California job growth will speed up in 2015, driven by a surge in the construction industry. But keep the party hats in the closet: The expansion will be slower than last year's.
So says a report from Chapman University, which found that construction job creation boomed 7.8% statewide in 2013 – the same year that California added 447,000 total payroll jobs.
That's a 3% increase, according to the school's A. Gary Anderson Center for Economic Research. In 2014, a 2.6% bump is expected, followed by a 2.7% uptick in 2015.
Over the two-year period, 813,000 jobs are likely to be added, researchers predict.
The education and health sector is, along with construction, a major contributor to the swell. Demand for healthcare has risen as the population grows and more Californians become retirees.
Higher home prices, strength in the stock market and the highest consumer sentiment levels in seven years are driving discretionary spending, which is boosting business and job growth in the leisure and hospitality segment, according to the report.
Researchers said hiring is the broadest it has been in six years, with nearly every major sector showing positive job growth. But unemployment levels still vary significantly from region to region.
Fresno last year bore a 12.1% jobless rate, followed by the Inland Empire with an 8.3% rate and Los Angeles with a 7.6% rate. In Orange County, 5% of those wanting work don't have it; in San Francisco, it's 4.3%.
The statewide unemployment rate last year was 7.8%.
Higher job growth is a promising sign. But it probably won't be enough to boost home price appreciation rates, which will be weighed down by projections of a larger inventory of homes for sale and lower housing affordability.
Californians are faced with lackluster income growth and higher mortgage rates.
Next year, potential home buyers will have to set aside 38.4% of their median family income to purchase a mid-priced home. Though that share is less than the 47.3% of income allocated in 2006, it's more than the 27.2% portion needed in 2012 and the historical 31.8% ratio.
As of April, median prices gained 4% from 2007 in Santa Clara but slumped 35% in Los Angeles. Across California, the gauge has depreciated 24% in the last seven years.
Construction spending growth has ramped up the last two years and is likely to expand 25.5% this year overall, though the trend will start to gradually reverse in the next few months.
Chapman also issued a nationwide forecast. A bull market and higher housing prices have resulted in household wealth exceeding $80 trillion – a record, according to researchers.