Southern California labor markets look positive this year. While gains in regional employment have moderated from the robust growth seen in early 2013, employment growth has remained steadily above the U.S. average in 2014. Area employment is expected to grow around 2.3 percent this year, while overall U.S. employment is expected to increase by 1.8 percent. The overall improvement in Southern California labor markets are expected to support gains in income growth at 5.1 percent for 2014.
Demand for single-family homes in the region is being dampened by rising home prices. May home prices for the L.A. and San Diego metropolitan areas remained 20.0 percent below their pre-recession peaks, according to the Case-Shiller Home Price Index. However, the robust growth in home prices seen over the last year in the Southern California region is leading to a decline in housing affordability. Area home sales dipped 12.4 percent from a year ago in July, according to CoreLogic DataQuick. From the demand side, rapid home price appreciation and tight credit standards are tempering the pool of potential traditional home buyers. From the supply side, current home owners may be holding off putting their houses onto the market until home prices have recovered further. As the overall economy improves, supporting sustained income growth, we expect Southern California housing markets to normalize.
California is on its way to quadrupling its annual allotment to subsidize tax credits for the film industry. The State Senate Appropriations Committee increased the state tax credit for film and TV productions to $400 million annually. The bill contains a 20 percent credit of qualified expenditures up to $100 million for motion pictures and TV shows. Proposed funding in Assembly Bill 1839 would begin in fiscal year 2015-2016. The amended bill has two more rounds of voting, first by the State Assembly, followed by the Senate.
Click here for the complete Southern California Regional Economic Update: SouthernCA 2014Q2.