Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Monday, September 25, 2006

...And Then It Just Turned Off!


"Job growth has suddenly stalled in Sonoma County, a mysterious trend that has analysts wondering if local employers are firing workers - or are just unable to hire them."

"Some analysts warn the figures could indicate the local economy is weakening and companies are shedding jobs. Others say the economy is strong and still has ample room to grow, but employers are finding it increasingly difficult to recruit workers to fill job openings in one of the nation's least-affordable places to live. Or, perhaps, it is a combination of both factors."

'"To be honest, I can't explain it completely," said Steven Cochrane, an economist with Moody's Economy.com who described the quick downturn as extraordinary."

hmmm... what a puzzle. What do you say you count the realtors, mortgage brokers and construction workers who are no longer working?

"Just last February, the local economy was on track to generate 4,500 jobs this year, its most powerful performance in six years. But things began to change quickly in the spring. Job growth slowed to a trickle in March and April. And in May, the expansion came to a halt as employment at local companies sank below levels from the preceding year."

"Since then, the job losses have accelerated every month in Sonoma County. In August, the county had 2,900 fewer jobs than it did a year ago, according to the most recent data issued by the state Employment Development Department."

"While analysts cannot fully explain the trend, they agree it is not good news for the county's economy. Three reasons have emerged for why the county is losing jobs, and all three might be playing some part."

"One possibility is that employers have jobs to fill but can't entice potential workers to move here because the cost of living is too high."

"A study issued last month by the National Association of Home Builders ranked Sonoma County as the 20th least-affordable housing market in the United States, based on a survey of incomes and housing costs in 198 communities."

"Rod Matteri, co-owner of SBI Building Materials in Fulton, said he has been unable to find new truck drivers."Five years ago if I put a classified ad in the newspaper, I'd get 50 responses," Matteri said. "(Now) I can't get anyone to move here for a job that pays $20 an hour."

"The second possibility is the economy is slowing significantly as a result of higher energy costs, a cooling housing market, increased interest rates, stagnant wage growth and other factors."

"The Sonoma County economy has lost jobs for four consecutive months only two other times in the past 16 years: immediately before the recessions in 1992 and 2001."

"No economist said the job losses in Sonoma County signal the start of a recession, which is two consecutive quarters of economic contraction. But historical comparisons to the previous two recessions - in the early 1990s and 2000s - show a remarkable similarity."

'"(I) must see the trend continue to make a statement about recession, but I agree it does not look good," Sonoma State economist Robert Eyler said in an e-mail interview. "This may be a signal that Sonoma County is beginning a recession."'

"The third possibility is that the data is wrong."

Sshh... Go back to sleep Sonoma, there is no housing bubble. Real Estate only goes up. You can't lose. The economy is just fine. Clerks turned out into realtors are making money hand over fist. There are plenty of jobs. Tinkerbell lives here. Santa is on his way.

"The cooling housing market is likely playing a significant role in the slowdown. Steve Shook, chief operating officer of Shook & Waller Construction in Santa Rosa, said construction of new homes suddenly slowed down a few months ago as inventories of new, unsold homes increased."

'"Three months ago, we were wondering how we were going to cover all the work we had. And then it just turned off," Shook said. "We just had to lay off some 80 guys. We don't have the work for them."'

"Overall, construction companies have shed 300 jobs over the last year.Another hard-hit industry appears to be restaurants, catering services and bars, which had 600 fewer jobs in August, compared with a year ago."

'"The economy is not that healthy right now," said Gerard Giudice, president of the Restaurant Association of the Redwood Empire and owner of Sally Tomatoes deli in Cotati. "And when income goes down, the first thing people cut out is fine dining."'

"Overall, Sonoma County had 190,500 jobs in August, down from 193,400 last year."

'"The question is, what is unique about Sonoma County that is making it decline unlike the rest of the state?" said Ken Jacobs, chair of the UC Berkeley Labor Center."

"Other counties in the Bay Area have high costs of living and are experiencing a decline in home prices, too, like Sonoma County, Jacob said."

3 Comments:

At 9/26/2006 09:50:00 AM , Anonymous tom stone said...

oooh,you quoted robert eyler,who was going to all the mls meetings earlier this year giving speeches,and at the end of july said that there was a zero chance of home prices dropping anywhere within 50 miles of california's coast...but that there "might" be some softening inland.i tell ya,it really fired up the troops!except for those of us trying not to barf,or choke while stifling laughter.

 
At 9/26/2006 10:36:00 AM , Blogger Athena said...

Professor Boobus himself. I have read some of his reports where his data says one thing and he draws a different conclusion. I think he must be seeking funding for his chair at the college. He speaks like he is lobbying for a paid schill post.

 
At 9/26/2006 12:43:00 PM , Anonymous tom stone said...

Athena,you are kinder than you should be.he is not stupid,just corrupt.the reaction of the real estate people when he stood there reinforcing their delusions was irrationally exuberant.it was genuinely sick...like someone giving an alcoholic a case of stoly for christmas,while reassuring them they were fine,it's those other folks.

 

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