Santa Barbara County

1
Santa Ynez Valley Economic Outlook
Bill Watkins
June 2, 2005
2
Finn Kydland
Time Inconsistency
Real Business Cycle
3
Median Home Price Forecast Performance
Ventura County
Forecast
Actual
Santa Barbara County
Forecast
Actual
San Luis Obispo County
Forecast
Actual
actual came in lower than forecast
4
Outline

• Home Prices
• The Forecast
• United States
• California
• The Santa Ynez Valley
• Today
• The Forecast

5
Houses and Bubbles
6
Are Home Prices In a Bubble?
7
Ten Most Affordable Communities in America
National Association of Home Builders
8
Housing Affordability
United States
65
60
55
50
45
1990
1992
1994
1996
1998
2000
2002
2004
9
Are California Home Prices In a Bubble?
10
Keb Mo says
Its the land of milk and honey, but you better
have some money, if youre looking for a house in
California.
11
Ten Least Affordable Communities in America
National Association of Home Builders
12
Median Home Price
California
610.9
559.8
thousands
509.4
452.3
372.7
262.4
217.5
188.2
186.5
178.2
1993
1995
1997
1999
2001
2003
2005
2007
13
Real Median Home Price Growth
California
17.4
17.2
14.9
9.7
7.2
7.4
6.6
6.2
5.8
5.2
3.5
-2.2
-3.0
-5.2
-6.8
1993
1995
1997
1999
2001
2003
2005
2007
14
Bill says
I think that Coastal Californias home market is
national, driven by demographics and wealth
accumulation.
15
Nominal Median Home Price
City of Buellton
151,100
16
Nominal Median Home Price
City of Solvang
1,046,000
941,300
839,700
721,600
575,800
451,800
392,500
309,300
236,300
228,800
1993
1995
1997
1999
2001
2003
2005
2007
17
Real Median Home Price Growth
City of Buellton
23.3
22.1
20.1
14.3
13.4
11.0
10.7
8.9
8.1
6.6
4.4
1.5
-0.2
-0.7
1993
1995
1997
1999
2001
2003
2005
2007
18
Real Median Home Price Growth
City of Solvang
24.2
23.5
21.3
16.1
12.9
12.5
12.0
9.0
8.1
5.4
4.2
2.4
-2.5
-11.3
-12.4
1993
1995
1997
1999
2001
2003
2005
2007
19
What About Interest Rates?
20
Greenspan Says
Its a conundrum.
21
Interest Rates
Fed Funds Rate
30-yr Conventional Mortgage Rate
22
Bill says
Mortgage rates will probably not rise in
lock-step with the Federal Funds Rate.
23
What About Rents?
24
What About Commercial Property?
25
United StatesEconomy
26
United States Unemployment Rate
27
Real GDP Growth
United States
4.5
4.4
4.2
4.3
4.0
3.7
3.7
3.3
3.0
2.7
2.5
1.9
0.8
-0.2
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
28
How High Are Oil Prices?
29
Real Oil Prices Normalized by Wealth
30
Californias Economy
31
Frank Zappa says
Sometimes you got to get sick before you can
feel better.
32
California Issues

• Budget
• Energy
• Housing costs
• Workers Compensation Insurance

• Health Insurance
• Tort Law
• High Costs
• Onerous Regulation

33
Californias Great Migrations

• Latinos
• Baby Boomers
• Generation X
• Business

34
California Manufacturing Percentage of All Jobs
16
15
14
13
12
11
10
1990
1992
1994
1996
1998
2000
2002
35
What About the Governor?
36
Arnold Says
Trust me.
37
Clint Says
A man has got to know his limitations.
38
Bill Says
Actually, California has been doing better than
expected.
39
Real Gross State Product Growth
California
40
Employment Distribution (1,000 of jobs)
California - 2004
370
Agricultural Production
23
Mining Quarrying
847
Construction
973
Durables Manufacturing
559
Non-durables Manufacturing
482
Information Services
482
Transportation, Warehousing, Utilities
654
Wholesale Trade
1,617
Retail Trade
903
Finance, Insurance, Real Estate
2,099
Professional Business Services
1,562
Education Health Services
1,442
Leisure Hospitality Services
504
Other Services
2,390
Public Sector
41
5-year Total Employment Growth
2004
Agricultural Production
-8.3
Mining Quarrying
-12.8
24.1
Construction
Durables Manufacturing
-17.8
Non-durables Manufacturing
-13.4
Information Services
-6.8
Transportation, Warehousing, Utilities
-5.1
4.1
Wholesale Trade
Retail Trade
7.1
Finance, Insurance, Real Estate
13.8
Professional Business Services
-1.0
Education Health Services
14.2
Leisure Hospitality Services
11.2
Other Services
6.6
Public Sector
6.7
42
TheSanta Ynez Valley
43
Baby Boomers ------------- Tourists
South Coast Home Prices
Chumash Casino Wineries Tourism
Valley Population
Valley Housing Prices
Santa Maria /Lompoc
S.Y. Valley Jobs
44
Chumash Casino
Employment and Growth
Jobs
1,600
Net Job Growth
1,200
Number of Jobs
800
482
400
217
209
137
108
80
72
34
0
-8
-75
-400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
45
Nominal Taxable Sales Per Capita
for Cities in Santa Barbara County
32,400
21,300
17,800
17,000
15,600
7,500
7,300
3,300
Buellton
Carpinteria
Goleta
Guadalupe
Lompoc
Santa
Santa Maria
Solvang
Barbara
46
2004 Median Age (in years)
for Cities in Santa Barbara County
47
2004 Median Household Income
for Cities in Santa Barbara County
67,078
56,975
55,350
53,682
50,773
40,678
40,268
37,441
Buellton
Carp-
Goleta
Guada-
Lompoc
Santa
Santa
Solvang
interia
lupe
Maria
Barbara
48
2004 Unemployment Rate
for Cities in Santa Barbara County
5.3
5.2
5.1
3.8
2.3
2.0
1.9
1.2
Buellton
Carp-
Goleta
Guada-
Lompoc
Santa
Santa
Solvang
interia
lupe
Maria
Barbara
49
Employment
Comparison
50
Hotel / Motel Room Sales
Buellton
51
Hotel / Motel Room Sales
Solvang
52
Domestic vs. Foreign Migration
Santa Barbara County
people
4,000
2,000
0
-2,000
-4,000
-6,000
-8,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Domestic Migration
Foreign Immigration
53
Employment Distribution (jobs)
Santa Ynez Valley - 2004
515
Agriculture
8
Mining
521
Construction
368
Durable Manufacturing
721
Non-Durable Manufacturing
124
Trans., Comm., Utilities
230
Wholesale Trade
1,134
Retail Trade
443
Finance, Ins. Real Estate
4,083
Other Services
1,481
Government
54
Employment Distribution (jobs)
South Coast Santa Barbara County - 2004
2,693
Agriculture
232
Mining
5,183
Construction
6,791
Durable Manufacturing
1,120
Non-Durable Manufacturing
4,120
Trans., Comm., Utilities
2,723
Wholesale Trade
11,022
Retail Trade
7,014
Finance, Ins. Real Estate
47,074
Other Services
19,577
Government
55
Employment Distribution (jobs)
North Santa Barbara County - 2004
13,157
Agriculture
2,678
Construction
Industrial
4,697
Trans., Comm., Utilities
2,099
1,239
Wholesale Trade
Retail Trade
7,514
Finance, Ins. Real Estate
2,148
16,217
Other Services
Government
19,601
56
Forecast
57
Real Gross Regional Product Growth
Santa Ynez Valley
58
Total Employment Growth
Santa Ynez Valley
15.3
13.3
6.5
5.3
4.7
4.1
3.5
2.9
2.8
2.5
2.3
2.1
1.8
-0.7
-2.6
1993
1995
1997
1999
2001
2003
2005
2007
59
Santa Ynez Valley
Output Share of Santa Barbara County
6.4
6.3
6.2
6.1
6.0
5.8
5.7
4.7
4.4
4.4
1993
1995
1997
1999
2001
2003
2005
2007
60
Real Retail Sales per Capita Growth
City of Solvang
3.9
1.9
1.6
1.4
1.0
0.3
-0.3
-0.6
-1.1
-1.7
-2.9
-3.5
-4.2
-5.0
-5.3
1993
1995
1997
1999
2001
2003
2005
2007
61
Real Retail Sales per Capita Growth
City of Buellton
20.1
12.4
6.9
2.6
2.4
1.6
1.5
1.3
1.0
0.2
-1.4
-1.8
-2.6
-6.5
-7.7
1993
1995
1997
1999
2001
2003
2005
2007
62
Hotel / Motel Occupancy Rate
South Coast of Santa Barbara County
78.9
77.7
77.2
76.2
74.5
74.0
73.9
73.8
73.6
72.7
71.2
70.6
1993
1995
1997
1999
2001
2003
2005
2007
63
Hotel / Motel Occupancy Rate
Santa Ynez Valley
66.3
65.0
63.8
63.8
63.0
61.3
56.7
56.0
1993
1995
1997
1999
2001
2003
2005
2007
64
Conclusion

• The short-term forecast is strong
• Chumash Casino
• Wine Industry
• Tourism
• Home Prices will continue to increase
• Demand from outside the area
• High home prices on the South Coast

65
Thank you. Visit us at www.ucsb-efp.com