Often we hear that jobs are the key to everything, at least in the economy. Especially in Northern California. Job growth is certainly something we watch in the housing world, since it helps home growth. But are jobs a driver in the Sonoma County real estate market?
Definitely. But another leading factor in the real estate market is population, and in certain areas that cater more to tourists, second home owners and retirees, population can actually be a bigger influence than jobs.
Jobs Boost Population
It’s absolutely true that job growth spurs population growth as people move for a job. However, the opposite is also true – people move out of an area or city when work is not available or they no longer need a job. For example, unauthorized workers fled the U.S. when the recession hit and the construction industry slowed in 2008. In fact, the national number of unauthorized immigrants hit it’s high in 2007 at 12.2 million, a number we haven’t seen since. And with an improving Mexican economy, that led some workers to move to Mexico for employment. There were times when jobs were growing faster there than here in the U.S.
Population has a tremendous affect on real estate and in turn, the Sonoma County real estate market. if the population declines, the need for housing also declines. This is important because we are seeing an overall decline in our country’s population (i.e. more deaths than births). Not to mention the recent changes to immigration also affecting population. Because population is a factor in economy and housing markets, we could see home prices start to go into a long term decline. Although it’s important to note that this would be a very long term shift in the housing market, not immediate.
Spotlight on Sonoma County
So that’s the country as a whole, but what about Sonoma County? In the spring of 2014, Sonoma County’s population hit half a million, making it one of the fastest growing areas of California. According to the U.S. Census, Sonoma County hit that number thanks to more births than deaths and people migrating from other parts of the country or state.
“The milestone, along with the uptick in the growth rate, is a sign that Sonoma County has to some degree crawled its way out of the Great Recession.”
-Martin Espinoza, The Press Democrat
Why the increase in population here? To take advantage of the booming economy. The North Bay Business Journal lays it out:
- The U.S. unemployment rate is around 5% while Sonoma County is around 4%.
- U.S. annual job growth is just under 2% – Sonoma County is almost 3%.
- Sonoma County wages and salaries increased 8% in 2015, as compared to 7% statewide and just 4% nationwide.
And that all leads to a positive affect on the Sonoma County real estate market, including lower housing vacancies.
Sonoma County Real Estate Market Factors
Of course there are other factors that also influence real estate, such as interest rates, the state of the economy and government policies or subsidies. An excellent example of government policies affecting the Sonoma County real estate market is the first-time home buyer’s tax credit. This was introduced in 2009 to help jump start a pretty sluggish economy and housing market. The National Association of Realtors estimates that this government subsidy is responsible for 900,000 home buyers diving into the market and boosting sales.
Population, job growth, demographics and government policies will continue to change and affect Sonoma County real estate. Nothing is written in stone. But the current stats look great for our neck of the woods!
As factors that influence the real estate market change, it’s essential to have a trusted realtor who stays current and knows Sonoma County real estate. Rebecca Celli, realtor and broker, not only keeps tabs on all real estate happenings in Northern California, but she is also an expert in the Sonoma County, Marin County and Petaluma markets. Contact her today to help you with selling or buying your next luxury dream home!