Greater variation was observed in the estimates for unemployment through the end of l995. Many economists indicate that employment growth has been mixed with improvement concentrated in selected industries. Projections by the consensus panel are wide-ranging for income growth. Building Permits Still Lagging Permits for residential housing have been essentially flat since 1991 with very little improvement even during the improved economic environment we have seen since the first quarter of 1995. Undoubtedly, this protracted weakness is not merely cyclical.
Structural factors are likely to play a significant role.
Given the price depreciation since 1991 and the high development costs, many development projects do not pencil out. Unless either prices begin to rise again appreciably, or development costs are curbed and reduced, any upward movement in housing permits will continue to be muted. Housing construction remains soft with the consensus panel mixed in their perspective. The California Association of Realtors is least optimistic with a forecast of 90,000 units while First Interstate Bank reflects a strong recovery at 120,000 units. The Controller's forecast remains on the low side with a 105,000 unit prediction.