2010 Economic Update and Forecast - Outlook Positive for Small Business

By: Sara Russ, President/CEO

I think everyone can agree that 2009 was an economically dismal year. Titled the “Great Recession”, 2009 represented a year of lost jobs, extreme financial declines, and a national “tightening of the belt” mentality. The hardest hit industry was in construction as we went from record high home prices, to a dead stop in all building. In 2009 only nine new single family home permits were issued by the city and 1,545 for the county, which was a 90% decline compared to 2005-06. However, home prices were an entirely different story, falling the first half of the year for San Bernardino County, prices actually started to increase the second half of 2009 going from $140,000 in July to $160,000 in November. For Big Bear the average home sold for $277,000, which is $117,000 or more than the average for the county.


Overall, the housing market seems to have hit the bottom and is starting to rebound, according to John Husing, the Inland Empire’s chief economist and another of Inland Empire – Quarterly Economic Report, which was published in January 2010. “In second quarter 2009, the Inland Empire’s housing market appears to have bottomed and is now in its recovery period. This forecast is made because the forces driving demand should continue to overwhelm the supply coming from foreclosures, restrained by federal pressure.” He bases this information on the percentage of families that can now afford homes in the Inland Empire, which is now at 66%, compared to only 15% in the mid-2005. “With affordability soaring, Inland Empire homes sales have also increased.”


The foreclosure supply is also shrinking, for San Bernardino County the share of foreclosures was 69% during the first part of 2009 and was down to 56% in November. Of the homes sold in Big Bear in 2009 that were foreclosures it was only 37%.


Sales tax, though lower than 2008, also showed that Big Bear did better than the county. Latest sales tax information, which is from the first half of 2009, showed Big Bear at only a 10.75% decrease compared to 2008 figures, while the county was 20.05%.


In summary, it is believed that the Inland Empire’s housing market has passed the point of falling prices, which supports that the worst of the housing crisis is over and things are improving. This is based on the fact that demand should exceed supply with rising prices because of the area’s record affordability, plus the large number of families that can now afford homes and the extended federal government tax credits. But, recovery will continue to take time. As for new construction, it is difficult to say. “New home construction is sluggish, but remodel permits are holding steady”, according to Jim Miller, Director of Building and Planning.


One thing is for sure, 2010 has to be better than 2009. With new businesses popping up all over town, including Grizzly Mountain Gourmet Market, Bay Meadow’s Resort, The Tea Company, The Copper Q, and Sugar Pine Bake Shop, as well as existing businesses expanding, such as The Paper Clip, Bear Creek Resort, Zook Studies, and SGS Windows and Doors, Big Bear has gotten through the worst of the storm.


But, just as all of our member businesses were forced to do in 2009 in regards to tightening belts, doing more with less, and improving the way they conduct business, so has the Chamber. We are using the lessons we learned in 2009 to do an even better job of serving our members in 2010. We are the leading business association in Big Bear and we are focused on improving our local economy. In 2010 “We Mean Business” and it looks like the national economy will bring the same.