Strong expansion by Silicon Valley’s high tech industries is helping to revitalize the Northern California economy. Hiring remains strong amongst major software firms. General Electric is not usually associated with Silicon Valley, but soon will be. The company is building a $1 billion facility in San Ramon that will house a staff of 400. Balancing out the surge in high tech jobs, the Northern California economy is heavily dependent on state and local government jobs. State and local government employment in California was hit particularly hard by the recession-induced budget crisis. In the three years from June 2008 to June 2011, statewide, some 148,000 state and local government jobs were cut from California payrolls. State tax revenues continue to be a source of frustration. According to the state controller’s office, state revenue in February 2012 was $146 million short of budget projections.
Despite shaky tax revenues and uncertain state and local budgets, the California High-Speed Rail authority approved plans for a $68.4 billion, 570 mile long high-speed rail network designed to connect the Bay Area to Southern California. The goal of the system, which could become partially operational in 10 years, is to move people from LA to San Francisco in 2 hours and 40 minutes.
Real estate markets are heating up in Silicon Valley. For both Santa Clara and San Mateo counties inventories of available single-family homes have declined every month since June 2011. Since peaking in 2007Q1 the FHFA house price index for the U.S. is down about 16 percent. From its later peak in 2009Q1, the San Jose FHFA house price index is down about 23 percent. Housing starts, particularly on multifamily projects have recently been on the upswing. Declining vacancy rates and improving rents are incentivizing multifamily builders.
Click here for the complete Northern California Regional Economic Update for 2012Q2: NorthernCA2012Q2.