County of Sonoma: Local Economic Report

EDB Economic Development Board economy -11 County of Sonoma: Local Economic Report E c o n o m i c D e v e l o p m e n t B o a r d 4 0 1 C o l l e g e Av e n u e S u i t e D S a n ta R o s a C A 9 5 4 0 1 ( 7 0 7 ) 5 6 5-7 1 7 0

Table of Contents 1 Letter & Highlights 2 Population 3 Employment 4 Population & Income Projections 5 Residential Real Estate 6 Real Estate & construction 7 Consumer Spending & Taxable Sales 8 Education 9 Sponsors Page

County of Sonoma: Local Economic Report February 2011 The Economic Development Board (EDB), in partnership with the Workforce Investment Board, is pleased to bring you the Local Economic Report. Highlights from this Local Economic Report include: Between 2000 and, median household income in increased 28% nominally, median-household incomes are projected to climb an additional 14%, to just below $78,000. The number of home sales has recovered by 36.5% since the decade low in 2007. The average median home price has declined for the past three years, and although wage growth has slowed, industries. Improvements in the labor market will lag improvements in its core industries. Thank you for your continued interest in the EDB reports. As always, if you have any questions, please feel free to contact us at (707) 565-7170. Sincerely, Ben Stone Executive Director 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.this report was prepared by Greg Smith and Sarah C. Deming.

Population The population of maintained consistent and moderate growth over the past two decades. During the 1990s, the dot-com era gave a boost to population growth until the bubble burst in 2001. Between 2000 and, the population of grew by 8% which is roughly 36,390 residents. Over the past decade, the median age of a resident rose from 37.5 to 39.3. An increasing dependency ratio coupled with diminished replacement rates has increased the forecast for long-term labor costs for businesses. The race-ethnicity composition of is changing rapidly due to an aging White population and a youthful Hispanic population. Currently, more than 70% of the Hispanic population is under the age of 35. In contrast, more than 60% of the White population is over the age of 35. 39.3 Median Age California 34.4 United States 37 Thousands of Residents 550 510 470 430 390 County of Sonoma Population : 493,285 350 '90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10 Source: California Dept. of Finance. Demographic Research Unit. (www.dof.ca.gov) U.S. Census Bureau (www.census.gov) & ESRI Market Profile (www.esri.com) Age Distribution 2000 2015 0-19 27.2% 24.5% 23.6% 20-54 51.4% 48.2% 46.8% 55+ 21.5% 27.3% 29.5% Source: ESRI Market Profile (www.esri.com) Age Distribution of Race-Ethnicity in White Hispanic 25% Percent of Population 20% *Year 8% 15% Projected Decrease of White Population per Decade 10% 7% 5% Projected Increase of Hispanics Population per Decade 0% 0-4 5-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+ Source: ESRI Market Profile (www.esri.com) 2

Employment The seasonally unadjusted unemployment rate for was 10.5% for June of, up considerably from 2008 when second quarter unemployment registered 5.2%. While s Q2 unemployment rate is below California s (12.1%), it is above the national level (9.5%). Seasonally UnAdjusted Unemployment Rate 12% June : 10.5% Total nonfarm employment in was 175,200 in June of. Total seasonally unadjusted employment has decreased 12.3% from June of 2007 (199,800). has lost 23,000 jobs since the employment peak in Q4 2007 (198,270). s sector employment percentage largely matches the state. The construction industry had the largest discrepancy between (8%) and California (5.9%). Sector Employment % Unemployed 10% 8% 6% 4% 2% 210 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: California Employment Development Department (www.edd.ca.gov) Total Nonfarm Employment (in thousands) 48.6% 2.3% 3.8% 8% 8.9% 2.7% 11.5% Agriculture/Mining Construction Manufacturing Wholesale Trade Retail Trade Trans/Utilites Information Fin/Insur/Real Est Services Public Admin 205 200 195 190 185 180 8.3% 3.8% 2% Source: ESRI Business Analyst (http://www.esri.com) 175 170 3 2000 2001 2002 2003 2004 2005 June : 175,200 2006 2007 2008 2009 Source: California Employment Development Department (www.edd.ca.gov)

Population & Income Projection The race-ethnicity composition of Sonoma County is projected to change significantly over the coming decades. The percentage of residents identifying as White is expected to decrease about 8 percent every decade until 2050. By contrast, the percentage of residents identifying as Hispanic is expected to increase around 7 percent every decade. During the past decade, median household incomes in grew 28.2% nominally. In real (adjusted for inflation) dollars, incomes increased 2.9% Over the next five years, the median household income of is expected to climb nominally by roughly 14%, just shy of $78,000. As incomes in rose over the past decade, the percentage of households earning less than $50,000 was reduced by 12.7 points. While the percentage of households earning between $50,000 and $99,999 per year remained relatively stable, the $100,000 to $149,999 household income bracket increased by an impressive 7.9 percentage points. $80k $75k $70k $65k Population by Race-Ethnicity in 2000-2050 5% 24.3% White Hispanic 65.9% Asian/Pac Islander Black American Indian Multirace 10% 51% 2000 2050 34% Median Household Income, : $68,255 28.2% Increase Since 2000 Over the next five years, the percentage of households in earning between $100,000 and $149,999 is expected to increase 4.9 percentage points. Households in most other income groups are expected to remain relatively unchanged. $60k $55k $50k '00 '10 '15 25% Households By Income, County of Sonoma 00, 10, 15 14% Projected 5-year Increase 20% 15% 10% 5% Source All: ESRI Business Analyst (www.esri.com) 2000 2015 0% <$15,000 $15,000-$24,999 $25,000-$34,999 $35,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$149,999 $150,000-$199,999 $200,000+ 4

Residential Real Estate s median home price decreased roughly $78,350, or 16.9%, year over between 2008 and 2009. This is a large decline after nearly a decade s worth of strong price advances. Housing affordability levels are near their highest levels in over two decades. The total number of homes sold in has increased by 26.3% since it reached a low in 2007. Although wage growth has slowed, suppressed home prices have increased affordability for potential home buyers fueling home sales. The average sales price of a home in was $406,000 for Q2. Northwest Santa Rosa, Northeast Santa Rosa, Cotati/Rohnert Park, and Sonoma had the greatest number of homes sold. Median Price of an Existing Home Sold In ($ Thousands) $800k $700k $600k $500k $400k $300k $200k $100k $0k 9000 8000 7000 6000 5000 2009: $386,513 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Total Number of Homes Sold 2009: 5,467 42.2% Increase Since 1999 Decrease Since 06 Increase since 07 39.5% 82.6% 26.3% Source All: Bay Area Real Estate Information Services Inc (www.bareis.com) 4000 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Increase Since 08 $ 1000 $800 $600 $400 $200 Average Sales Price ($ Thousands) and Total Sales by Sub-County Area, Q2 Average Sales Price ($ Thousands) County Average Price ($ Thousands) Total Unit Sales (Right Axis) 250 200 150 100 50 $0 SW Santa Rosa Cotati/Rohnert Park NW Santa Rosa Russian River SE Santa Rosa Cloverdale Windsor Oakmont East Petaluma NE Santa Rosa West Petaluma Penngrove Sonoma Sebastopol Costal Sonoma Sea Ranch Healdsburg 0 5

Real Estate & Construction 25% 20% 15% 10% 5% Commercial Property Vacancy Rates 0% 2007 2008 2009 Q2 : 23.8% Q2 : 14.6% Q2 : 8.6% Source: Keegan and Coppin Company, Inc. (www.keegancoppin.com) 15% 12% 9% and California Residential Housing Vacancy 40.1% 6% 3% 5.8% 9.3% 55.3% 12% Office Industrial Retail 30.1% Vacancy Increase Since 2000 California Commercial vacancy rates in have averaged a 4.9% increase from Q1 2008. Recent figures suggest these rates have peaked and that is poised for long-term recovery. The office and industrial vacancy rates for Sonoma County decreased in the second successive quarter after growing for nine consecutive quarters. The office vacancy rate registers 23.8% county wide with the highest levels of 38.2% and 43.4% in Rohnert Park and Petaluma respectively. Office rent has fallen considerably over the past two years, a sign of the distressed nature of the commercial property market, but also an indicator of the improved affordability for new and expanding businesses. s cost of doing business is not only below the U.S. average, but it is the only Bay Area metro area to have below-average costs. Thus, is competitive in business costs nationwide and within the Bay Area. The value of building permits, which reflect trends in construction activity, are at a decade low. The value of residential permits has decreased roughly $477,140,000 (77.4%) since 2005. 0% '00 '10 '15 Source: ESRI Business Analyst (www.esri.com) Millions of Dollars $800 $700 $600 $500 $400 $300 $200 $100 $0 '00 '01 '02 Source: Construction Industry Research Board (www.cirbdata.com) Total Value of Building Permits In ($ Millions; Includes Alterations and Additions) '03 '04 6 '05 '06 '07 Residential Non-residential 2009: $143,777,000 '08 2009: $68,573,000 '09

Consumer Spending & Taxable Sales The positive trend of s total taxable sales ended in 2007. All across California, taxable sales have been falling. Since 2007, taxable sales have decreased 6.5% in Sonoma County compared to an average decline of 6.3% in California. Compared to the national average, Sonoma County residents spend considerably more per capita on housing, computers, education, and food away from home. They spend considerably less on apparel. The largest consumer expenditures were on general retail goods, shelter, food at home, and health care. Total Taxable Sales $8b $7b $6b $5b $4b '98 '99 '00 '01 2008 Total: $7,369,109,000 '02 '03 '04 '05 '06 '07 '08 6.5% Decrease Since 07 37% Increase Since 98 Source: California Board of Equalization (www.boe.ca.gov) 2009 Consumer Spending by Commodity General Retail Goods $5,366,153,000 Shelter $3,744,234,000 Food at Home $992,997,000 Health Care $815,288,000 Entertainment & Recreation $752,238,000 Food Away from Home $718,185,000 Travel $461,901,000 Investments $437,869,000 Household Furnishings & Equip. $421,321,000 Apparel & Services $378,704,000 TV, Video, & Sound Equipment $271,858,000 Education $270,653,000 Vehicle Maintenance $214,034,000 Computers & Accessories $51,305,344 General Retail Goods Shelter Source: ESRI Business Analyst (www.esri.com) Food at Home Health Care Entertainment & Recreation Food Away from Home Travel Investments H.H. Furnishings & Equip. Apparel & Services Education TV, Video, & Sound Equip. Vehicle Maintenance Computers & Accessories 7

Education The National Center for Education Statistics (NCES) adjusted high school dropout rate for (16.6%) is below the state average (18.9%). Students identifying as Caucasian, which make up 59.8% of the county s student population, had a dropout rate of 12.2%. These rates do not reflect students transferred to alternative schools. Adjusted NCES High School Dropout Rate, 2007-2008 Marin Monterey 7.7% 11.6% English Learners made up 23.4% of the student population in comparable to the state average of 24.2%. The percentage of English learners in Sonoma County has increased by nearly 80% over the past decade, when in 2001, the percentage of English learners was just 15.1 percent. Santa Barbara Sonoma Ventura Napa 12.1% 16.6% 17.6% 18.4% SAT scores for college-bound high school graduates in rank above the state and national averages. Over the last four years, SAT scores have remained relatively stable within and the state. Mendocino State 18.9% 18.9% Average Total SAT Scores by County 2008-2009 1000 1250 1500 1750 2000 Marin 1695 *The NCES defines dropout as students who do not achieve a diploma or GED during their first four years of high school. Monterey English Learners by County 2008-2009 0% 10% 20% 30% 40% 39.2% Sonoma 1615 Santa Barbara 30% Ventura 1592 State 24.2% Santa Barbara 1573 Sonoma 23.4% 64.9% Napa 1553 Ventura 23.2% Mendocino 1543 Napa 23% U.S. 1509 Mendocino 19% State 1502 Marin 14.4% Monterey 1413 *Source: ALL Educational Demographics Unit, CA Department of Education 8

EDB Economic Development Board With Acknowledgment and Appreciation to Local Key Businesses Supporting Economic Development: Director Executive Sponsor County of Sonoma General Services, Real Estate Division County of Sonoma Board of Supervisors Health Services Transportation & Public Works