Solano County economic pluses could prove biggest challengesMay 22 2019
Daily Republic May 22, 2019 By Todd R. Hansen
FAIRFIELD — The positive check marks that show the Solano County economy is trending upward may also prove to be the biggest challenges to the county.
Nowhere is that more true than with housing and rental prices, Robert Eyler, the principal at Economic Forensics and Analytics out of Petaluma, recently told the Solano County Board of Supervisors.
He presented his 11th annual Index of Economic and Community Progress last week. Supervisor Jim Spering had flight issues coming out of the Dallas and did not make this portion of the meeting.
While Solano County has not reached the housing value it had at the start of the Great Recession, median home prices have climbed steadily since 2012.
“Housing markets in 2018 experienced another year of rising median prices for single-family homes in Solano County. An estimated 9,750 single-family homes in Solano County for 2018 were sold, slightly more than in 2017. Home prices increased by 8.6 percent in Solano County in 2018,” the economic index states.
The median price for a detached, single-family homes – a point at which half the sales are above and half are below – was approximately $450,000 as of December.
The comparable statewide median home price was $557,600, the report states.
The problem with rising home prices has been well discussed in recent months, and even beyond. Many of the buyers are coming from outside the county, where prices are even higher. The buyers are essentially trading the need to commute back to their job counties for the more affordable housing in Solano.
In turn, existing Solano County residents who do not have the same wage levels are being “squeezed” out of the market, Eyler said.
According to data from the third quarter of 2018, only 38 percent of county households could afford a home at the median price, the report states.
Gas prices, the volatility of the stock market, political uncertainty as well as utility costs and other pressures on household income also are concerns.
Eyler also noted that while the drought is over, to think that way may be the worst possible way to think in terms of water. He said the focus still needs to be on improving water supply, water infrastructure and other water needs.
“We really haven’t changed how we capture it and deliver it,” Eyler said.
Moreover, while personal incomes rose in 2018, the thrust of that increase is felt greatly from the wages earned outside the county.
“Rental prices have also continued to trend higher, though 2018 saw some flattening and even slight contraction across Solano County and the regional economy,” the report states.
“For Solano County, the median rental price for any style of home available for rent was approximately $2,160 (per month) in December 2018 . . . This rental price is less than half of the same measure in San Francisco County,” the report states.
Another pressure that is still difficult to assess fully is the number residents coming from fire-torched counties, particularly nearby Napa and Sonoma counties.
“Regional fires in 2018 may put more pressure on rental pricing in Solano County if the county receives migrating fire survivors from the north,” the report states.
The wildfires, including the Paradise blaze, also are taking construction labor away from other counties, and forcing the costs of construction to increase. That could have a definite impact on Solano County moving forward, Eyler said.
Still, Eyler described 2018 as a good year for Solano County – hitting positive marks for housing prices, per capita income, job creation and the rising rate in the gross domestic product.
The economist said it is unlikely Solano County will see another recession through 2021.
“If we do go into recession,” Eyler said, “it will likely be more mild.”
Robert Burris, the executive director of the Solano Economic Development Corp., said he would like to see commercial developers expand their vision for the area – away from just the warehousing and logistics sector and include some smaller spaces needed for more “densely populated employment areas” that can be used for a variety of uses.
He noted a lost opportunity with an Emeryville company looking for about 15,000 square feet for a wet lab, and it was not available in Solano County. He said there are a lot of other firms looking for that kind of space.
Burris also said it is important to go beyond just creating jobs.
“And that really is the ultimate goal, to create those quality jobs that raise the level of income and wealth in our region and ultimately the quality of life,” Burris said.
One fundamental strength, as reported, is that the gross domestic product for Solano County, adjusted for inflation, grew by 2.4 percent in 2017, slightly slower than California, but faster than the national economy.
The gross domestic product measures the market value of all the final goods and services produced in a period of time, in this case, annually.
The economic report notes that Solano County’s unemployment rate was 3.8 percent at the start of 2019, the lowest rate on record.
Perhaps more significant is the fact in-county, private-sector employers added 4,000 more jobs during the year, a 3.5 percent increase over 2017. The public sector added another 300 jobs, the report states. Farm jobs fell by 300 in 2018.
The report also shows that the county continues to grow, with 3,153 more residents in 2017, a 0.7 percent increase.
Solano County’s population is expected to expand by 64,420 from 2018 to 2030.
At the same time, poverty rates for 2017, which are based on five-year averages, fell to 8.6 percent of households.
County revenue from property values and taxable sales rose in 2018. Assessed property values increased to more than $54 billion.