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Economic forecast: More good news than bad news

 

It may be several more years before no economic bad news is mixed in with the good, but according to Ben Stone, the Sonoma Valley's fiscal future is looking up.

Stone is executive director of the county's Economic Development Board and an economic snapshot he provided a Sonoma Valley Chamber of Commerce breakfast on May 13 had more good news than bad.

Using the latest numbers available - although many of them are necessarily many months old, Sonoma Valley's unemployment rate was 8.5 percent in June of 2010, lower than the county overall (at 10 percent) and significantly lower than the state unemployment rate variously measured at 12 percent to 15 percent.

On the other hand, in the second quarter of 2008, before the bottom fell out of the economy, Sonoma's unemployment rate was 4.2 percent.

Since the recession hit, said Stone, Sonoma County has lost 25,000 jobs. Real estate construction, Stone explained, is still highly depressed and foreclosures are still putting pressure on home prices.

Median home prices dropped by roughly $105,000 - or 20.8 percent - on a year-over year basis between 2008 and 2009, said Stone's report. But since a decade low in 2007, home sales in Sonoma have rebounded by 14.2 percent.

In the second quarter of 2010, Stone's report stated, the average sales price of a home in the city of Sonoma was $597,200, which is significantly higher than other areas of the county, although still lower than Sebastopol, Coastal Sonoma and Healdsburg, which had the highest average home prices in the county.

At the same time, residential vacancy rates in Sonoma are staying above the county average and a five-year projection suggests they will remain at about 9.2 percent, while the renter occupancy rate will decline by 3.8 percent.

The most dramatic economic hit to Sonoma is reflected in the value of building permits, an important barometer of construction activity. Residential permit values have dropped 90 percent - or almost $33 million - from their peak in 2003.

But in a subsequent analysis released on Monday, Stone reported that residential construction is showing signs of a recovery.

"Residential construction is beginning to regroup in Sonoma County, but the recovery will not hit full stride until later in the year," wrote Stone. "A sizeable backlog of unsold houses - eight months according to the California Association of Realtors - will prevent homebuilding from ramping up as fast as the U.S. pace. Nevertheless, homebuilding has been weak for so long that this inventory should dry up quickly as demand recovers. Demand will strengthen even more once prices settle at their trough in the third quarter of 2011."

While taxable sales in Sonoma dropped 1.1 percent between 2007 and 2008, that's far better than the picture for Sonoma County as a whole, where taxable sales dropped on average of 6.5 percent in the same period.

Other interesting metrics in Stone's report include the dropout rate for the Sonoma Valley Unified School District, at 10.5 percent, which is considerably better then the state average of 18.9 percent. Those figures were calculated by the National Center for Education Statistics.

Meanwhile, the percentage of English-language learners in the school district - at 32.9 percent - is significantly higher than the county as a whole with a rate of 26 percent. But in the Healdsburg school district, English-language learners comprise 37.7 percent of the student body, and in the Roseland School District, on the south edge of Santa Rosa, English-language learners make up a staggering 64.9 percent of students. For the state, English-language learners constitute 24.2 percent of the student population.