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LOS ANGELES-The region’s economy appears to be safe from the much discussed housing bubble now and into 2006, but there are risks on the horizon that include proposed statewide legislation that could impede business growth. Those are some of the highlights of a mid-year economic outlook report that was issued this week by the Los Angeles County Economic Development Corp. and was discussed by the LAEDC’s chief economist, Jack Kyser, at a meeting hosted by the Financial Partners Credit Union Wednesday in Long Beach.Kyser tells GlobeSt.com that the LAEDC has looked at “housing bubble factors” including the health of the local, state and national economies, housing demand, interest rates and property taxes. The economic development organization considers all three economies generally in good shape, while the shortage of housing continues unabated in Southern California, especially in coastal counties.”We have a shortage of housing, absolutely, and if you ask about affordable housing, we have literally painted ourselves into a corner,” Kyser says, because delivering affordable housing is virtually impossible for residential developer. The question on interest rates is the same as it has been for several years, Kyser tells GlobeSt.com: Will they rise, how much and how quickly. “We’re forecasting that mortgage rates will go up modestly next year,” the LAEDC chief economist says.Higher property taxes “are starting to chill some of the move-up market” for home sales, Kyser says, so the LAEDC expects that home prices may top out and remain flat, especially on the upper end of the market. The housing and commercial real estate markets should continue to benefit from stable local, statewide and national economies into next year, but “there are some risks,” he adds.One of those risks is “a lot of ill-considered legislation coming out of Sacramento,” including a proposal to put an initiative on the state ballot that would de-couple nonresidential real estate from residential under Prop. 13. The proposal, called the split roll tax, is considered anathema to business interests because it would modify Prop. 3 to reassess business properties more frequently and to impose higher tax rates on them than on residential properties.The LAEDC’s mid-year forecast listed both positive and negative economic forces that will be at work through next year. Among the positive forces listed were continued modest growth in high-value aerospace jobs, strong international trade, robust tourism, high levels of television and movie production and brisk new home building. The negative forces listed included the prospect of congestion at the ports, the threat of summer power shortages at the investor-owned utilities, an ongoing shortage of quality industrial space, impacts from retail mergers and a continued shortage of affordable housing.

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