My firm has now completed our annual review of the real estate markets and the events and statistics that will undoubtedly catalyze or demoralize the markets and its players in the coming year. Most auspiciously, the long, drawn out recession has exacted a phenomenal toll on our national economy, best exemplified by the loss of 8.4 million jobs during the 2007 to 2009 period. Compare this loss to the two prior recessions experienced during the past 20 years. The recession of 1990 to 1993 resulted in an overall job loss of 1.6 million people. The more recent “tech wreck” from 2001 to 2003 resulted in total job losses of 2.7 million people. The two prior recessions combined resulted in roughly one-half the job loss of our Great Recession.

If redevelopment law in California is eliminated, as Gov. Jerry Brown has proposed, it would send an estimated $450 million in local property tax dollars to the state coffers. Under the governor’s proposal, more than 90 percent of this money would stay at the state level rather than being disbursed back to local school districts and other agencies as is the case with all other property taxes. The governor’s proposal to shut down redevelopment as we know it would be permanent. The tax transfer proposal would last for one year, presumably just to get the state over the fiscal hump. Why would we want the redevelopment tax money to go directly to the state, when our local agencies are also suffering? If the focus is to be on property taxes, why is the governor thinking exclusively about eliminating current fiscal deficit through a more expedient, short-term approach of eliminating redevelopment agencies, rather than tackling the bigger, more difficult issues of reforming antiquated property tax laws?

Instead of thinking of years in terms of animals, which according to the Chinese Zodiac this is the year of the rabbit, I tend to think about the underlying theme for the economy in the coming year. Looking backwards, 2008 was a year of uncertainty, which bled into 2009 - reality checks and corrections. We’ve been waiting for things to return to “normal,” but what we’ve discovered is there is now a new normal. It’s been dragging on for some time, and 2010 was finally a year of stabilization. So what is the theme for 2011? Recovering economic poise. This is not going to be a robust economic recovery. All we can do is capitalize on what the strengths of 2010 and remain positive that the economy will be improving. Because it will, albeit not as fast as everyone would like. By year-end 2011 we should be more confident in the U.S. economy and beginning to see more prominent signs of recovery. There are already signs of a renewed confidence in the economy. Consumer confidence has more than doubled since the bottom in 2009, which is evidenced by increased consumer spending. Locally in San Diego County, taxable sales are estimated to be $414 million for 2010 – up from $396 million in 2009. The reason? Households felt more job stability in 2010, which led to a comfort level of higher spending. Economists expect this trend to continue and for retail sales to improve accordingly.

To be frank, the economic recovery seems to be occurring, but it is like a patient coming out of a major life-saving operation in the recovery room: She is still semicomatose, with the prognosis of a prolonged wake-up period ahead, and then an even longer recovery until she mends in full. Consider this: 2010 employment growth in San Diego County was better, but still only an anemic 6,000 jobs were added. This was a good year in comparison with the 100,000 jobs lost in this region in 2008-2009. There is good news ahead, according to locally based but nationally acclaimed economist Lynn Reaser of Point Loma Nazarene University.

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