North Bay Business Barometer Spring Edition 2008

Transcription

1 EDB Sonoma County Economic Development Board economy North Bay Business Barometer Spring Edition 28 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: County of Sonoma Board of Supervisors 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 8 Marin County 13 Mendocino County 17 Napa County 22 Sonoma County

4 28 North Bay Business Barometer June 28 The Sonoma County Economic Development Board (EDB), in partnership with the Sonoma County Workforce Investment Board (WIB), is pleased to bring you the Spring 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 January, February, and March 28. 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 County information contained herein is a reprinted edition of the 28 First Quarter Calendar Year (CY) Sonoma County Business Barometer. Highlights g from the North Bay Business Barometer include: The median price of an existing home sold in March 28 fell to $52,75 from $623,4 in March 27, 7 a 16.5% decrease. Nonfarm employment neared e the all-time high h of Q1 21 s benchmark of 394,4, to end the fourth quarter 26 at 393,6. The North Bay s seasonally adjusted unemployment rate of 4.8 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 28 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 publication can be made available in alternative formats, such as Braille, large print, audiotape, or computer disk. Requests can be made by calling (77) Please allow 72 hours for your request to be processed. This report was prepared by Robert Nachtsheim.

5 28 North Bay Business Barometer North Bay Counties Summary

6 North Bay Real Estate Between 21 and March 28, the North Bay median home price of an existing home grew 43 percent, but it declined 16 percent the year-over in March 28. In addition to the recent decline in home prices, the average number of days on the market has increased since 23, reaching a high of over four months during the first quarter of 28. The sales-to-list price ratio of homes sold fell to an unusually low 94.8 percent of asking price, indicating the value of North Bay homes has been impacted by the subprime mortgage crisis. 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 233 percent, indicating a sizeable supply of real estate relative to demand. Median Price of an Existing Home Sold ($Thousands) March 28: $52,75 $7 $6 $5 $4 $3 $2 $1 $ '1 '2 '3 '4 Mar Mar Mar '5 Mar Source: California Association of Realtors ( Average Days on the Market 15 March 28: 125 Sales/List Price Ratio of Homes Sold 1% 12 98% 9 96% March 28: % 6 '3 '4 '5 May Jan Mar May Jan Mar Apr Jun Feb Apr Jun Feb Source: Bay Area Real Estate Information Services ( 92% Jan Feb Mar Jan Feb Mar Commercial Property Vacancy Rates* 2% Q4 27: 15.% 15% Office Industrial Source: Bay Area Real Estate Information Services ( Listings and Closed Sales (Includes Commercial Properties) Listings Mar 28: % Q4 27: 6.6% 15 1 Sales Mar 28: 581 5% '5 Source: Keegan and Coppin Company, Inc. ( *Excluding Mendocino County; retail vacancy data not available Jan Listings Closed Sales Jan Jan Source: Bay Area Real Estate Information Services (

7 North Bay Real Estate Fair Market Rents $2 Efficiency One-Bedroom $15 Two-Bedroom Three-Bedroom $1 Four-Bedroom $5 ' '1 '2 '3 '4 '5 Source: Department of Housing and Urban Development ( Fair Market Rents in the North Bay have slowly risen since 2. FMR is tied to the median income of the area, indicating a slow rise in the median income of the North Bay. It should be noted that FMR is not a measure of current market rates, but rather it is a measure of rent affordable to a median income renter in that area. Currently, residential building permit issuance is at an all time low since 2, as is the value of those permits, indicating a considerable slowdown in North Bay residential housing construction. Notices of default rose every quarter since second quarter 25 and grew 225 percent the year over first quarter 28. In addition to tightening mortgage availability, the rapid increase in foreclosed homes may have also contributed to the slowdown in residential housing construction. Residential Building Permits Issued (Includes Single- and Multi-family Units) 12 Value of Residential Building Permits Issued ($Millions) $3 1 8 Q1 28: 26 $25 6 $2 Q1 28: $119,558, 4 2 $15 Source: Construction Industry Research Board ( $1 Source: Construction Industry Research Board ( Includes Single- and Multi-family Units Notices of Default* 2 Q1 28: '5 Source: DataQuick Information Services ( *Excluding Mendocino County 5

8 North Bay Employment Seasonally Adjusted Nonfarm Employment (Thousands) 4 Q4 26: 393,6 Seasonally Adjusted Unemployment Rate 8% California % 6% 5% United States North Bay '1 '2 '3 '4 '5 4% Q1 28: 4.8% 3% '1 '2 '3 '4 ' 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% 6

9 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 Feb 28: 2.8% 1. Percentage Point Increase in Rate of Inflation Since February 22.4 Percentage Point Decrease in Rate Of Inflation Since February 27 The price of regular unleaded gasoline in the San Francisco Bay Area rose to $3.65 per gallon in the last week of March 28, a 12.7% increase over last year s reading of $3.23. Inflation crept downward from December s reading of 3.8% to 2.8% annualized in March. The Federal Reserve of San Francisco attributed the dip in inflation to a general slowdown in the economy, despite the pressure of rising commodity prices, and core inflation is expected to remain around 2% in 28 and 29. The Federal Funds rate fell sharply in Q1 28 from Q4 27, reflecting action by the Federal Reserve following the recent subprime loan crisis. According to the Federal Reserve of San Francisco, the falling dollar has contributed to rising gasoline prices. Interest Rates 1% 8% 6% 4% 2% Mortgage Prime Federal Funds Weekly Regular Unleaded Gasoline Prices ($ Per Gallon), San Francisco Bay Area $3.75 Mar 31, 28: $3.65 per Gallon $ % $3.25 $3. $ % $2.5 Increase Since Mar 26, 27 % '4 '5 $2.25 Jan Jan Increase Since Mar 27, 26 Source: Federal Reserve Board ( Source: Department of Energy ( Electricity Prices ($ per Kilowatt Hour) $.17 Mar 28: $.167 per KwH Natural Gas Prices ($ per Therm) March 28: $1.24 per Therm 2.% $ % $.16 Increase Since Mar 7 6.6% $1.2 $1.1 $1. Increase Since Mar 7 6.4% $.15 Jan Jan Increase Since Mar 6 $.9 Jan Jan Increase Since Mar 6 Source: Pacific Gas and Electric ( Source: Pacific Gas and Electric ( 7

10 28 North Bay Business Barometer Marin County

11 Marin Real Estate Marin County s residential real estate market experienced some effects of the current subprime mortgage and credit crisis, but it has weathered the difficulties well. The median price of an existing home sold decreased 3.8 percent a year-over in March 28, indicating some stress in the market. However, the median home price has grown quickly since 1998, rising 13.1 percent over the past decade. The average number of days on the market has fluctuated since 2, peaking to 14 days in January 27, but it has recently moderated. The ratio of sales to list price has remained relatively constant, hovering close to 97 percent. The most active areas of home sales were in Novato, San Rafael and Mill Valley, while Kentfield, Point Reyes and Ross maintained the highest average sales prices. Median Price of an Existing Home Sold ($Thousands) $1 March 28: $729, $8 $6 $4 $2 $ '98 '99 ' '1 '2 '3 '4 Mar Mar Mar '5 Mar Source: California Association of Realtors ( Average Days on the Market 12 Sales/List Price Ratio of Homes Sold 1% 1 March 28: 83 98% March 28: % 4 2 ''1'2'3'4'5 May Jan Mar May Jan Mar Apr Jun Feb Apr Jun Feb Source: Bay Area Real Estate Information Services ( 94% 92% Jan Feb Mar Jan Feb Mar Source: Bay Area Real Estate Information Services ( Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q1 28 $5 $4 Source: Bay Area Real Estate Information Services ( Average Sales Price ($Thousands) Total Unit Sales (Right Axis) $3 9 $2 6 $1 3 $ Tomales Dillon Beach Greenbrae Muir Beach Sausilito Larkspur Mill Valley Tiburon Kentfield Ross Novato Fairfax San Rafael San Geronimo San Anselmo Corte Madera Nicasio Belvedere Point Reyes 9

12 Marin Real Estate Fair Market Rents $3 Efficiency $25 $2 One-Bedroom Two-Bedroom Three-Bedroom $15 Four-Bedroom $1 $5 ' '1 '2 '3 '4 '5 Source: Department of Housing and Urban Development ( Fair Market Rents in Marin County have remained steady since 25, down from their peak in 23. FMR is tied to the median income of the area, and median income does not typically vary considerably between years. Therefore, FMR tends to change slowly over time. The number of residential building permits issued has generally fallen since 26, although the value of those permits has fluctuated during that time. While the number of permits issued in 27 was relatively constant across quarters, the spring and summer months carried high value projects. Notices of default are up significantly in 28, growing 166 percent a year-over in the first quarter and 541 percent since the first quarter of 2. Residential Building Permits Issued (Includes Single- and Multi-family Units) 8 Value of Residential Building Permits Issued ($Millions) $1 7 6 Q1 28: 36 $8 5 Q1 28: $46,258, 4 $6 3 2 Source: Construction Industry Research Board ( $4 Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Notices of Default Q1 28: ' '1 '2 '3 '4 '5 Source: DataQuick Information Services ( 1

13 Marin Real Estate Listings and sales of Marin County properties have quickly accelerated after a lull recorded in December 27. December is typically the month with the fewest new listings in any given calendar year. Current listings exceed current sales by 24 percent, indicating a sizeable supply of real estate relative to demand following the subprime loan crisis. Office space vacanies have gently declined since 23 and are at 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 3.9 percent this quarter, substantially besting both the state and national unemployment rates. In addition, Marin County s rate of unemployment growth is lower than both the state and national rates. Listings and Closed Sales (Includes Commercial Properties) 6 Listings Mar 28: Jan Jan Jan Sales Mar 28: 146 Source: Bay Area Real Estate Information Services ( Listings Closed Sales Commercial Property Vacancy Rates 2% Q % 15% Seasonally Adjusted Unemployment Rate 8% California Office Industrial Retail 7% 6% United States Marin County 1% 5% 5% % '3 '4 '5 Q4 27: 4.2% Q4 27: 2.9% 4% 3% 2% '1 '2 '3 '4 Q1 28: 3.9% '5 Source: Keegan and Coppin Company, Inc. ( 11

14 Marin Employment Seasonally Adjusted Nonfarm Employment (Thousands) 115 Q4 26: 19, '1 '2 '3 '4 '5 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 Tax Receipts Generated By Tourism Spending (Constant 25 $Millions) $35 $3 $25 $2 $15 $1 $5 $ State Local 25 Source: Dean Runyan & Associates ( Leisure and Hospitality Employment By Industry, % 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% 12

15 28 North Bay Business Barometer Mendocino County

16 Mendocino Real Estate The median price of a Mendocino County home fell 29 percent between March 27 and March 28 and is up 14 percent since 21. The average number of days on the market held steady the year over in March 28, although there was some fluctuation during those twelve months. The sales-to-list price ratio of homes sold in Mendocino county fell to just over 91 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. Point Arena and coastal Mendocino had the greatest average sales price in the county. Median Price of an Existing Home Sold ($Thousands) March 28: $413,98 $6 $5 $4 $3 $2 $1 $ '1 '2 '3 '4 '5 Mar Mar Mar Source: California Association of Realtors ( Average Days on the Market 2 March 28: Sales/List Price Ratio of Homes Sold 1% 98% 96% 1 94% March 28: '1 '2 '3 '4 '5 May Jan Mar May Jan Mar Apr Jun Feb Apr Jun Feb Source: Bay Area Real Estate Information Services ( 92% 9% Jan Feb Mar Jan Feb Mar Source: Bay Area Real Estate Information Services ( Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q1 28 $15 Average Sales Price ($Thousands) Total Unit Sales (Right Axis) 25 $12 Source: Bay Area Real Estate Information Services ( 2 $9 15 $6 1 $3 5 $ Covelo Calpella/Redwood Ukiah Anderson Valley 14 Willits Talmage/Hopland Coastal Mendocino Gualala Point Arena

17 Mendocino Real Estate Fair Market Rents $2 Efficiency $15 One-Bedroom Two-Bedroom $1 Three-Bedroom Four-Bedroom $5 $ ' '1 '2 '3 '4 '5 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 current and future slowdown in Mendocino County residential construction. The combined value of residential permits closely follows the number issued. Mendocino County s unemployment rate was higher than the national average and nearly as high as the state average. Listings of residential and commercial properties for sale have increased since December 26, although closed sales are slightly decreasing. Residential Building Permits Issued (Includes Single- and Multi-family Units) 12 Value of Residential Building Permits Issued ($Millions) $25 1 $2 8 6 Q1 28: 32 $15 Q1 28: $7,874, 4 $1 2 $5 Source: Construction Industry Research Board ( Seasonally Adjusted Unemployment Rate 8% California United States 7% Mendocino County 6% Q1 28: 6.1% 5% 4% '1 '2 '3 '4 '5 Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Listings and Closed Sales (Includes Commercial Properties) Jan Listings Closed Sales Jan Jan Sales Mar 28: 3 Source: Bay Area Real Estate Information Services ( Listings Mar 28:

18 Mendocino Employment Nonfarm employment in Mendocino County has remained fairly constant since 21. Leisure and Hospitality employment has grown by close to 3 percent since 199, with the past three quarters in record levels. On average, leisure and hospitality employment grew by 1.6 percent per year since 199. 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. Seasonally Adjusted Nonfarm Employment (Thousands) 35 Q1 28: 3, '1 '2 '3 '4 ' 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 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% 16

19 28 North Bay Business Barometer Napa County

20 Napa Real Estate The median price of a Napa County home fell 12 percent between 26 and 27 and fell 18 percent between 27 and 28. However, Napa County homes still appreciated 71 percent between 2 and March 28. 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 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 more than twice the number of homes than all other areas combined. Deer Park homes fetched the highest average sale price. Median Price of an Existing Home Sold ($Thousands) $7 $6 $5 $4 $3 $2 $1 $ ' '1 '2 '3 '4 Mar Mar Mar '5 Mar Source: California Association of Realtors ( March 28: $469, Average Days on the Market 2 Sales/List Price Ratio of Homes Sold 1% March 28: % 15 March 28: % 1 94% 5 ' '1 '2 '3 '4 '5 May Jan Mar May Jan Mar Apr Jun Feb Apr Jun Feb Source: Bay Area Real Estate Information Services ( 92% 9% Apr Jun Feb Apr Jun Feb May Jan Mar May Jan Mar Source: Bay Area Real Estate Information Services ( Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q Average Sales Price ($Thousands) Total Unit Sales (Right Axis) Pope Valley Circle Oaks Berryessa Yountville Napa St. Helena Calistoga Angwin Deer Park 18 Source: Bay Area Real Estate Information Services (

21 Napa Real Estate Fair Market Rents $2 $15 $1 $5 Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom ' '1 '2 '3 '4 '5 Source: Department of Housing and Urban Development ( Fair Market Rents in Napa County have been steadily rising the past two years. Residential building permits issued and their combined value have fallen considerably since the third quarter of 26, falling 43 percent between first quarter 27 and first quarter 28. The value of those permits fell in tandem with their issuance. Notices of default increased rapidly over the past four quarters, with first quarter 28 topping out at 223 percent higher than first quarter 27. Like Marin and Mendocino Counties, Napa County has been impacted by the subprime mortgage crisis across multiple housing indicators, such as median home price, permit issuance and notices of default. Residential Building Permits Issued (Includes Single- and Multi-family Units) 25 2 Q1 28: 37 Value of Residential Building Permits Issued ($Millions) $ $4 $3 Q1 28: $21,69, Source: Construction Industry Research Board ( $2 Source: Construction Industry Research Board ( *Includes Single- and Multi-family Units Notices of Default Q1 28: '5 Source: DataQuick Information Services (

22 Napa Real Estate Listings of residential and commercial properties fell more than five percent from first quarter 27 to first quarter 28, and closed sales fell more than 35 percent during the same period. Since January 26, listings have fluctuated seasonally, although sales have remained generally declined. Office space has remained constant since 24, but industrial vacancy has declined impressively during that time. Napa County s unemployment rate has consistently been below the unemployment rate for both California and the United States, although it does closely mirror the growth in unemployment state- and nation-wide. Listings and Closed Sales (Includes Commercial Properties) Jan Listings Closed Sales Jan Jan Listings Mar 28: 28 Sales Mar 28: 67 Source: Bay Area Real Estate Information Services ( 2% Commercial Property Vacancy Rates Seasonally Adjusted Unemployment Rate 8% California 15% Q1 28: 11.4% Office 7% United States Napa County 1% Industrial 6% 5% 5% % '5 Q1 28: 4.9% 4% 3% '1 '2 '3 '4 '5 Q1 28: 4.5% Source: Keegan and Coppin Company, Inc. ( 2

23 Napa Employment Seasonally Adjusted Nonfarm Employment (Thousands) Q1 28: 63, '1 '2 '3 '4 '5 Napa County s nonfarm employment has grown nearly five percent since 21 after accounting for seasonal variations. Leisure and Hospitality employment grew at a very quick 54 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 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%) 21

24 28 North Bay Business Barometer Sonoma County

25 Sonoma Real Estate February s median home price decreased $119,5, or 23.1%, on a year-over basis to $399,. The recent cooling of Sonoma County s residential real estate market follows nearly a decade s worth of strong price advances. According to the Center for Regional Economic Analysis at Sonoma State University, home prices tripled in Sonoma County from 1996 to 25. In a recent report by Moody s Economy.com, Sonoma County ended 27 as the 5 th least-affordable metropolitan area in the country, based on the ratio of median income to median monthly housing costs. The average home sold for 95.% of its asking price in March 28, down from 97.2% in March 27 and 98.4% in March 26. Sonoma County s sales/list price ratio is currently at its second-lowest mark since the EDB began tracking in 23, with the lowest figure first recorded in January 28 and equalled in February 28. The general downward trend in the sales/list price ratio and median price of homes sold suggests buyers have been able to apply more leverage in price negotiations, given current market conditions. Northwest Santa Rosa, Northeast Santa Rosa and Sonoma had the greatest number of homes sold. Healdsburg, Penngrove and the Sea Ranch had the highest average home price during the first quarter. Median Price of an Existing Home Sold ($Thousands) $6 $5 $4 $3 $2 $1 $ '3 '4 '5 Feb 28: $399, '98 '99 ' '1 '2 '3 Feb '5 Feb Feb '4 Feb Feb Source: California Association of Realtors ( Sales/List Price Ratio of Homes Sold 82.2% Increase Since 1998 Decrease Since Feb 7 Mar 28: % 3.4% Decrease since Mar 6 2.2% Decrease Since Mar 7 Source: Bay Area Real Estate Information Services ( Average Sales Price ($Thousands) and Total Sales by Sub-County Area, Q1 28 $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 NW Santa Rosa SE Santa Rosa E Petaluma Oakmont W Petaluma Cloverdale Sonoma Penngrove Cotati/Rohnert Park SW Santa Rosa Russian River Windsor NE Santa Rosa Sebastopol Coastal Sonoma The Sea Ranch Healdsburg 23

26 Sonoma Real Estate Average Days on the Market Mar 28: % The average days on the market for sold homes has been volatile since January 27 s peak, and it is up more than 37% in the past two years. The average home stayed on the market for more than four months before being sold in March, up nine days year-over. 9 6 Increase Since Mar 6 7.7% One hundred sixty-seven (12.6%) fewer properties were sold in March 28 than March 27. The decrease in year-over sales was met with a corresponding decrease in year-over listings, indicating a decreasing supply of housing relative to demand '3 '4 '5 Source: Bay Area Real Estate Information Services ( Listings and Closed Sales (Includes Commercial Properties) 15 Listings Mar 28: Listings Closed Sales Notices of Default Sales Mar 28: 338 Source: Bay Area Real Estate Information Services ( Increase Since Mar % Decrease in Mar Year-Over Listings 33.1% Decrease in Mar Year-over Sales Defaults rose 242% from 47 defaults in Q1 27 to 1,392 in Q1 28, a new 15-year high. Each of the last four quarters established a new record for the number of defaults. The Fall 27 Sonoma County Business Confidence Report, published by the EDB, indicated that 85% of Sonoma County executives believed that the subprime loan crisis would have moderate or significant effects on the local economy. Current Business Barometer data reveals a definite slowdown in the local residential and commercial real estate markets. Q1 28: 1, '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 Source: DataQuick Information Services ( % Increase Since Q Number of Defaults Higher Than Previous Q4 7 Peak

27 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 $91 for a one-bedroom residency, $1,137 for a two-bedroom residency, $1,613 for a three-bedroom residency, and $1,886 for a four-bedroom residency. Fair Market Rents $2 $15 Efficiency One-Bedroom Two-Bedroom First quarter residential permit issuances were at their lowest quarterly level since recording began in 2. In total, 9 multi-family permits were issued in Q1 28, down from 249 in Q1 27. Additionally, single-family permits showed a year-over decline, falling from 266 in Q1 27 to 92 in Q1 28. The small number of single- and multi-family permit issuances depressed the value of residential building permits to $43,817, through March, significantly lower than last year s figure and is the lowest figure since 2. Of $43.8 million in building permits issued, approximately $29.7 million (67.7%) was attributable to single-family permits, $13.1 million (29.9%) to residential alterations and additions permits, and $1.1 million (2.4%) to multi-family permits. $1 $ ' '1 '2 '3 '4 '5 Source: Department of Housing and Urban Development ( Residential Building Permits Issued (Includes Single- and Multi-family Units) Q1 28: 11 Three-Bedroom Four-Bedroom 65.4% Year-over Decrease in Single-Family Permits Since Q % ' '1 '2 '3 '4 '5 Source: Construction Industry Research Board ( Year-over Decrease in Multi-Family Permits Since Q1 7 Value of Residential Building Permits Issued ($Millions; Includes Single- and Multi-family Units, Alterations and Additions) $25 Source: Construction Industry Research Board ( $2 $25 $2 $15 $1 Q1 28: $43,817, $15 $1 $5 $5 $ ' '1 '2 '3 '4 '5 $ 63.2% 53.5% 97.2% Year-over Decrease in Residential Permit Value Since Q1 7 Year-over Decrease in Single- Family Permit Value Since Q1 7 Year-over Decrease in Multi- Family Permit Value Since Q

28 Sonoma Real Estate Commercial Property Vacancy Rates 25% Q % 2% 15% Q4 27: 1.4% 1% 5% Q4 27: 3.5% % '3 '4 '5 Office Industrial Retail First quarter data for commercial property vacancy rates were not available at the time of publishing this document. The office vacancy rate for Q4 27 in Sonoma County was down noticeably from Q4 26, shifting from 21.1% to 18.5%. The lowest vacancy rates were recorded in Santa Rosa and the North Corridor region comprising the airport area, Windsor and Healdsburg. Petaluma and Rohnert Park experienced above-average office vacancies. The industrial vacancy rate rose slightly from 9.5% in Q4 26 to 1.4% in Q4 27. The North Corridor area recorded the lowest industrial vacancy rate in Sonoma County at 4.7% for the fourth quarter. Source: Keegan and Coppin Company, Inc. ( Share of Q1 Nonresidential Permit Value 16.7% 23.% 5.6% 54.7% Alterations and Additions (54.7%) New Other (23.%) New Commercial (16.7%) The retail vacancy rate, at 3.5% for Q4 27, was in line with the five-year average for the area (3.6%). Petaluma and Windsor recorded the lowest retail vacancy rates, and Petaluma will host the greatest amount of planned retail expansion in the next year than any other Sonoma County city. New Industrial (5.6%) Source: Construction Industry Research Board ( Value of Nonresidential Building Permits ($Millions; Includes Alterations and Additions) $1 $1 $8 $6 Q1 28: $3,59, $8 $6 $4 $4 $2 ' '1 '2 '3 '4 '5 $2 Source: Construction Industry Research Board ( % 34.8% Year-over Decrease in Value of Q1 Nonresidential Permits Decrease in Value of Nonres. Permits Relative to Q1 22

29 Sonoma Employment The Sonoma County Business Cycle held steady in the 4th Quarter of 27. Currently, the Index stands at points above Q1 21. The index bottomed 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 - 52.%, Wages %, Taxable Sales %, Business Confidence - 3.7%. 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 2,2 jobs on a year-over basis and remains above 21 levels for the sixthstraight quarter, indicating that the local economy has fully rebounded from its contraction from 21 to 23. Job growth has been strong across virtually every sector between 26 and 27, with particularly sizable gains experienced by the Construction, Professional and Business Services, Manufacturing, and the Trade, Transportation and Utilities sectors. Sonoma County's seasonally adjusted unemployment rate increased to 4.8% in Q1 28 from 4.2% in Q1 27. The seasonally adjusted unemployment rate was up.1 percentage points from Q4 27, despite high job numbers in the fourth quarter, but remains below the U.S. (5.3% for Q1 28) and California (6.3% for Q1 28) rates. Despite recent shakeups in the real estate and financial sectors, Sonoma County s diversified economy should buffer the area from sudden labor market swings. Business Cycle Index '1 Seasonally Adjusted Nonfarm Employment (Thousands) Q1 28: 192, '1 '2 '2 '3 '3 '4 '4 '5 '5 Q1 28: 19.1 Seasonally Adjusted Unemployment Rate Source: Economic Development Board ( Source: California Employment Development Department Sonoma County s nonfarm employment has been seasonally adjusted by the EDB. 8% California 7% 6% 5% 4% 3% '1 '2 '3 '4 '5 United States Sonoma County Q1 28: 4.8% 11.5 Points Increase Since Q Points Increase Since Q % Increase Since Q % Increase Since Q1 26. Percentage Point Increase Since Q Percentage Point Increase Since Q1 27 Sonoma County s unemployment rate has been seasonally adjusted by the EDB. 27

30 Sonoma Employment The Leisure and Hospitality sector accounts for 8.3% of total civilian employment within Sonoma County as of 27. Moody s Economy.com forecasts that Leisure and Hospitality employment will grow 3.% over the next five years. Food Services and Drinking Places accounts for the majority (67.8%) of jobs in the sector. The average annual wage for a Leisure and Hospitality worker grew 19.8% between 21 and 26. In 25, Leisure and Hospitality produced $725 million in goods and services in the area. Horizon Air traffic at the Sonoma County Airport averaged nearly 6,5 passengers during the quarter. Although Q1 of any calendar year is often a slow travel period, Q1 28 passenger volume matched the traditionally higher holidays volume of Q4 27. Leisure and Hospitality s Total Sonoma County Regional Product ($mil) $8 25: $725 mil $6 $4 $2 21: $537 mil Leisure and Hospitality Employment (Thousands) 212: 24, : 2, : 13,7 51.8% '9 '95 ' '5 Forecast by Moody s Economy.com, Sonoma County s Advantage In A Slowing Economy, May 27 Leisure and Hospitality Employment By Industry, % 4.% 6.% 14.4% 17.8% '1 Employment Growth Since % Projected Employment Growth From Arts, Entertainment and Recreation (14.4%) Accommodation (17.8%) Food Services and Drinking Places (67.8%) $ '1 '2 '3 '4 '5 Source: U.S. Bureau of Economic Analysis ( STS Airport (Sonoma County) Passenger Loads, Q Jan in Jan out Feb in Feb out Mar in Mar out Passengers Leisure and Hospitality Average Annual Wage ($Thousands) $2 $15 $1 21: $12,466 '1 Nominal Real (in Constant 26 Dollars) '2 '3 26: $16,993 '4 '5 19.8% Nominal Wage Growth Between % Real Wage Growth Between Source: Sonoma County Airport ( 28

31 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: County of Sonoma Board of Supervisors Sonoma County Permit & Resources Management Community Development Commission Sonoma County Health Services Sonoma County Transportation & Public Works