Apologies that I am late with this post. I had lots of clients yesterday and got tied up. Lots of people are really interested in my Small Business Mastery program. It is designed for people that don’t have extensive Business Education and are running their own Business. 8 sessions every other week discussing a full range of issues that an Owner should have expertise in.
Last week I said I wanted to talk about housing in Sonoma County. I know some Residential Realtors and I know they are constantly looking for inventory. In other words, they are looking for houses to sell. The market has not been so good here since the bursting of the housing bubble in 07 – 08. This, first, should give you pause as it is likely we are in some sort of mini-bubble. If you are buying today, you should make sure that you can pay for what you get and question any additional value you will earn over the next few years. According to Realtor.Com, the average home price is $619,500 with the average transaction around $500,000. The percentage of homes for sale is about 1%. All of this is good news if you bought a house in 2010. You are now able to sell your house and make a lot of money.
The rental market is also very high. Average rents have increased over 10% per year over the last 5 years. Occupancy is very high and property managers are shooting for 97% or higher occupancy. Lake County residents who lost their homes last year added to the pressure put on rental units.
Other than pure numbers, I want to point out the impact that this can have on our local economy. We are dominated by Agriculture, Tourism and Hospitality. These industries generate a large percentage of low paid, if not minimum wage jobs. In Silicon Valley, technology dominates and graduating Engineers often earn $100K per year coming out of college. The question is going to be, where are the workers for our economy going to live?
Like the HUD complaint about Marin County, we are not overstocked with low income housing in Sonoma County. If you made $15 an hour (the new minimum wage), how would you live in a $1500 a month apartment? The goal is that housing should take no more than 30% of your income. Minimum wage puts this number at $774 per month. My quick Craigslist search showed 2 properties in Sonoma County at that price level. Other than that, you are likely living in Lake County and commuting. Think about living in Lakeport and commuting to Petaluma 5 days a week for minimum wage. Gas alone will make that untenable.
So, something in our whole housing policy here has to be looked at in these terms. How will we sustain and grow our economy if the majority of the jobs in our county do not allow people to live here? This is not a call for unrestrained growth, but we are in a bit of a quandary. The funny thing is that people are now focused on Art as the next part of the local economy to grow (via the Economics Development Board). Again, this is not helpful in generating a big number of well paying jobs.
Do I have any answers? Not today, but it is something we need to think about and figure out a path forward together.
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