Housing slump drags on broader Southern California economy

Discount center it isn't. This is where you go to find a $3,300 home espresso machine at Sur La Table, a $500 handbag at Coach or a $6 cup of Pinkberry frozen yogurt.

Harder to find are paying customers. On a recent weekday afternoon, most stores had fewer shoppers than salespeople.

Outside the Starbuck's, Melissa McVicar was selling sunglasses from a cart, $12 a pair. Five hours into her shift, McVicar had sold only six pairs. And most of her customers weren't paying cash.

"People are buying on credit, even if it's only $12," she said.

A year after the median home sales price in Southern California started to go down, Dos Lagos is a good example of how the housing slump is spreading into the broader economy. New housing developments were supposed to have brought thousands of big-spending residents to the area. But only a fraction of those houses were actually built and sold, leaving the rolling hills around the mall bulldozed and bare.

That means retailers won't sell as many goods or hire as many people, which lessens demand for other goods and services. It's just this sort of ripple effect that's behind California's rising unemployment rate, which hit a 12-year high last month, economists say.

And it all traces back to the housing downturn.

For every area job lost in construction, real estate or banking, three other positions will disappear, according to the U.S. Department of Commerce.

"There's a multiplier effect with housing. When a job is lost in real estate it ripples throughout the economy," said Sung Won Sohn, an economist at Cal State Channel Islands in Camarillo.

Sohn estimates that 1 out of 8 jobs in Southern California is related in some way to housing, and as much as 80% of a median household's net worth is in the family home. So if a carpenter or real estate agent loses a job, it can lead to employment losses in fields such as retailing and restaurants as spending declines. Individuals and families will also spend less if their home values decline.

Tens of thousands of jobs have been lost in the sectors most directly tied to housing -- construction, banking, retail and real estate -- in the last year alone, driving unemployment up to 8.1% in Los Angeles County and 8.9% in the Inland Empire. Local governments have also cut jobs as sales tax collections have slowed.