “Apartments are seeing their lowest vacancies in four years,” Schniepp said.
DEAL OF THE WEEK
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