Asia Woes Starting to Slow State’s Economy, Analysts Say

Financial turmoil in Asia and slower growth in motion picture production are beginning to take their toll on California’s expansion, a panel of economists said Thursday at a real estate outlook conference in Los Angeles.

“We’re definitely seeing signs that the economy is flattening out,” said Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County.

With studios releasing fewer movies and production shifting to other locales, employment growth has begun to cool. Only 3,500 motion picture and television production jobs are expected to be added in the Southland this year, far less than the 13,600 jobs added on average each year from 1990 to 1997, Kyser said.

Meanwhile, the financial crisis in Asia is increasingly affecting companies outside the trade and transportation sectors. Film distribution contracts and orders for California produce have been canceled. Asian tourism has dwindled, and foreign-owned technology companies are beginning to undergo cutbacks, Kyser said.

He and other economists predicted that housing prices will continue to rise, and warned that the supply of affordable housing is dwindling.

“Something is not right with supply. It does not match demand,” said G.U. Krueger, deputy chief economist for the California Assn. of Realtors. Although population growth is boosting demand for starter homes, Krueger said, builders are constructing luxury houses with higher profit margins.

With these expensive homes on the market, and prices of existing homes rising quickly, Krueger estimated that only 15% of the region’s population will be able to afford a home in 2000--the same percentage that could afford to buy when the market reached its peak in 1989.

Panelists at the conference, which was co-sponsored by the Los Angeles Times at the Century Plaza Hotel, also cautioned that too many retail centers are under construction or planned in Southern California. About 2 million square feet of new retail space is expected to go up on the Westside alone in coming years, leaving many empty shops on the market, said San Diego-based real estate consultant Sanford R. Goodkin.