Sonoma County on the Edge of Recession
A glimpse into the 2007 outlook for Sonoma County's Economy and Housing Market.
"Sonoma County's economy was one of the weakest in the Bay Area heading into 2007, and housing has dropped sharper than almost anywhere else in the nine-county region."
"Homeowners and builders still face challenges making sales, given both the oversupply of homes and poor job growth, said Chris Peterson, co-owner of Santa Rosa builder Rivendale Homes. Many homes remain too expensive relative to incomes in Sonoma County and a glut of housing is still for sale."
"Housing remains a troubling question mark that will influence the direction of the region's economy."
"The Sonoma County outlook contrasts with the "soft landing" predicted for the California and U.S. economies last month by the UCLA Anderson Forecast."
"The region's economy has deteriorated over the last six months and is showing signs of vulnerability, according to the outlook prepared for The Press Democrat by the Center for Regional Economic Analysis at Sonoma State University."
"Sonoma County is teetering on the brink of a mild recession this year, as job losses and the housing slump weaken the region's economy, according to a new forecast."
"Economists who track the county's economy differ on the probability for recession, but agree the odds are greater than a year ago."
'"The chances are high, certainly over 50 percent," Robert Eyler, who prepared the SSU forecast said. "The housing market slowdown is coming at the same time as a normal business cycle downturn. That's why a recession should take place."'
'"The local economy has been a mixed bag the last few years. It's not growing as fast as it needs to be," Eyler said."
"What growth there was ended unexpectedly in May, the first of seven consecutive months the county had fewer jobs than a year earlier."
"Steve Cochrane, research economist with Moody's Economy.com, said there is at least a 25 percent chance the economy could dip into a recession."
'"There were a number of large-scale layoffs that we weren't expecting among these tech-based businesses. Even the food and winemaking industry wasn't hiring much," Cochrane said."
"Real estate built up an outsized role in the region's economy during an eight-year housing boom. Housing-related jobs now account for 13 percent of employment in Sonoma County, and soaring prices boosted equity that bolstered consumer spending."
"Plunging sales led to construction layoffs and job losses in real estate, financing and other housing related areas. More could follow, economists warn."
"Housing's surge ebbed in 2005, when the county's median resale home price hit a record $619,000. Then high prices and rising mortgage loan interest rates made homes even less affordable in a region where families already found purchasing houses difficult."
"The price for a typical county home has fallen to $565,000 and may not have hit bottom. Falling prices leave homeowners with less equity to tap for buying cars, home improvements and other spending."
'"All the forces are now ganged up," Eyler said of the chance for a recession."
"Housing's recovery is farther off and continues to pose some peril for the county's economy."That is one of the risks in this coming year," Cochrane said."
"The housing market likely will remain weak into 2008, the economists said."