A panel of economists Wednesday offered grim predictions for the Inland Empire economy, including a rise in unemployment, a slide in manufacturing and a wave of foreclosures likely to continue for another two years.
Some of the numbers were staggering.
“There has been a 3,500% rise in foreclosures in the Inland Empire since 2005,” said Brad Kemp, director of regional research for Beacon Economics, a research and consulting firm. “Most people want to think this housing drop is over, but it’s going to continue.”
A recovery, he said, is not expected until early 2011, the year he believes the housing crash will bottom out after prices fall 28% to 32% more.
Kemp spoke during the second annual Inland Empire Economic Forecast Conference in San Bernardino. Mayor Pat Morris opened the event by saying San Bernardino had 5,282 homes either in or close to foreclosure.
“This is the worst situation we have seen in our city’s history,” he said.
University of Redlands business professor Johannes Moenius said the collapse of the Inland Empire housing bubble played a major role in bringing the global economy to its knees. “These localized bubbles are what essentially brought down the world economy,” he said.
Riverside and San Bernardino counties experienced unprecedented growth followed by a spectacular crash, the report shows.
Between 2000 and 2006, 315,000 jobs were created and 815,000 new residents moved in, according to the report. Home prices jumped 214% in Riverside County and 241% in San Bernardino County.
Many people took out adjustable rate mortgages that were foreclosed when the rates set at a higher level. Home prices plummeted 35% in Riverside and 37% in San Bernardino County over the last year.
“Most of the downturn . . . will be experienced by the end of 2010, when median home prices are expected to be on order of $198,000 and $165,000 in Riverside and San Bernardino Counties respectively,” the report said.
Kemp predicted that unemployment would eventually top 12%. A decrease in new housing construction has hit hard, he said. The downturn, he said, will not last forever and increasing housing affordability will once again bring in buyers. The area’s manufacturing base also remains strong.
“This is the region for expansion in California,” he said. “When the economy does come back you are going to be strong again.”