Forecast: Vallejo Income, Employment Tops
Expert sees red-hot housing market cooling a bit but prices will rise locally
By RACHEL RASKIN-ZRIHEN, Times-Herald staff writer
Personal income and employment will continue growing in the Vallejo area in the next couple of years, out-pacing much of the rest of the region, while available housing continues to decrease, according to several agencies' latest economic forecasts.
Sean Snaith, director of the University of the Pacific's Eberhardt School of Business Business Forecasting Center, said his group's most recent study shows the Vallejo/Fairfield region surpassing the rest of the state in employment growth through 2008.
"I think the recent numbers show continued growth in the region, with construction still leading the charge, even as we start to see a transition from a red-hot housing market to something more sustainable," Snaith said.
Snaith predicts a slowing of home price appreciation for lower- and medium-priced homes, while higher-end units are expected to actually decrease slightly in value, he said.
"The $700,00 to $1 million McMansions may see price declines. Nothing major. Not an unraveling," Snaith said.
Deana Vladic of the California Building Industry Association (CBIA), said that organization's latest figures show Solano County's 2005 total housing starts dropped 16 percent over 2004.
The CBIA data shows Marin County with the sharpest drop in housing starts, at more than 53 percent. The average drop statewide and regionally was just under 3 percent, Vladic said. Snaith said severe weather and hurricane-fueled spending fears at year's end may have contributed to the drop in housing starts.
Snaith said that at an average of 6.63 percent per year for the next two years, personal income in the Vallejo region will grow at the third fastest pace of the 11 metro area his group studies.
In its latest forecast, released Thursday, the Association of Bay Area Government's (ABAG) latest study also shows housing affordability and availability decreasing locally. The ABAG study shows that to be able to afford a two-bedroom apartment in Solano County a minimum wage earner must work 112 hours - the fewest in the nine county Bay Area. The agency reports the state has lost more than 29,000 affordable housing units since 1996 as property owners opt-out of federally assisted housing programs.
Land prices, competition for scarce building sites, zoning and regulatory red tape and ever-increasing construction costs also are contributing to higher rents and fewer residential building starts, the agencies agree.
At 21.2 percent, Solano County's taxable sales growth far outpaced the rest of the Bay Area's from 2001 to 2004, according to ABAG's report. Napa's was a distant second, at just over 9 percent.
Solano County homes sales dropped by nearly 16 percent between November 2004 and November 2005, which is among the sharpest drops in the Bay Area, after Napa and San Mateo. However, the county's median home price, still the Bay Area's lowest, rose from $400,000 to $490,000 - a 22.5 percent gain - in the same period. It's the second highest increase after Contra Costa's 24.3 percent rise, ABAG reports. The statewide average increase was just over 15 percent.
ABAG predicts job growth in the Bay Area will be higher than the national average over the next two years.
Paul Fassinger, ABAG's economist and research director, said he expects the region's wage and salary jobs will increase in the next two years and that the relatively higher job growth in the Bay Area would reverse a recent trend in which jobs have grown at a slower pace regionally than nationally.
"We came late to the party," he said.
Fassinger said, "2005 was the year that the economy finally returned to normal" in the Bay Area.
- E-mail Rachel Raskin-Zrihen at RachelZ@thnewsnet.com or call 553-6824.
Significant Solano County economic events, 2005:
- The Vallejo City Council approved plans by Triad Communities to revamp the aging downtown district, building high-rise housing atop stores and offices.
- Rents stay down in Fairfield and Vacaville, according to a survey by Fairfield's Planning and Development Department.
- While Solano County freeways saw congestion rise by 9 percent in 2004, it still had the best-flowing traffic in the Bay Area.
- Solano transportation leaders want Interstate 80 carpool lanes and a north connector road in Fairfield within five years. A New Benicia Bridge span with 17 toll booths could open in 2007.
- A proposed "smart growth" project along Interstate 80 in Fairfield was endorsed by Fairfield's City Council. When finished, the complex of offices, apartments and townhouses would have 1,200 residents an provide 3,000 jobs.
- Benicia Business Park expansion is progressing. It's the largest port-oriented industrial park in Northern California, housing 600 businesses with more than 7,000 employees. The proposed added space involves about 40 acres bordering Interstate 680 for commercial use.
- The House of Representatives passed transportation funding for Solano County, including $850,000 for the Vallejo Baylink Ferry for parking, an improved bus transfer facility and bicycle and pedestrian connections between downtown and the waterfront. Funds were also approved for Vacaville's Nut Tree Airport improvements and a Fairfield-Vacaville Intermodal Station.
Source: University of the Pacific's Eberhardt School of Business Business Forecasting Center's California & Metro Forecast 2005-2008
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