Economic Turmoil Could Wash Over San Diego
San Diego's home builders still haven't recovered from the sub-prime mortgage mess and housing market crash that followed five years ago. The ongoing volatility likely won't help them either. Rising interest rates will likely keep a new home market recovery from happening anytime soon.
"What this is likely to do is make developers a little more hesitant," said Alan Gin, University of San Diego economist. "If they see all this bad news in the economy, if they're worried about interest rates going up and adversely impacting the housing market, they may hesitate in terms of construction activity."
San Diego developers have nearly stopped building large tracts of single family homes. Housing prices peaked in 2005 and then lost nearly 40 percent of their value in the next three years. Requests for building permits had rebounded recently, going up for five straight months before falling last month.
Pension funds also lost a lot of value during the stock markets two-week plunge.
Gin said not all the news is bad.
"The news that seems to be getting lost is that the economy is still growing. The problem is that its growing at a really slow level. So, we're not in a downturn as of yet. Things are just edging up really slowly," said Gin.
California Treasurer Bill Lockyer, in a statement released Monday, said lawmakers should focus on improving the state's economy. The lower credit ratings may not have an immediate impact on the state, said Lockyer.