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VENTURA COUNTY NEWS

Economy Expected to Slow, but Stay Strong

Forecast: County's growth may be about half of what it was last year, but no recession looms, study says. And housing costs are likely to soar.

February 23, 2001|MARGARET TALEV | TIMES STAFF WRITER

After four years of boom times, Ventura County's economy is expected to slow down considerably this year.

But there's no need to worry about a recession, said Bill Watkins of the UC Santa Barbara Economic Forecast Project. The county's economy should still grow this year--but by about 4.5%, compared with 8.7% in 2000.

The only thing still skyrocketing in the next few years may be median home prices, which could hit an astonishing $463,000 by 2005, Watkins told about 300 gathered at an Oxnard hotel Thursday for the release of his center's annual report.

Low-wage workers who lose their jobs will have a harder time finding new work than a year ago.

And in coming months, the state's energy crisis could put a serious crunch on businesses, including farming.

The billion-dollar local agricultural industry, which employs at least 17,000 workers, is bracing for such a scenario, Rex Laird, executive director of the Ventura County Farm Bureau, said later Thursday.

"If energy costs skyrocket, everything about growing is going to be more expensive, including fertilizer," Laird said. "If your water mill is electric and your coolers are electric, then it starts to snowball.

"What happens when consumers refuse to pay for it? Or when you can grow [the same crops] in Mexico, where they don't have this electricity problem and then import from there. It's not a good thing," Laird said.

Watkins said the 4.5% economic growth expected in the county this year--which should be higher than the 0.1% growth rate he said the state is predicting--is certainly not bad.

"It's better than any year we had in the 1960s, 1970s and most of the 1980s," he said.

He expects the growth to accelerate slightly in future years and settle in above 6% by 2005.

Ventura County's gross product, the value of all goods and services produced in the county, was $33.8 billion last year and should be $36.4 billion this year, Watkins said. By 2005, it could be close to $52 billion, he said.

Watkins said he is optimistic because the county is better prepared to weather an economic slowdown than a decade ago when the last recession hit.

One reason, he said, is the resilience of the county's high-tech and biotechnology companies, including giant Amgen, and the continued popularity of the so-called tech corridor along the Ventura Freeway.

That, he said, will continue to draw firms squeezed out of costly Northern California. Tech firms helped drive the average county salary up about 9% last year, and many of those companies could be less vulnerable to economic dips than other sectors of the economy, he said.

Another factor is that no major reductions are planned at Naval Base Ventura County, the largest employer in the county with 17,300 workers on its payroll.

Finally, Watkins said, it helps that there's no glut of construction.

In fact, the county's housing stock is so limited that Watkins predicted median single-family home prices will soar from last year's $295,000 to $322,000 this year, and to $463,000 within four years. That would be comparable $368,000 in today's dollars, according to Watkins.

At least one conference attendee said he was not surprised by Watkins' prediction.

"I haven't done the research, but it seems possible," said Building Industry Assn. spokeswoman Rondi Guthrie. "We've been trying to get the message across for some time: We're in a housing crisis."

John Karevoll, an analyst for DataQuick Information Systems, which compiles statistics on home sales, agreed that Watkins' projection "is not that far-fetched."

The median price for houses, townhomes and condos countywide was only 1.6% higher in January of this year than January 2000, rising from $254,000 to $258,000, according to a DataQuick report also released Thursday.

But Karevoll said the figures were skewed by an unusually large number of new houses put on the market in January 2000. "The fact of the matter is, homes are going up 11% or 12% a year in Ventura County," he said. Only a severe recession would stem that tide, he added.

Even in last month's modest showing, home prices in some neighborhoods shot up dramatically. The median home price in one Oxnard ZIP Code went from $220,000 to $385,000.

Rising home prices may put a smile on owners' faces. But Watkins' prediction doesn't offer much hope to the estimated two-thirds of the county's residents for whom house prices already are considered unaffordable.

Meanwhile, Watkins predicted the county's unemployment rate will creep up from last year's 4.5%, which had been the lowest in three decades, to about 5.2%.

Low-wage workers are most likely to be affected, he said. Those most vulnerable to layoffs could include retail clerks and manufacturing workers at local branches of national chains. They are also most likely to remain unemployed longer than they might have had they lost their jobs a year ago, and that's mainly what will drive the rate up, Watkins said.

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Ventura County House Sales

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