Monthly Economic Report: July 2005

Submitted by Rich Toscano on July 29, 2005 - 9:40pm
The local economy isn't showing any signs of short term trouble. Notices of default remain flat, indicating that those overleveraged San Diego homeowners haven't gotten themselves into serious trouble just yet.

Employment growth has been decent, as well:

So, like last month, there is no sign that economic factors will put downward pressure on housing in the near term. Beyond that, I obviously remain concerned. The real estate sector continues to account for a healthy (more to the point, unhealthy) chunk of San Diego job growth:

The real estate sector comprises 9% of all San Diego jobs, so any trend that negatively affects the industry (for example, the inevitable slowdown of the condo conversion craze) could have a noticable impact on overall employment in San Diego. This will be a problem in the future. But it isn't yet.

The USD Index of Leading Indicators flattened out in June, but it still hasn't managed an increase since December 2004:

Conclusion

Like I said above, weakness on the part of either the homeowner or the general economy does not seem imminent. Housing should therefore not come under any serious pressure due to local economic factors for the next couple months. However, economic trouble seems like a given at some point in the future—and maybe not that far into the future, either. But we can't know that until it starts to show up in the numbers, so stay tuned.

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