Welcome to the Regional Outook San Francisco, Beacon Economics' quarterly forecast for the San Francisco Metropolitan Statistical Area.  This report delivers a clear snapshot of the current state and future outlook of employment, home prices, consumer spending, personal income, and othe leading indicators in this key region of California.

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San Francisco Labor Market Sees Slow, But Steady Growth

The San Francisco Metropolitan District (MD) has fared better during the recession and recovery than the state overall. The region’s unemployment rate never reached into the double digits and total nonfarm employment fell 1.5 percentage points less than the state from pre-recession peak to post-recession trough. Also, since bottoming out, the San Francisco region has outpaced the state by 0.15 percentage points in total nonfarm employment growth. From the second to the third quarter of 2011 total nonfarm employment increased 0.8%, more than the states increase of 0.2%. In that same period the unemployment rate in San Francisco decreased 0.13 percentage points to 8.3%.

Employment in the San Francisco MD is benefiting from a nationwide effort by companies to maximize efficiency instead of hiring new employees. To that end, the Professional, Scientific, and Technical employment sector continues to lead the area’s recovery, both in percentage growth and in number of positions added. Employment in the Leisure and Hospitality sector has also done well quarter over quarter, continuing its upward trajectory and indicating continuous tourism and recreation activity in the region. Seasonally adjusted, Leisure and Hospitality employment is now less than 1% below its pre-recession peak set in April of 2008.

The recent trends reinforce the view that the worst has passed. Beacon Economics is forecasting that total nonfarm employment in San Francisco will again reach 1 million by 2015. The unemployment rate will continue to decrease and will fall below 7% in the first half of 2013.

 

No Double-Dip In This Housing Market

Housing prices fell hard in San Francisco when the housing bubble burst, plummeting 31% from their peak in the second quarter of 2007 to their trough in the first quarter of 2009. Still, as bad as that sounds, the state fared worse, falling 57% from the first quarter of 2007 to the second quarter of 2009. And since hitting bottom, San Francisco has performed better than the state with median home prices increasing 12% versus a 9% increase in the state overall.

For the past few months, Beacon Economics has been one of the few voices arguing against economists, pundits, and media headlines predicting a possible double dip recession – including a double dip in home prices. The data continues to show that the hype doesn’t match the facts. In San Francisco, Beacon Economics is forecasting continued increases in home prices, with the median home price reaching $700,000 in the first half of 2013.This pales in comparison to the median home prices of $880,000 seen at the height of the housing bubble, but it is a far more sustainable figure as it falls in line with incomes in the region and makes more sense within the post-recession context.