Faculty Fellows Share Economic, Real Estate Trends in Inland Empire

Faculty Fellows Share Economic, Real Estate Trends in Inland Empire
Greg Hunter shares results from a survey about consumer confidence.
Michael Reibel talks about residential real estate trends in the Inland Empire.
Sandra Emerson discusses the California budget.

Although the nation remains mired in recession, residents of the Inland Empire are showing signs that the worst may be behind them. A fresh survey reveals an  improvement in consumer confidence, typically one of the first indicators of economic recovery, said Associate Professor of Economics Greg Hunter.

“In our economy, about 70 percent is driven by consumer spending. If consumers are feeling better about the economy, they're more likely to spend, and that's a pretty good indicator of economic growth,” Hunter said. His findings were based on preliminary results from a scientific phone survey of 600 residents in the Inland Empire, a survey completed just a day before results were announced. (Results from the complete survey of 1,000 people are currently underway.)

Despite the increase in consumer expectations, which exceeded the national average, Hunter wasn't ready to declare that boom times are around the corner. “People are still feeling the pinch of a recession, and it's unabated.”

Hunter was one of three presenters in a roundtable discussion hosted by Cal Poly Pomona's Center for the Study of the Inland Empire on Wednesday, May 13. The center's faculty fellows gave presentations and answered questions about the economy, residential real estate trends and the California budget.

Michael Reibel, professor of geography, said home sales have increased in Southern California, especially in the Inland Empire. That's a sign that credit is available and the financial system is working, but home values continued to take a beating.

The lopsided market, mostly driven by foreclosures, is a trend that can't be sustained. “We're in a situation of a lot of bargain hunting,” Reibel said. Although the market has not yet hit bottom, Reibel said home prices are beginning to level off, based on month-to-month figures.

Proximity to jobs in Los Angeles and Orange counties appears to be a major factor in determining the decline in real estate values, Reibel said. Homes in Chino, Chino Hills, Corona, Norco and Murietta lost 15 to 30 percent from March 2008 to March 2009, compared with declines of 40 percent or more in farther-out cities such as Fontana, Riverside, San Bernardino and Moreno Valley. He said it was a trend worth watching, because it could indicate that homeowners are putting increasing value on the length of their drive to work.

Political Science Professor Sandra Emerson analyzed the California budget, saying it will run in the red for the next five years, with the upcoming two fiscal years being the most challenging. Even in five years, she pointed out, the state won't likely be flush with cash. Instead, the budget will be similar to 2007-08, a challenging year that preceded the steep deficits.

Budget revenues are expected to rise in 2009-10, but the difference in revenues and expenditures will increase with the largest gap occurring in 2010-11. Emerson projects the gap narrowing in 2011-12 and through the following two to three years.

Losses in income and corporate tax revenues will have a major effect on public education and health and social services, she said.

The roundtable discussion, held at the Sheraton Suites Fairplex in Pomona, is a biannual event for academic researchers, business people and community leaders. Additional faculty fellows include: Juliana Fuqua, assistant professor of psychology; Carsten Lange, associate professor of economics, Stacy McGoldrick, assistant professor of sociology; Faye Linda Wachs, associate professor of sociology and Barbara Way, dean emeritus of the College of Letters, Arts & Social Sciences and a faculty emeritus in political science.

Upcoming events include a crime and violence think tank event this summer and a roundtable discussion about the economy and real estate market in October.

For more information about the Center for the Study of the Inland Empire, contact Nicole Forrest Boggs at forrestboggs@cpp.edu or (909) 869-4450.