Northern California labor markets improved in 2013. Nonfarm payroll employment has now surpassed its pre-recession peak, at 2,976,430 jobs in 2013Q4. We expect the Northern California economy to add another 56,000 jobs in 2014. The unemployment rate for the region dropped to 6.3 percent in 2013Q4. Labor force participation rates have been declining due in part to the retirement of the baby-boomers and also due to discouraged workers. We expect softer labor force participation growth in the region and moderate employment expansion to drive the unemployment rate down to 5.0 percent by the end of 2014.
Housing construction and home prices will increase in 2014. Housing starts grew by 32.7 percent from a year ago in 2013Q4. Most of this increase came from multifamily housing. Slower growth in single-family housing starts helped boost area existing home prices. Northern California home prices grew approximately 20.0 percent (FHFA Price Index) from a year ago in 2013Q4. Homeowners will see strong home prices into 2014. Pent up demand and increased income gains will be a boost for homes sales this year. Northern California housing starts are expected to climb to approximately 17,900 in 2014, supporting an increase in construction-related jobs.
The San Francisco 49ers will be moving to a new home, but not out of our Northern California region. The new $1.3 billion stadium is located in Santa Clara, approximately 40 miles outside of San Francisco. Levi’s Stadium is expected to be completed before the 2014 season. Additionally, a number of development projects are either pending or currently underway in the surrounding area. The City Center projects will be an approximately 224 acre commercial and entertainment district with office, hotel, retail, restaurant and residential developments. The proposed new City Center is comprised of two separate projects. The first, “Centennial Gateway,” is a $400 million joint venture between the Montana Property Group and Lowe Enterprises. The second, “City Place Santa Clara,” is a $1.5 billion project by Related California. The Santa Clara City Council approved design principles for both projects on December 3.
Click here for the complete Northern California Regional Economic Update: NorthernCA 2013Q4.