June 29, 2005
By RACHEL RASKIN-ZRIHEN, Times-Herald staff writer
The Vallejo area is riding a wave of growth that forecasters predict will more than double its economy in the next 25 years, a new study shows.
Sean Snaith, director of the University of the Pacific's Business Forecasting Center, said the Vallejo-Fairfield metropolitan area is growing faster than nearly anyplace else in the region.
"The bottom line for the Vallejo area is that once again it's looking like one of the strongest metros we cover, over the next two years and also long term," Snaith said.
The center conducts quarterly economic studies for the United States, California and 11 metro areas.
Snaith said the area's growth is fueled by several factors involving regional and national trends.
"The Vallejo area's economy is growing faster than most other areas. It's one of the top two or three," Snaith said. "It's the same kind of thing we're seeing in the Central Valley. The coastal regions are essentially built out, and that, along with economic considerations, is driving people to these more inland areas."
Snaith said the coastal build-out pushes property values there out of most people's reach, which sends them inland in search of affordable housing. The demand for housing in places like Vallejo causes home prices here to soar.
The influx of population, some of which results from baby boomers entering their peak homebuying years, also spurs development of businesses offering the goods and services needed to support them, he added.
Often described as a real estate "bubble," the situation is more like a "soufflŽ," Snaith says.
"It's not like the dot com bubble, which burst," Snaith said. "The real estate market is based on something more tangible - supply and demand - and is not likely to collapse."
The housing boom, and its resulting economic boom, could falter, though, if one or more of the factors driving it drastically changes, Snaith said.
"We don't want to peek in the oven here, but if any part of the ingredients changes, like a sharp rise in interest rates, the soufflŽ could deflate," he said.
The study shows that personal income in the Vallejo area will grow 7 percent from its present $14.2 billion to nearly $20 billion in the next decade. It is expected to reach about $38 billion by 2020 and nearly $73 billion by 2030. This area's personal income growth rate through 2007 is expected to surpass the state's average, because of a strong employment outlook, the study shows.
Construction jobs are expected to grow through 2006, but slow down through 2007. The service sector and professional and business service industries are predicted to create more than 2,000 jobs locally by 2007.
The number of education, health services, and leisure and hospitality jobs are also expected to rise, though more moderately. And, unlike the rest of the state where manufacturing is down, that industry is expected to grow at more than 2 percent in the Vallejo-Fairfield metro area in the foreseeable future.
The study further predicts employment in the Vallejo area growing at better than 2 percent every decade through 2030. And it anticipates the area's population growing from just over 416,000 this year to 672,000 in 2030, with the sharpest spike predicted within the next five years.
The whole story, Snaith said, is told in the center's predicted "gross metro product" for the Vallejo area - the local equivalent of the nation's gross national product. Figured in 2000 dollars, that figure is expected to rise from this year's $13 billion-plus in output to more than $29 billion in 2030.
- E-mail Rachel Raskin-Zrihen at RachelZ@thnewsnet.com or call 553-6824.
Wednesday, June 29, 2005
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