The Regional Intelligence Report, Third Edition, was released this week and shows strong economic activity in most areas. Beacon Economics, a leading provider of economic research, forecasting, industry analysis and data services prepares the report that includes a detailed economic snapshot for Riverside, as well as provides summaries of the state and national economic conditions and outlook.
Sponsored by The City of Riverside and the Greater Riverside Chambers of Commerce, Beacon was retained to provide the community with a detailed overview of the local economy so that businesses and the agencies working to help businesses can develop better short and long-term strategies.
In most key aspects, the local economy continues to show positive trends. Residential real estate is now a noted ‘bright spot’ in Riverside’s economy with median home prices increasing by 23.6% and supply shrinking to 2.9 months of inventory over the past year. Consumer and business spending in the city has bounded back over 32% since hitting its lowest point in 2009. While not yet as strong as the residential market, commercial real estate is steadily improving and experiencing falling vacancy rates and rising asking rents in office, retail, industrial and Flex/R&D properties.
Other notable highlights from the report:
Nation - The US has added over 6 million jobs since the labor market hit bottom in 2010. Unemployment has fallen from 10% to 7.5%. Industrial production is up 15%. As for housing, the fundamentals suggest that rising prices are only bringing things back to normal levels rather than pushing them above that level (affordability is very strong given low mortgage rates). As long as credit remains tight, it is unlikely that the current increase in housing prices will turn into another bubble. But at the same time, looser credit would do more to help the broader economy. Demand is still tightest in the rental markets, and most of the new building activity is in multifamily.
California - Recent evidence shows that California’s economic recovery continues to pick up steam. The latest estimates from the California Employment Development Department (EDD) indicate that the statewide unemployment rate dipped to 8.5% in June 2013—down from the 12.4% it hit during the depths of the recession. The number of nonfarm jobs has also expanded by 803,400 positions since California employment hit bottom in February 2010. This represents a recovery of more than half the 1,368,200 jobs lost during the downturn. Perhaps even more encouragingly, preliminary indications from the EDD show that the more lagged, but also more accurate, Quarterly Census of Employment and Wages has employment tracking almost 57,200 jobs higher than is currently being reported in the survey-based estimates. Incomes continued to rise across California as well, and income growth gained momentum—outpacing the United States overall in last three consecutive quarters.
Riverside - While not all of Inland Southern California’s employment sectors are showing job increases (Government has been the hardest hit with a 1.3% decline), three sectors in the City of Riverside are beating the Inland Southern California trend. First, the Financial Activities Sector grew by 6.1% in the City from May 2012 to May 2013, compared to 5.1% in Inland Southern California. Rising property values have contributed to job growth, as the sector is composed of many realtors, loan processors, investors, and property managers. Second, Riverside’s Manufacturing sector grew by 1.7% over the same period, compared to a 2.1% decline in Inland Southern California. The local Manufacturing sector is showing somewhat surprising growth from businesses producing non-durable goods, such as packaged foods. Third, while not demonstrating growth, Construction jobs in Riverside declined by 1.5%, compared to the 4.8% decline in Inland Southern California. However with builders filing more construction permits and property values increasing, the number of construction jobs reported in both the City of Riverside and Inland Southern California may be undercounted.