California Association of REALTORS® Deputy Chief Economist Robert Kleinhenz echoed remarks C.A.R. Chief Economist Leslie Appleton-Young made at the C.A.R. EXPO in September and again at last week’s Los Gatos/Saratoga District – the economy has improved, and for a while, there appeared to be surge in the housing market, but wild cards in the domestic and international arena dampened consumer confidence and, as a consequence, recovery has stalled. The engine of growth must come from consumers; businesses won’t spend if consumers don’t, said Kleinhenz.

Kleinhenz presented SILVAR REALTORS® with performance targets which can help them gauge how good or bad the economy is doing. With these indicators in mind, he said REALTORS® can lay out expectations to clients so clients “have the appropriate expectations from the beginning and end up being satisfied in the end.”

  • GDP – The country needs GDP (Gross Domestic Product) at 3 percent or higher. C.A.R. only expects GDP to be at 1.7 percent by year-end and forecasts GDP will only be at 2 percent in 2012.
  • Unemployment Rate – The unemployment rate has got to come down to 6 percent at best, so consumer confidence can  rise. It’s at 9 percent nationwide and 12 percent in California. C.A.R. projects the national unemployment rate will be 9 percent by year-end.
  • Job Growth – The country lost 8.4 million jobs during the recession, and though it has gained back 1.1 million jobs, job growth needs to be at 3 percent or a gain of 400,000 jobs per month.
  • Home Sales – To be sustainable, statewide sales should be at 500-550,000 units per year. C.A.R. projects 496,000 unit sales in 2012.

Kleinhenz said California has had a decent level of sales and is seeing stability in its median price, expected to hit quicker than in other parts of the country. C.A.R. projects the median price to hit $296,000 in 2012. California’s median price bottomed in February 2009 at $245,230.

Kleinhenz is optimistic the market is slowly on the mend. “In California, we have our economic fundamentals that are carrying us through in the years to come,” said Kleinhenz.

He saidthe state’s assets continue to attract people and businesses. The best news of all is the Silicon Valley labor market has been the star of the California economy.

“The economy has shown marginal improvement with nuggets of good news, but it has taken us a lot longer to grow out of this recession because of the financial crises that have paralyzed several aspects of the economy,” California Association of REALTORS® Deputy Chief Economist Robert Kleinhenz told SILVAR members at the Silicon Valley Association of REALTORS® Economic Seminar and General Membership Meeting last week.

“Fundamentally, affordability hasn’t been as good as this in Santa Clara County and the state. Homes are at the right price with the right mortgage rates. The problem is consumers are so concerned about prices bottoming out they are losing sight of the opportunities,” said Kleinhenz.