The economy and job market in California and the U.S. are expected to keep growing for the next two years, while home prices and rent will become less affordable, according to the economy and housing market forecast released Monday by UCLA’s Anderson School of Management.
The forecast predicts that the U.S. is in its fourth-longest economy expansion since 1948, and that it will continue for a couple more years. Moreover, there’s only a 20% probability of an imminent recession. The GDP growth will be around 2% and 3%, better in 2016 than the year after. A declining unemployment rate and a rising employment-to-population ratio are expected to be achieved in 2016.
For California, Senior Economist Jerry Nickelsburg estimates that the state's unemployment rate will fall from 6% in 2015 to approximately 4.8% during the next two years. Meanwhile, the growth in California’s employment rate and real personal income will continue, but will grow at a slower pace by 2017.
As jobs continue to grow, the housing market will also pick up steam in California and around the nation. High housing costs have already been an issue for many Californians, but it may get even tougher for them in the near future. Housing costs “will become increasingly less affordable over the next two years, as the amount of building will not meet new demand,” Nickelsburg wrote in the forecast.
Senior Economist David Shulman agrees that housing prices and sales will continue to rise nationwide, even though the homeownership rate is declining. “The flip side of declining homeownership rate is a rise in renting which has triggered a boom in multi-family housing starts,” Shulman says in the report. He added that the low rate of apartment vacancies will increase rental prices.
One factor to consider is how Los Angeles’ export and tourism industries will be impacted by China’s slowing economy. Economist William Yu anticipates that the housing market in Los Angeles will ride out this stymy, because Chinese real estate investors are confident about the American market. According to Yu, Chinese investors expect better and safer returns from the American market when compared to the dismal domestic market in China.