The Department of Finance released its July 2012 Finance Bulletin which includes the following review of the latest economic indicators for California.
Regional employment as well as pending home sales information for May indicate that the recovery is on firmer ground than a year ago. Regional employment data show that job growth is spreading inland from the coastal areas. Low mortgage rates and home prices boosted demand for homes and real estate sales have become less dependent on investors and distressed sales.
Labor Market Conditions
Among California’s 13 leading metropolitan statistical areas, all but three saw better job growth during the first five months of 2012 than during all of 2011.
In four regions, the pace of job growth accelerated by a full percentage point or more. Three of these four—Fresno, Riverside, and Stockton—are inland regions that were some of the areas hardest hit by the recession. Job growth in the Stockton MSA went from negative 1.0 percent year-over-year in 2011 to positive 3.9 percent during the first five months of 2012—a 4.9-percentage point swing.
In 2011, only 4 of the 13 regions had year-over-year job growth above 1 percent. During the first five months of 2012, eight regions met or exceeded 1 percent growth. Similarly, whereas four areas had negative or no job growth in 2011, only two—Sacramento and Modesto—had no job gains during the first five months of 2012.
Pending home sales in May appear to indicate improving real estate demand in the near future. Although unchanged from April, pending sales of existing single family homes in California were up substantially from a year earlier, which marked the 13th consecutive month of year-over-year improvement, according to the California Association of Realtors’ Pending Home Sales Index.
Equity, or non-distressed, sales accounted for a much larger share of all home sales in May compared to a year earlier. Equity sales accounted for over 59 percent of all sales, up from 55.8 percent in April and much better that the 51 percent they accounted for in May 2011.
Distressed sales made up about 41 percent of all sales in May, down from 44.2 percent in April 2012 and 49 percent in May 2011.
The share of real estate owned sales dropped significantly over the year, from 28.4 percent in May 2011 to 21 percent in May 2012.