There likely is no recession looming on the horizon, but it may feel like one if your job has any relationship to the residential real estate industry. That’s the essence of the message given to an audience of more than 300 attending the 14th Annual Northern Los Angeles County Real Estate and Economic Outlook Conference on Nov. 2 at the Hyatt Valencia Hotel. On that date, however, the Writer’s Guild strike vote had not yet been announced. With estimates of the fiscal impact of the strike as high as $1 billion, there is concern this may be the key ingredient that forecasters have been telling us was missing from the recession recipe. Dan Blake, CSUN economics professor and director of the San Fernando Valley Economic Center, said for the strike to become catastrophic for the Santa Clarita Valley “it would have to be prolonged and it would have to be respected across the Board.” But now we return to our program already in progress. The conference opened with a very pessimistic keynote speech by Sen. Tom McClintock whose first words were, “I hope you didn’t invite me here to brighten up the morning.” The senator warned attendees that the state budget numbers are “nothing short of appalling,” with a $7.7 billion first quarter deficit. He went on to decry recently passed state legislation, in particular AB32 which requires a 25 percent reduction in global warming emissions statewide by the year 2020, saying compliance with the new regulations were going to “bankrupt us.” The economists who followed seemed relatively chipper in comparison. Brighter forecasts After peering into their crystal balls, and massaging their spreadsheets of data covering everything from housing starts to non-farm job creation, they found nothing terribly alarming. Dr. Ryan Ratcliff of the UCLA Anderson Forecast said that although “ARM-ageddon continues in California,” growth in third quarter gross domestic product statewide was higher than forecast. And although unemployment in the state is rising, it will peak at a still-low 6 percent by the end of 2008, with residential real estate and related companies taking most of the hit, as anticipated. As goes the state, so goes the Santa Clarita Valley, according to Dr. Mark Schniepp, principal of the California Economic Forecast. Aside from the well-publicized housing woes, he had a fair amount of positive news to report. Commercial, industrial and retail vacancy rates remain low. Job creation slowed but is still on the rise. Manufacturing employment has flattened as has employment in the professional/scientific/technical sectors. Healthcare and real estate related industry employment have dipped but education employment is at an all-time high. The default record for residential loans appears to be slowing in high-demand areas like the SCV even while gloom descends further on the inland empire counties. That’s not to say there will be no pain. Real estate timing In answering a question he says he is often asked, namely “is now a good time to buy real estate?” Schniepp responded with a picture. The graphic featured a human hand grasping a knife by its blade, illustrating an old proverb why try to catch a falling knife when you can wait until it hits the ground and just pick it up? Both Schniepp and Ratcliff said the knife (housing prices) should continue to fall until well into 2009, particularly in the area of existing homes. There may be some opportunity for value in new homes in the SCV as builders with large swaths of home tracts start dropping prices and offering incentives to home buyers. But for anyone who has to buy or sell a home in the next 18 to 24 months, it will be a dicey proposition. In concluding his presentation, Schniepp said, “There is no clear, convincing evidence that things are eroding away,” adding that 2008 will feel a lot like 2007 to most of us. That sounded about right to CSUN’s Blake. “We’re seeing growth in the right areas,” said Blake. Employment increases in the logistics sector (rail, freight, cargo, etc.) are replacing some of the mid-level jobs the region has lost in manufacturing. “But we are still not replacing the high-level, high-skilled manufacturing jobs,” he added. Lower-level fabrication jobs are moving out, but design, engineering, packaging and shipping, which are higher paying jobs, are coming in. He also said the low value of the dollar will actually have some positive impacts on our local economy. The lower dollar, Blake said, increases revenues from tourism and also exports. According to Blake, the real question is whether the market will stay stable until wages rise to the point that more people can afford the homes that are available.