Longtime Inland Empire economist John Husing delivers an economic report card during the Coachella Valley Economic Summit on Friday at the Renaissance Esmeralda Resort & Spa in Indian Wells. Omar Ornelas/The Desert Sun
INDIAN WELLS — The Coachella Valley economy earns a “C” from longtime Inland Empire economist John Husing, but that doesn't mean a full recovery will happen any time soon.
It will be 2015 before the Coachella Valley economy starts to return to normal, Husing told about 750 people attending Friday's annual Coachella Valley Economic Summit at the Renaissance Esmeralda in Indian Wells.
 The forecast somewhat echoed last year's prediction of a 2015 recovery, with one major caveat. Full recovery could stretch into 2016 if the housing crisis continues, as 35.5 percent of the 846,067 Inland Empire's homes are worth less than their outstanding mortgages.
Homes are more affordable than ever before, Husing said, citing an affordability rating of 64 percent for existing houses that are selling at a median as of mid-2011 of $238,839 for existing homes and $250,056 for new homes.
“With the move down in interest rates, home sales should be stronger, but they're not.
“Why not?” he said rhetorically. “It's fear.”
National politics — and the budget fight in Congress — rattled the confidence of Wall Street investors and consumers, he said.
Husing predicted a period of uncertainty through the upcoming presidential election year.
While the nation has added back 23percent of the 8.3 million jobs it lost in the recession, the Coachella Valley has not yet begun to recover the 14,121 jobs it has lost since 2007. “We're having a fairly rough time,'' he said.
Even with the uncertainty, and the anemic job recovery, Husing painted a picture of progress.
The Coachella Valley's “C” grade represents progress. It scored a “D” two years ago.
Were it not for the drag the state of California has had on business competitiveness, the grade might have been even stronger, Husing said. He gave the state an “F-minus” on competitiveness.
Stacked against nine Western markets outside of California, the Inland Empire is at a disadvantage because of state regulation and high taxes, he said.
“Take those two elements out of the mix, and the Coachella Valley would compete rather well,'' he said.
What's working
At work to improve the valley economy, whose slow recovery resembles a checkmark:
Positive signs on the tourism front, given recent double-digit increases in hotel occupancy and a 5.4 percent gain in rates.
Airport traffic, which rose 2 percent to 1.4 million passengers in 2010. It's softened a tad so far this year. But car rentals are up, as are hospitality-related jobs — up 6.3 percent as of July.
Fewer upside-down homes than in 2009, when mortgages in distress stood at 54 percent.
Stronger retail sales. Cash register totals rose 10 percent for the first half of the year compared to 2010.
Record crop production for the agricultural industry. In 2010, the sector sold a record $533.8 million of crops, up 9.2 percent from 2009.
Advances to land clean-tech companies and establish strong relationships in the creative arts.
Health care continues breaking records in terms of employment, Husing said.
The film and commercial industry is doing well. The valley accounted for nearly 67 percent of film activity in Riverside County last year.
Baby boomer effect
One cannot ignore the importance that retirees — especially the baby boomers — will have on the economy going forward, Husing said.
CVEP's cohesiveness also has helped keep the valley pressing on in a period of sluggish growth, he said.
Don Perry, chairman of the CVEP board, said “This is an exciting time — when many are diving into the trenches to ride out the storm,” the agency and CEO Tom Flavin are driving sustainable growth.“There's an old saying, ‘If you don't know where you are going, any road will take you
there,''' Perry said, noting that's not the case with the Coachella Valley. Where other regions have chosen to head into a ditch to ride the storm out, he said the valley is doing anything but.
“We do have a plan.”
Flavin said he believes the valley's strongest asset is its sense of community and common purpose.
“We have the ability to get important things done,'' he said. “If we are fully mobilized, the Coachella Valley can become the business portal for California and the Pacific Rim. ‘Compete and Prosper' will be more than a conference theme. It will be an economic reality.”
Business leaders said the predicted 2015 recovery did not surprise them, nor did the report card.
“The grades weren't all good, but the Coachella Valley is doing better than other regions,'' La Quinta Councilwoman Linda Evans said. “It would be an anomaly if we were well ahead, while the state was falling apart.”
Jeff Van Hoy, an executive with JFK Memorial Hospital in Indio, said he thinks significant progress was made this year, citing CVEP's Rabobank Regional Business Center and Innovation Hub in Palm Springs as a key accomplishment.
Todd Hooks, economic development director with the Agua Caliente Band of Cahuilla Indians, was taken by the buzz of activity before the morning summit began.
“This is not artificial,'' he added. “It's real people, real business organization trying to take the next step in a difficult economy.”
Competitive Housing Prices
Existing home prices in the Coachella Valley & Southern California counties as of the second quarter of 2011.
Indian Wells: $645,000
Rancho Mirage: $520,000
Orange County: $500,000
San Diego County: $362,500
Los Angeles County: $330,000
Palm Springs: $308,423
La Quinta: $302,250
Palm Desert: $286,754
Riverside County: $190,000
Indio: $161,226
Cathedral City: $153,750
San Bernardino County: $146,000
Coachella: $120,250
Desert Hot Springs: $93,446
Yucca Valley: $81,000
Source: DataQuick
Foreclosures Losing Steam
There are 1,086,305 homes in the Inland Empire. Here's the share over the past two years that were underwater, or not worth as much as their mortgages.
4Q 2009: 54.9%
1Q 2010: 53.5%
2Q 2010: 51.3%
3Q 2010: 48.8%
4Q 2010: 48.9%
1Q 2011: 47%
2Q 2011: 45.5%
Source: CoreLogic |
