NYTimes & Forbes Expose Sonoma County

Sonoma County ... apparently not everyone wants to live or work here. Those who do, will find the area unaffordable. We are currently ranked 3rd most unaffordable in the nation.

SANTA ROSA

"Just four years after it was No. 2 on Forbes magazine's annual list of the best places in the United States to start a business or relocate for a new job, Sonoma County fell this year to No. 182."

"Sonoma County would not even have made the list this year except that Forbes expanded it from 150 places to 200 this year."

"The county's ranking was hurt by low showings in several of the nine categories used to judge the business climate. Especially negative were the cost of living, based mainly on housing, utilities and transportation, and the cost of doing business, based on labor, energy, taxes and office space. The county's best showings were in its crime rate and in culture and leisure."

"California had the worst showing of all states, mainly because of "runaway business costs," Forbes said."

"According to a Monday New York Times article citing data from Moody's economy.com and the U.S. Census, the Santa Rosa-Petaluma area is the third least affordable region nationwide. The analysis ranked areas based on the percentage of household income spent on mortgage payments."

"Santa Rosa-Petaluma isn't the only area in California that is highly unaffordable, according to the article. In fact, each of the top 11 highest mortgage-rate-to-income areas were in the state."

"Although the New York Times article did not give specifics about exactly how difficult it is to afford to live here, a similar report released in December by the National Association of Home Builders and Wells Fargo ranked the area as the 17th least affordable in the nation."

"The high unaffordability rating was no surprise to John Records, executive director of the Committee on the Shelterless."

'"I had known for a long time that it was high, but I was shocked to find it reported on a national basis," he said."

The article also says not everyone agrees with the information reported by the New York Times. A real estate broker is quoted as saying something along the lines of the area is affordable and the real problem was just not enough houses on the market to buy. The broker said that usually there are about 125 homes for sale and now there are 185. Thus her position that houses ARE affordable.

Honey, let me be the first to clue you in to a minor detail...

Unaffordability is not calculated based on the number of houses on the market. It is determined by comparing the PRICE of a house and the INCOME required to purchase said house, be it 1 on the market or 185 on the market.

Let's review:

First of all, in Sonoma County high-paying jobs are not plentiful, and many of the new jobs pay less than the average wage.

Second, there is a disparity between the competency of the available workforce and the specific skills required for many of the new jobs.

And finally, the economy is not firing on all cylinders yet according to a report prepared for the Sonoma County Economic Development Board by Economy.com.

* Employment peaked in Sonoma County in 2001 at the end of the tech boom when the county had 196,700 payroll jobs.

* By 2003, the economic downturn had wiped out 7,600 of those jobs, based on average annual employment.

* Through 2005, only 2,400 had returned.

* In Sonoma County, the average wage is $42,171

*Adjusted for inflation, per-capita income in 2006 will increase 1.9 percent, to $29,113.

* Per-capita income fell 2.6 percent in 2005.

* The Press Democrat study found that 58 percent of the new jobs created between 2003 and 2005 paid below the average wage.

* It is estimated that 60% of the new jobs added between 2001 and 2003 were lower-paying service jobs that are below the county’s average wage of $42,171 per year.

* Fifty-eight percent of new jobs between 2003 and 2005 paid below the average wage.

* The number of jobs in the county is still 3.3 percent, or 6,500 jobs, below 2001.

* Only 7 percent of households could afford a median-priced home in Sonoma County at year's end 2005 compared with 12 percent a year ago.

* In 2005 a Sonoma County household needed a minimum income of $152,595 to buy the typical home, based on prevailing interest rates for a 30-year mortgage.

* In 2004, the minimum income needed was $124,650.

(Did you note the per capita income is only: $29,113? Did you note the average wage is $42,171? Did you note that of the new jobs created nearly 60% are paying below that average wage? Did you notice even if they ARE paying the average wage it still is nowhere near the income needed to buy a median priced home? Did you notice that even if you double the average wage it still isn't enough? ok... just checking)


* Buyers had to increasingly stretch financially to purchase homes. A majority turned to interest-only and other adjustable-rate loans, often making little or no down payment when purchasing homes.

* Adjustable-rate mortgages accounted for 69 percent of loans to buy Sonoma County homes last year and only 31 percent were 30-year, fixed-interest loans - a reversal from just two years earlier.

* Default notices are rising, signaling business instability and consumer insolvency.

* As interest rates rise, and there are conversions from adjustable rate mortgages to fixed, defaults are likely to rise.

Percentage of home buyers choosing adjustable-rate mortgages
(most likely chosen BECAUSE of the prices being out of whack from incomes)

Sonoma County
2003 - 36.8%
2004 - 59.4%
2005 - 69%