California’s housing industry has taken a beating in recent years in
light of the crash and recession and has been slow to recover. With
construction not bouncing back, home builders have been unable to employ
as many workers, which in turn affects the economy of the state. In
fact, the economic output of the housing industry has fallen 80% since
2005, according to a new report from the California Homebuilding
Foundation and the Center for Strategic Economic Research. The study
details the extent of the crash on California; for instance, in 2005 the
industry accounted for $67.7 billion in economic impact but by 2009,
the economic benefits of the industry only amounted to $13.8 billion.
Furthermore, employment for housing was 77,000 in 2009 and back in 2005
it was 487,000. As for counties that were most affected by the slump,
the LA Times reports:
“The slowdown hit Los Angeles, San Diego and Orange counties especially hard. In Los Angeles County, total economic impact fell from $3.8 billion in 2008 to $2.1 billion in 2009, a 45% drop. In San Diego County, the economic impact fell 35% in that time period; in Orange County, it fell 27%.”Highlights from the report include:
- Every dollar spent on new housing construction in California generates another $0.8 in total economic activity, while each job created through residential construction supports an additional 1.2 jobs.
- New housing construction is an important industry for the state’s economy, accounting for 0.4 percent of California’s total output and ranking among the top 15 percent of all industries.
- With a drop in residential permit activity of close to 83 percent between 2005 and 2009, the economic benefits of new housing construction in California have decreased considerably.
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