North Bay Business Barometer First Edition 2007

Transcription

1 EDB Sonoma County Economic Development Board economy North Bay Business Barometer First Edition 27 Economic Development Board 41 College Avenue Suite D Santa Rosa CA

2 EDB Sonoma County Economic Development Board With Acknowledgment and Appreciation to local key businesses supporting Sonoma County Economic Development: Chairman s circle: Executive Tier: Associate Tier: Santa Rosa California Realty Sonoma County Permit & Resources Management Community Development Commission Sonoma County Health Services Sonoma County Transportation & Public Works

3 Table of Contents 2 Executive Summary 3 North Bay 7 Marin County 11 Mendocino County 14 Napa County 18 Sonoma County

4 27 North Bay Business Barometer November 27 The Sonoma County Economic Development Board (EDB), in partnership with the Sonoma County Workforce Investment Board (WIB), is pleased to bring you a new publication. Enclosed is the first edition of the North Bay Business Barometer. This type of report was previously done only for Sonoma County. This report primarily covers data from the months of April, May, and June 27. The purpose of the Business Barometer Report is to provide a sense of how the North Bay economy is performing as many businesses operate across the region. The indicators selected for this report cover a broad swath of economic topics, including employment, housing and construction, and prices and inflation. This report provides a North Bay composite of Marin, Mendocino, Napa and Sonoma counties, as well as individual information for those counties in alphabetical order. Sonoma o County information contained herein is a reprinted edition of the 27 Second Quarter Calendar Year (CY) Sonoma o County Business Barometer. Highlights g from the North Bay Business Barometer include: The median price of an existing home sold in June 27 rose to $498,8 from $472,4 in June 26, 6 a 5.6% increase. Nonfarm employment reached an all-time high, surpassing Q1 21 s benchmark of 386, by more than 13, jobs. The North Bay s seasonally adjusted unemployment rate of 4.3 percent remained lower than the unemployment rate of both California and the United States. The North Bay Business Barometer may not contain all the information provided for individual counties because of potential differences in the frequency and metholodgy of data collection. The EDB encourages interested readers to recommend any pertinent local indicator or ways in which we may improve this report. As always, if you have any questions, please feel free to contact us at (77) Sincerely, Ben Stone Executive Director 27 Sonoma County Economic Development Board. The Economic Development Board (EDB) believes all data contained within this report to be accurate and the most current available, but the EDB does not guarantee that this report is accurate or complete. Use of data from a source does not represent an endorsement of any product or service by the EDB, its members, or affiliates. This quarter s report was prepared by Robert Nachtsheim with assistance from Thomas J. Chow.

5 North Bay Real Estate 12 Between 21 and 27, the North Bay median home price of an existing home grew 37 percent, and 6 percent the year over in June 27. Data from 24 and 25 is not available. While the median home price has increased, the average number of days on the market has increased as well since 23. The sales-to-list price ratio of homes sold maintained a remarkably high 98.9 percent of asking price, indicating the value of North Bay homes has weathered the subprime mortgage crisis well. Industrial and office vacancy rates have remained fairly stable over the past two years. Residential and commercial listings of property currently exceed closed sales by 87 percent, indicating a sizeable supply of real estate relative to demand. Average Days on the Market Median Price of an Existing Home Sold ($Thousands) June 27: $498,8 $5 $4 $3 $2 $1 $ '1 '2 '3 Jun '6 Jun '7 Source: California Association of Realtors ( Data not available for 24 and 25 Sales/List Price Ratio of Homes Sold 1% June 27: June 27: 93 99% 98% 8 97% 6 '3 '4 '5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 96% 95% Apr '6 May '6 Jun '6 Apr '7 May '7 Jun '7 Commercial Property Vacancy Rates* 2% 15% 1% 5% '5 Q2 27: 16.3% '6 '7 Office Q2 27: 7.2% Source: Keegan and Coppin Company, Inc. ( *Excluding Mendocino County; retail vacancy data not available Industrial Listings and Closed Sales (Includes Commercial Properties) Jan '6 Listings Closed Sales Jan '7 Listings June 27: 1811 Sales June 27:

6 North Bay Real Estate Fair Market Rents $2 $15 $1 Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom Fair Market Rents in the North Bay have slowly risen since 2. Currently, residential building permit issuance is at an all time low since 2, although the combined value of residential permit issuance grew 25 percent over last quarter. Notices of default rose every quarter since second quarter 25 and grew 95 percent the year over second quarter 27. The subprime mortgage crisis could be responsible for the decrease in new residential construction and the rapid increase in foreclosures. $5 ' '1 '2 '3 '4 '5 '6 '7 Source: Department of Housing and Urban Development ( Residential Building Permits Issued (Includes Single- and Multi-family Units) 2 Value of Residential Building Permits Issued ($Millions) Q2 27: Q2 27: $195,9, ' '1 '2 '3 '4 '5 '6 '7 1 ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( Source: Construction Industry Research Board ( Includes Single- and Multi-family Units Notices of Default* 8 Q2 27: '5 4 '6 '7 Source: DataQuick Information Services ( *Excluding Mendocino County

7 North Bay Employment Non-Seasonally Adjusted Nonfarm Employment (Thousands) Q2 27: 399, 4 Seasonally Adjusted Unemployment Rate 8% California % 6% 5% United States North Bay '1 '2 '3 '4 '5 '6 4% Q2 27: 4.3% 3% '1 '2 '3 '4 '5 '6 ' Leisure and Hospitality Employment (thousands) '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 Leisure and Hospitality Employment By Industry, 25 Tax Receipts Generated By Tourism Spending, (Constant 25 $Millions) $2 $15 $1 $5 $ State Local 25 Source: Dean Runyan & Associates ( 16.3% 2.7% 14.9% Performing Arts, Spectator Sports (2.7%) Accommodation (16.3%) Food Services and Drinking Places (66.1%) Amusement, Gambling and Recreation (14.9%) 66.1% 5

8 North Bay Energy, Inflation and Interest rates 12-Month Change in Prices, San Francisco Bay Area 8% 7% 6% 5% 4% 3% 2% 1% % '99 ' '1 '2 '3 '4 '5 '6 August 27: 2.6% '7 2.5% Decrease in Rate of Inflation Since August % Decrease in Rate Of Inflation Since August 26 The price of regular unleaded gasoline in the San Francisco Bay Area leveled off to $3.1 per gallon in the last week of September, a 9.6% decrease over last year s high of $3.33. Inflation crept downward from June s reading of 3.4% to 2.6% annualized in August. Gasoline prices began to fall as they approach the lower demand autumn season, although natural gas prices may rise approaching the winter months. Electric prices have remained constant since March. The decline in the housing market may have caused homeowners to scale back their consumption, keeping the rate of inflation relatively constant during 27 in light of fluctuating energy costs. Interest Rates 1% 8% 6% 4% 2% Mortgage Prime Federal Funds $3.75 $3.5 $3.25 $3. $2.75 $2.5 Regular Unleaded Gasoline Prices ($ Per Gallon), San Francisco Bay Area Sept 27: $3.1 per Gallon 13.4% Increase Since Jan. 1, % % '4 '5 '6 '7 Source: Federal Reserve Board ( $2.25 Jun Aug Oct Dec Feb Apr June Aug May Jul Sep Nov Jan Mar May July Sept Source: Department of Energy ( Increase Since Sept 6 Electricity Prices ($ per Kilowatt Hour) $.17 Sept 27: $.163 per KwH $1.4 Natural Gas Prices ($ per Therm) Oct 27: $1.24 per Therm.6% $ % $.16 Decrease Since Jan. 7.6% $1.2 $1.1 $1. Increase Since Jan % $.15 Apr Jun Aug Oct Dec Feb Apr June Aug May Jul Sep Nov Jan Mar May July Sept Increase Since Sept 6 $.9 Apr Jun Aug Oct Dec Feb Apr JuneAug Oct May Jul Sep Nov Jan Mar May July Sept Increase Since Oct 6 Source: Pacific Gas and Electric ( 6 Source: Pacific Gas and Electric (

9 Marin Real Estate Marin County s residential real estate market held steady in light of a looming mortgage credit crisis. The median price of a Marin County home has grown quickly since 1998, rising 118 percent between 1998 and 25. The average number of days on the market has fluctuated since 2, peaking to 77 days in 22, but it has recently moderated. A slight uptick occurred in June as credit faces tighter supply. The ratio of sales to list price has remained remarkably constant, hovering close to 99 percent. Such a high ratio indicates that Marin County homes have retained their values well after recent home prices declines elsewhere. The most active areas of home sales were in Novato, San Rafael and Mill Valley, while Kentfield, Belvedere and Ross maintained the highest average sales prices. Median Price of an Existing Home Sold ($Thousands) June 27: $975, $1 $8 $6 $4 $2 $ '98'99''1'2'3'4'5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 Source: California Association of Realtors ( Average Days on the Market 8 Sales/List Price Ratio of Homes Sold 1% June 27: June 27: 62 99% % 97% 3 ' '1 '2 '3 '4 '5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 96% 95% Apr '6 May '6 Jun '6 Apr '7 May '7 Jun '7 Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q Average Sales Price ($Thousands) Source: Bay Area Real Estate Information Services ( Total Unit Sales (Right Axis) Novato San Geronimo Greenbrae Sausilito Corte Madera Mill Valley Stinson Beach Belvedere Fairfax San Rafael San Anselmo Muir Beach Larkspur Tiburon Kentfield Ross

10 Marin Real Estate Fair Market Rents $3 Efficiency $25 $2 One-Bedroom Two-Bedroom Three-Bedroom $15 Four-Bedroom $1 $5 ' '1 '2 '3 '4 '5 '6 '7 Source: Department of Housing and Urban Development ( Fair Market Rents in Marin County have remained steady since 25, down from their peak in 23. A boom in residential construction in 24 could have expanded the rental housing supply and caused the readjustment in rates that began simultaneously. Current issuance of residential construction permits is slightly lower than the average number recorded between 22 and 26, reflecting concerns over the availability of mortage credit. The combined value of residential permits closely follows the number issued. Notices of default are up noticeably in 27, growing 33 percent a year over in the second quarter. These defaults may have expanded the supply of existing homes, thereby slowing the issuance of new residential home construction permits noted above. Residential Building Permits Issued (Includes Single- and Multi-family Units) 5 Value of Residential Building Permits Issued ($Millions) 1 4 Q2 27: Q2 27: $36,43, ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Notices of Default Q2 27: ' '1 '2 '3 '4 '5 '6 '7 Source: DataQuick Information Services ( 8

11 Marin Real Estate Listings and sales of Marin County properties have quickly accelerated after a lull recorded in December 26. Office space vacanies have gently declined since 23 and are close to a record low. Industrial and retail vacanies have recovered from the increase recorded in early 26 to levels around their 23 to 25 averages. Marin County enjoyed an unemployment rate of 3.4 percent this quarter, substantially besting both the state and national unemployment rates. Listings and Closed Sales (Includes Commercial Properties) Listings 6 May 27: Sales May 27: Jan '6 Jan '7 Listings Closed Sales Commercial Property Vacancy Rates 2% Q % Office 15% Industrial Retail 1% Q2 27: 4.6% Q2 27: 2.9% 5% % '3 '4 '5 '6 '7 Source: Keegan and Coppin Company, Inc. ( Seasonally Adjusted Unemployment Rate 8% California 7% 6% United States Marin County 5% 4% 3% Q2 27: 3.5% 2% '1 '2 '3 '4 '5 '6 '7 9

12 Marin Employment Non-Seasonally Adjusted Nonfarm Employment (Thousands) 12 Q4 26: 11, '1 '2 '3 '4 '5 '6 Nonfarm employment is steady in Marin County. On a year-over basis in the fourth quarter of 26, nonfarm employment is up 1.8 percent. Leisure and Hospitality employment has grown slightly since 199 and has remained relatively constant since 2. The sector s employment is up 13 percent since a recent trough in Tax receipts generated by tourism have also remained relatively constant, although state and local governments have enjoyed a 1 percent increase in receipts since 21. Leisure and Hospitality employment is centered around food and beverage establishments, followed by amusement, gambling and recreation; accommodation ; and performing arts and spectator sports Leisure and Hospitality Employment (thousands) '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 Leisure and Hospitality Employment By Industry, 26 Tax Receipts Generated By Tourism Spending, (Constant 25 $Millions) $35 $3 $25 $2 $15 $1 $5 $ State Local 25 Source: Dean Runyan & Associates ( 4.8% 9.5% 15.1% Performing Arts, Spectator Sports (4.8%) Accommodation (9.5%) Food Services and Drinking Places (7.6%) Amusement, Gambling and Recreation (15.1%) 7.6% 1

13 Mendocino Real Estate The median price of a Mendocino County home jumped 25 percent between April 26 and April 27 and is up 145 percent since 21. The average number of days on the market climbed 25 percent from May to June of this year, indicating some jitters over the availability of mortgage credit. However, the current average is still far below its peak in 21 and 22. The sales-to-list price ratio of homes sold in Mendocino county fell to just over 95 percent of listed price, further revealing some effects of the subprime loan crisis. However, the rising trend in median home price in the area should buffer Mendocino County. Ukiah had the greatest number of homes sold this quarter, followed by Willits. Talmage/Hopland and Anderson Valley had the greatest average sales price in the county. Median Price of an Existing Home Sold ($Thousands) April 27: $497,87 $5 $4 $3 $2 $1 $ '1 '2 '3 '4 '5 May '6 Apr '7 Apr '6 Jun '6 Source: California Association of Realtors ( Average Days on the Market 15 Sales/List Price Ratio of Homes Sold 1% 99% 12 June 27: 14 98% 9 97% 96% April 27: '1 '2 '3 '4 '5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 95% 94% Apr '6 May '6 Jun '6 Apr '7 Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q Average Sales Price ($Thousands) Point Arena Covelo Willits Total Unit Sales (Right Axis) Source: Bay Area Real Estate Information Services ( Ukiah Gualala Coastal Mendocino Anderson Valley Laytonville/Branscomb Calpella/Redwood Talmage/Hopland

14 Mendocino Real Estate Fair Market Rents $15 Efficiency $12 One-Bedroom Two-Bedroom $9 Three-Bedroom Four-Bedroom $6 $3 ' '1 '2 '3 '4 '5 '6 '7 Source: Department of Housing and Urban Development ( Fair Market Rents in Mendocino County have steadily increased since 2. All grew at approximately the same rate, although the fair market rent for four-bedroom units spiked between 24 and 25. Residential building permits are most issued during the third quarter of each year followed by the second quarter. This quarter s issuance indicates a strong rise from the previous quarter en route to the summer peak. The combined value of residential permits closely follows the number issued. Mendocino s unemployment rate was higher than both the state and national seasonally adjusted average, although unemployment should decrease in the third quarter. Listings of residential and commercial properties for sale have increased since December 26, although closures remain constant. Residential Building Permits Issued (Includes Single- and Multi-family Units) Q2 27: 86 Value of Residential Building Permits Issued ($Millions) 2 15 Q2 27: $12,919, ' '1 '2 '3 '4 '5 '6 '7 5 ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( Seasonally Adjusted Unemployment Rate 8% California Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Listings and Closed Sales (Includes Commercial Properties) 25 7% 6% United States Mendocino County Q2 27: 5.5% 2 15 Listings June 27: 148 5% 1 Listings Closed Sales Sales June 27: 67 4% '1 '2 '3 '4 '5 ' '7 5 Jan '6 Jan '7

15 Mendocino Employment Nonfarm employment in Mendocino County has remained fairly constant since 21, with second quarter employment fluctuating by less than one percent each year. Leisure and Hospitality employment has grown by more than 3 percent since 199, and 26 established a record for sector employment. Tax receipts generated by tourism spending grew by nine percent between 21 and 25. The majority of Mendocino County s leisure and hospitality employees worked at food and beverage establishments, although a significant percentage worked within residual-arts, entertainment and recreation activities. Non-Seasonally Adjusted Nonfarm Employment (Thousands) 35 Q2 27: 3, '1 '2 '3 '4 '5 '6 ' Leisure and Hospitality Employment (thousands) Tax Receipts Generated By Tourism Spending, (Constant 25 $Millions) $2 $15 $1 $5 State Local '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 Leisure and Hospitality Employment By Industry, 26 $ Source: Dean Runyan & Associates ( Food Services and Drinking Places (62.8%) Residual-Arts, Entertainment, and Recreation (37.2%) 37.2% 62.8% 13

16 Napa Real Estate The median price of a Napa County home has been steady between 26 and 27, although home prices peaked in April 26. The average number of days on the market has increased noticeably since 2, particularly within the past two years. Similarly, the ratio of sales to list price of homes sold fell sharply at times during the second quarter of 26 and 27, indicating a large supply of homes relative to demand. The availability of mortgage credit during the subprime crisis could be a factor. The city of Napa had the greatest number of homes sold this quarter, exchanging nearly seven times the number of homes than any other area in Napa County. St. Helena homes fetched the highest average sale price. Median Price of an Existing Home Sold ($Thousands) $8 $7 $6 $5 $4 $3 $2 $1 June 27: $589,5 $ ' '1 '2 '3 '4 '5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 Source: California Association of Realtors ( Average Days on the Market 12 June 27: 111 Sales/List Price Ratio of Homes Sold 1% % 98% 97% 96% 95% June 27: ' '1 '2 '3 '4 '5 May '6 Apr '7 Jun '7 Apr '6 Jun '6 May '7 94% 93% Apr '6 May '6 Jun '6 Apr '7 May '7 Jun '7 Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q Average Sales Price ($Thousands) Total Unit Sales (Right Axis) 25 2 Source: Bay Area Real Estate Information Services ( Berryessa American Canyon Yountville Calistoga Napa Angwin St. Helena 14

17 Napa Real Estate $2 $15 $1 Fair Market Rents Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom Fair Market Rents in Napa County have been stable during the past two years. Residential building permits issued and their combined value have fallen considerably since the third quarter of 26, although the second quarter of 27 recorded slight increases. Permit issuance rose four percent between quarters, and their combined value rose 12 percent. Notices of default increased significantly over the past three quarters, with second quarter 27 topping out at 172 percent higher than second quarter 26. $5 ' '1 '2 '3 '4 '5 '6 '7 Source: Department of Housing and Urban Development ( Residential Building Permits Issued (Includes Single- and Multi-family Units) ' '1 '2 '3 '4 '5 '6 Q2 27: 48 '7 Source: Construction Industry Research Board ( Value of Residential Building Permits Issued ($Millions) ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Q2 27: $85,143, Notices of Default Q2 27: '5 Source: DataQuick Information Services ( '6 '7 15

18 Napa Real Estate Listings of residential and commercial properties fell nearly 2 percent from first quarter to second quarter 27, although closed sales rose two percent. Since January 26, listings have fluctuated, although sales have remained much more constant. Both office and industrial space vacancy declined slightly from the previous quarter. Napa County s unemployment rate has consistently been below the unemployment rate for both California and the United States. Unemployment should decrease in the third quarter this year, reflecting seasonal changes in the Napa County economy. Listings and Closed Sales (Includes Commercial Properties) Listings Closed Sales Listings June 27: 262 Sales June 27: 13 5 Jan '6 Jan '7 15% Commercial Property Vacancy Rates Seasonally Adjusted Unemployment Rate 8% California 12% Q2 27: 1.4% Office Industrial 7% 6% United States Napa County 9% 5% Q2 27: 3.5% 4% Q2 27: 4.% 6% '5 '6 '7 Source: Keegan and Coppin Company, Inc. ( 3% '1 '2 '3 '4 '5 '6 '7 16

19 Napa Employment Non-Seasonally Adjusted Nonfarm Employment (Thousands) 8 Q2 27: 64, '1 '2 '3 '4 '5 '6 '7 Napa County s nonfarm employment has grown impressively since 21, rising 18 percent in that time. Leisure and Hospitality employment grew at a very quick 42 percent since 199, reflecting Napa County s growth as a leisure and hospitality destination. Tax receipts generated by tourism spending jumped 3 percent since 21 and 13 percent from 24. The majority of Napa County leisure and hospitality workers were employed in food service and drinking places, complemented by accommodation employees. Napa County s relatively large share of accommodation employees reflects the large number of overnight guests in the area Leisure and Hospitality Employment (thousands) Tax Receipts Generated By Tourism Spending, (Constant 25 $Millions) $6 $5 $4 $3 $2 $1 State Local '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 Leisure and Hospitality Employment By Industry, 26 $ Source: Dean Runyan & Associates ( 31.% 1.2% 9.5% Other (1.2%) Accommodation (31.%) Food Services and Drinking Places (58.3%) 58.3% Arts, Entertainment and Recreation (9.5%) 17

20 Sonoma real Estate March s median home price decreased $42,5, or 7.4%, on a year-over basis to $532,5. The Press Democrat s monthly real estate report indicated a 1.9% year-over decline for March, extending that index s downward trend to nine consecutive months. The recent cooling of Sonoma County s residential real estate market follows nearly ten years of strong price advances. From 2-26, the average Sonoma County home appreciated $313,413, the 13 th largest gain in the country (out of 36 metropolitan statistical areas), according to a report released by the U.S. Conference of Mayors. Consequently, Sonoma County started 27 as the 7 th least affordable metropolitan statistical area in the country, based on the ratio of median income to median monthly housing costs. The average home sold for 98.8% of its asking price in June 27, up from 98.% in June 26 but down from 1.1% in June 25. Sonoma County s sales/list price ratio had not reached 98% since June 26 and was hovering mainly around 97% since October. The general downward trend in sales/list price ratio and median price of homes sold suggests buyers have been able to apply more leverage in price negotiations, given current market conditions. Median Price of an Existing Home Sold ($Thousands) $6 June 27: $532,5 $5 $4 $3 $2 $1 $ '98 '99 ' '1 '2 '3 June '5 June '7 June '4 June '6 Source: California Association of Realtors ( Sales/List Price Ratio of Homes Sold 11 June 27: % Increase Since % Decrease Since June 6 1.3% Decrease since June 5.8% 96 Jan '3 Jan '4 Jan '5 Jan '6 Jan '7 Increase Since June 6 Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q2 27 $12 $1 Average Sales Price ($Thousands) Total Unit Sales (Right Axis) Source: Bay Area Real Estate Information Services ( $8 12 $6 8 $4 4 $2 Cotati/Rohnert Park Cloverdale NW Santa Rosa E Petaluma SE Santa Rosa W Petaluma Sonoma Sebastopol The Sea Ranch Russian River SW Santa Rosa Oakmont Windsor Penngrove NE Santa Rosa Coastal Sonoma Healdsburg Timber Cove 18

21 Sonoma Real Estate Average Days on the Market 15 June 27: % The average days on the market for sold homes has been decreasing gradually since June 26 s peak but is up more than 8 percent in the past two years. The average home stayed on the market for three months before being sold in June, up thirteen days year-over. 9 6 Increase Since June % One hundred twenty-nine fewer properties were sold in June 27 than June 26. The decrease in year-over sales was met with a corresponding decline in year-over listings, indicating a general decrease in demand for real estate Jan '3 Jan '4 Jan '5 Jan '6 Jan '7 Listings and Closed Sales (Includes Commercial Properties) Listings Closed Sales Listings June 27: 988 Increase Since June % Decrease in June Year-Over Listings Sales June 27: % Defaults rose 129% from 22 in Q2 26 to 462 in Q2 27, a new fifteen-year high. Around 23% of Sonoma County mortgage originations in 25 were subprime, granted to individuals or families with tarnished or limited credit histories at premium rates. These loans have been widely criticized as a key source of the recent spate of foreclosures in California. Sonoma County did, however, have one of the lowest incidences of subprime refinance lending in the country in 25, according to the Consumer Federation of America. Of the 7,93 refinancing originations, only 7%, or 542 loans, were subprime, the second-lowest rate among the over 3 metropolitan statistical areas included in the study. 3 Jan '6 Jan '7 Decrease in June Year-over Sales Notices of Default Q2 27: '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 Source: DataQuick Information Services ( 24 Number of Defaults Higher Than Previous Q3 96 Peak 128.7% Increase Since Q

22 Sonoma Real Estate Fair Market Rents, calculated by the Department of Housing and Urban Development, have reached a plateau in Sonoma County. The current fair market rents per month in Sonoma County are: $923 for a one-bedroom residency, $1,165 for a two-bedroom residency, $1,653 for a three-bedroom residency, and $1,933 for a four-bedroom residency. Fair market rents for 28 are presented here, but they are pending Federal approval. First quarter residential permit issuances were at their lowest level since 24, led by an unseasonably low number of single-family permits granted over all three months of the quarter. In total, 66 multi-family permits were issued in Q2 27, down from 91 in Q2 26. Conversely, single-family permits showed a year-over decline, falling from 374 in Q2 26 to 241 in Q2 27. The small number of single- and multi-family permit issuances depressed the value of residential building permits to $91,828, through June, significantly lower than last year s figure but moderate by historical standards. Of the roughly $91.8 million in building permits issued, approximately $12.6 million was attributable to multi-family permits, $58.8 million to single-family permits, and $2.5 million to residential alterations and additions permits. Fair Market Rents $2 $15 $1 $ ' '1 '2 '3 '4 '5 '6 '7 '8* Source: Department of Housing and Urban Development ( *Proposed Residential Building Permits Issued (Includes Single- and Multi-family Units) Q2 27: 37 Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom 35.6% Year-over Decrease in Single-Family Permits Since Q % ' '1 '2 '3 '4 '5 '6 '7 Source: Construction Industry Research Board ( Year-over Decrease in Multi-Family Permits Since Q2 6 Value of Residential Building Permits Issued ($Millions; Includes Single- and Multi-family Units, Alterations and Additions) $25 Source: Construction Industry Research Board ( $25 $2 Q2 27: $91,828, $2 $15 $15 $1 $1 $5 ' '1 '2 '3 '4 '5 '6 '7 $ % Year-over Decrease in Single- Family Permit Value Since Q2 6 1.% 35.9% Year-over Increase in Multi- Family Permit Value Since Q2 6 Year-over Decrease in Residential Permit Value Since Q2 6

23 Sonoma Real Estate Commercial Property Vacancy Rates 25% Q % 2% Office 15% Q2 27: 1.4% Industrial 1% Retail 5% Q2 27: 3.5% % '3 '4 '5 '6 '7 Source: Keegan and Coppin Company, Inc. ( Share of Q2 Nonresidential Permit Value The office vacancy rate for Q2 27 in Sonoma County was down slightly from Q2 26, shifting from 21.9% to 19.%. According to Keegan and Coppin figures, development projects, as of Q4 26, are slated to add 553,449 square feet of office space to the current county total of 13,49,964, an increase of just over 4%. The industrial vacancy rate increased from 9.% in Q2 26 to 1.4% in Q2 27. Planned buildings, as of Q4 26, are expected to add 1.3% to the current industrial square footage. No permits were issued in Q2 27 for new industrial buildings. The retail vacancy rate, at 3.5% for Q2 27, was near a four-year low. Sixteen percent of acreage within existing large office-industrial parks remains undeveloped, with the greatest amount of available acreage found in the Rohnert Park and Cotati area. 2.6% 3.1% 67.2% Alterations and Additions (67.2%) New Other (3.1%) New Commercial (2.6%) New Industrial (%) Source: Construction Industry Research Board ( Value of Nonresidential Building Permits ($Millions; Includes Alterations and Additions) $1 Source: Construction Industry Research Board ( Q2 27: $61,49, $1 $8 $8 $6 $6 $4 $4 $2 ' '1 '2 '3 '4 '5 '6 '7 $2 7.8% Increase in Value of Nonres. Permits Relative to Q % Year-over Decrease in Value of Q2 Nonresidential Permits 21

24 Sonoma Employment The Sonoma County Business Cycle rose again in the 2nd Quarter of 26. Currently, the Index stands at % above 2nd Quarter 21. The index bottoms out in the first half of 23, and has been steadily rising since, a representation of the improving economic conditions experienced in the County. The Sonoma County Business Cycle Index attempts to show the current trends of several key economic statistics in one graph. The Index combines four statistics in varying proportions based on their volatility - those statistics, such as employment, which are relatively stable are considered more important than those statistics, such as business confidence, which tend to vary considerably. Currently the index is weighted in the following approximate proportions: Employment - 4.7%, Wages - 3.8%, Taxable Sales %, Business Confidence - 4.6%. Following the decline of the technology sector, the index shows the economic contraction experienced in Sonoma County after 21 and is set so that 1st Quarter 21 = 1. Sonoma County s seasonally adjusted nonfarm employment is up 4, jobs on a year-over basis and remains above 21 levels for the third straight quarter, indicating that the local economy has fully rebounded from its contraction. Job growth has been strong across virtually every sector, with particularly sizable gains experienced by the Construction, Manufacturing, Information and Professional and Business Services sectors. Sonoma County's seasonally adjusted unemployment rate increased to 4.2% in Q2 27 from 4.1% in Q2 26. The seasonally adjusted unemployment rate was up.3% from Q1 27, despite record job numbers, but remains well below the U.S. (4.5% for Q2 27) and California (5.2% for Q2 27) rates. Sonoma County Business Cycle Index '1 Seasonally Adjusted Nonfarm Employment (Thousands) 195 Q2 27: 193, '1 '2 '2 '3 '3 '4 '4 Q2 27: 19.5 Seasonally Adjusted Unemployment Rate '5 '5 '6 '6 '7 Source: Economic Development Board ( '7 Source: California Employment Development Department Sonoma County s nonfarm employment has been seasonally adjusted by the EDB. 8% California 7% 6% United States Sonoma County 9.9% Increase Since Q % Increase Since Q % Increase Since Q % Increase Since Q2 25.9% Increase Since Q2 21 5% 4% Q2 27: 4.2%.1% 3% '1 '2 '3 '4 '5 '6 '7 Increase Since Q2 26 Sonoma County s unemployment rate has been seasonally adjusted by the EDB. 22

25 Sonoma Employment The Leisure and Hospitality sector accounts for 9.1% of all employment within Sonoma County as of June 27. Moody s Economy.com forecasts that Professional and Business services employment will grow 19.% over the next five years and will constitute 26.3% of county employment in 212. Professional, Scientific and Technical services accounts for the majority (5.%) of jobs in the sector. The average annual wage for a Professional and Business services worker grew 6.9% between 21 and 26. The Economic Development Board (EDB) will be releasing its annual tourism report within the month of May. The report can be accessed at the EDB s website ( Tax Receipts Generated By Tourism Spending, (Constant 25 $Millions) $8 $7 $6 $5 $4 $3 $2 $1 $ State Local 25 Professional Services Employment (Thousands) 3 212: 26, '9 199: 11,7 '95 ' '5 Forecast by Moody s Economy.com, Sonoma County s Advantage In A Slowing Economy, May 27 '1 Professional and Business Services Employment By Industry, % 4.2% 26: 22,1 5.% 2.5% 88.9% Employment Growth Since % Projected Employment Growth From Waste Management and Remediation Services (2.5%) Administrative and Support Services (4.2%) Management of Companies and Enterprises (7.3%) Professional, Scientific and Technical Services (5.%) Source: Dean Runyan & Associates ( STS Airport (Sonoma County) Passenger Loads, q Leisure and Hospitality Average Annual Wage ($Thousands) $52 Real (in Constant 26 Dollars) Nominal $5 26: $47, % Passengers $48 $46 $44 21: $44,283 Nominal Wage Growth Between % 1 $42 April in April out May in May out June in June out $4 '1 '2 '3 '4 '5 '6* Real Wage Growth Between Source: Sonoma County Airport ( *Preliminary 23

26 EDB Sonoma County Economic Development Board With Acknowledgment and Appreciation to local key businesses supporting Sonoma County Economic Development: Chairman s circle: Executive Tier: Associate Tier: California Realty Santa Rosa Sonoma County Permit & Resources Management Community Development Commission Sonoma County Health Services Sonoma County Transportation & Public Works