By Matthew Bunk
FAIRFIELD - California's housing market will begin to deflate by 2007, fewer Fairfield workers will commute to work in the year 2030, and tourism will be a major economic engine for Solano County if the popularity of wine continues to grow.
Those were findings of a study released Wednesday by The Business Forecasting Center at the University of the Pacific. The 100-page report contains short-term and 25-year projections for the state and 11 metro areas, including Fairfield-Vallejo.
"Any time you make long-run comparisons you really have to rely a lot more on trend analysis, while the quarterly forecasts can incorporate things like business cycles, monetary policy and fiscal policy," said Sean Snaith, director of Pacific's Business Forecasting Center and author of the report. "The further out you look, the more difficult it is to be specific and, quite frankly, accurate."
Researchers tried to get a grasp on California's wily real estate market, a task that's kept many economists and analysts busy for the past couple of years as the price of homes rose to record levels.
Similar studies have predicted home prices would continue to rise at a record pace and others have warned of a bursting bubble. But Snaith's study took a moderate tone, likening the housing market to a delicately baked pastry.
"The current housing market is like a soufflé because it is the end result of just the right ingredients put together at just the right time in just the right environment that has allowed for prices to make this historic climb," the study states. ". . . Once any of the ingredients are taken out of the mix, the soufflé will begin to deflate."
It's unlikely, Snaith said, home prices will continue to rise 30 percent every year, and it's just as unlikely the market will crash. Instead, there might be a slowdown as mortgage rates rise, and that could happen by 2007.
"But to go from 30 percent per anum appreciation to 2 percent doesn't seem to me like a bubble bursting," he said.
The wider economic picture shows steady expansion for the next 25 years, with Fairfield-Vallejo expected to progress faster than the state in many economic categories. In particular, personal income growth in the region is expected to outpace the state average.
The employment outlook for Fairfield-Vallejo is strong as well. After marginal growth for the past couple of years, total employment is expected to increase an average of 2.4 percent for the next three years, with the construction industry leading the way.
"I think employment growth is rising at a nice clip," Snaith said. "The Fairfield-Vallejo metro area is above the state average and certainly above national average growth. It's one of the stronger metro areas we covered in the study."
That's because the state will experience a shift in growth centers from the coastal areas to farther inland as the traditionally popular cities reach buildout, Snaith said.
The Business Forecasting Center at Stockton's University of the Pacific was founded in 2004.
Reach Matthew Bunk at 425-4646 Ext. 267 or firstname.lastname@example.org.
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