Irvine as an example. I have to admit I feel giddy about using a city in the heart of the “it will never go down” OC. I have taken a lot of slack form my friends down there. Here is a quote from a recent Bloomberg article I’m sure we have all read about Irvine.
“In Irvine, where just nine months ago office vacancies approached a three-year low, home prices were at an all-time high, and unemployment was less than the national average, at just 3.6 percent, the unraveling subprime mortgage market is ruining the recent prosperity.
Hometown lenders including New Century and Ameriquest Mortgage Co. already have fired more than 3,000 people, house and condominium prices are down 17 percent since June and office vacancy rates are poised to double this year, said John McDermott, regional manager for Orange County at commercial real estate broker Sperry Van Ness.
“It’s a huge engine that has been shut off,” McDermott said. “I don’t know where the new influx of jobs are if you take the lending market out of the equation.”
O.K. this is an acute example of what a Southern California city looks like when you take RE related jobs away. It appears from this reporting you do get the beginning of steep price declines. The city of Irvine looks like it is in localized recession. I’m getting that this is a harbinger of things to come in So Cal. “It’s a huge engine that has been shut off” I think that statement is true of all RE and RE related jobs right now. “I don’t know where the new influx of jobs are if you take the lending market out of the equation.” If you take the word lending and replace it with “RE and RE related jobs” I think that describes the situation facing California’s economy right now. The impact on Irvine is more immediate given the large Corp presence of subprime lenders but it gives a telling view of what things will look like if SD and other So Cal cities go into negative job growth. I don’t know if this is the methodology that RO is looking for but it suggest strong anecdotal evidence of how this will play out to the more severe side. It’s worth watching.
