Kelly Cunningham, economist for the San Diego Institute for Policy Research, says, “Things are slowing down. Before, people could spend because they could refinance their homes, get second and third mortgages.” But now that spigot has been shut down. “Retail stores will see slower sales.” San Diegans are loaded with debt: “We’re overextended here more than in other places,” he says. “We certainly had a bubble in housing prices that needs to be brought down to reality, although our reality is higher than the reality elsewhere.”
Cunningham says San Diego is not overbuilt in housing. “People still want to live here,” he says. The county has to get back to a price/affordability equilibrium. Then those homes in inventory will be sold and more will be built. Although San Diegans are overleveraged and consumer purchases will slow, “Our economic drivers are not dependent on consumer spending,” he says. (However, others point out that consumer spending is 72 percent of the U.S. economy and at least as much of the San Diego economy.) Cunningham thinks that strength in tech sectors will offset the weakness in construction and real estate. San Diego will add 14,000 jobs this year, up from 11,000 last year, he says.