Sunday, November 18, 2007

Fairfield balances on the edge as housing prices plunge

Article:Fairfield balances on the edge as housing prices
San Francisco Chronicle
Fairfield balances on the edge as housing prices plunge

Sam Zuckerman, Chronicle Staff Writer

Sunday, November 18, 2007

Kevin Cerkoney, president of Compu-Tech Lumber in Fairfie... Stu Reid, owner of a home-remodeling business, is encoura... Fairfield. Chronicle Graphic

If you want to see how the housing bust is affecting business in the Bay Area, there's no better place to look than Fairfield.

Housing in this bustling Solano County city is in an outright depression. Home prices are plummeting, buyers are running for cover and, in September and October, not a single home building permit was issued, the first time that's happened in the memory of city officials.

Yet, despite the wrenching collapse of its housing sector, Fairfield is holding up pretty well - at least so far.

"People still seem to be employed. There's still a lot going on," said Stu Reid, owner of the home remodeling business Kitchen Tune-Up. "While people may be talking more cautiously, they're still going out to dinner, still playing golf. You still see long lines at Starbucks."

That's right now. The question on everybody's mind is how long can the city's economy stay healthy with housing in tatters. Fairfield, it seems, is a city on the knife's edge.

Until recently, the spillover from housing was confined mainly to businesses directly linked to the residential market - real estate firms, construction companies, building materials suppliers and the like. But now there are ominous signs that the pain is spreading to businesses further afield, such as furniture and home-improvement retailers, and even restaurants and car dealers.

"Those businesses one step removed from housing are starting to slow down, in some cases dramatically," said Sean Quinn, director of Fairfield's community development department.

New-car sales at Thomason Autogroup, which owns nine franchises in Fairfield, have edged down about 5 percent in the past year, due in part to homeowners who can no longer easily get home-equity loans.

"Our customers appear to have less disposable cash," said Thomason president Pancho Redfern.

The issue is the same one confronting the nation as a whole: Can Fairfield's economy remain on its feet in the face of what amounts to a housing depression? Will the downward suction of housing overwhelm strength in other areas, destroying jobs, demoralizing consumers, and pushing the economy into recession? Or can the housing crunch be contained while business hums in other sectors?

Set in the coastal hills midway between San Francisco and Sacramento, Fairfield is an excellent laboratory to look at the effects of housing on the economy. It's representative of many cities and towns along the Bay Area's eastern fringe that experienced home construction booms during the go-go years earlier this decade.

Fairfield and its surrounding area was one of the region's home-building hot spots, luring buyers with picturesque landscapes, suburban amenities and relatively affordable house prices.

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