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Ventura County gets '07 report

It's a mixed economic outlook with a housing slump continuing but jobs increasing.

February 10, 2007|Gregory W. Griggs | Times Staff Writer

Ventura County's housing slump is expected to continue through 2007, but the commercial real estate market remains hot and the number of jobs continues to grow, analysts said Friday.

"You can use a headline like: 'Housing market not at bottom,' or 'Economy hanging on in 2007,' " said Mark Schniepp, director of the California Economic Forecast.

Schniepp presented his annual Ventura County Real Estate and Economic Outlook report at a conference arranged by First American Title Co. at the Hyatt Westlake Plaza in Thousand Oaks.

While no recession is expected, the state and national economies will continue to slow, with California home sales reporting either single-digit price increases or possibly losses.

"Existing home sales [in Ventura County] collapsed 28% in 2006.... The extent of the decline was surprising," according to Schniepp's 137-page report. "We expect sales to return to the level of activity that prevailed in 1996-97."

Median home prices slipped in selected communities last year, from a modest 0.1% decline in Oak View to 3.4% in Ventura and 2.8% in eastern Thousand Oaks. Countywide, 2006 median prices -- the point at which half of the homes sold for more, half for less -- were up 2.7%, a poor showing compared with increases of 12.2% in 2005 and 29.2% in 2004.

During the next 10 months, Schniepp predicts "a 'Goldilocks condition' in the economy to prevail: not too hot, not too cold. We're going to get weaker growth this year, but we're going to have a lower interest rate environment."

Indeed, despite the downturn in the housing market, there is some good economic news. County employment grew by nearly 1.9% in 2006 -- with most of those jobs occurring in the construction, healthcare, business services and hospitality sectors. A 1% growth in non-farm jobs is predicted this year.

At the same time, personal income rose by 5% in 2006, and a 7% increase is expected this year. The county's median household income is $79,500, making it one of the most affluent regions in the state.

The county's commercial and industrial real estate market also remains in good shape because of a low vacancy rate. The trend is expected to continue in 2007, driven by increasing competition for space. But the sluggish housing market remains the analysts' biggest concern.

Howard L. Roth, chief economist for the California Department of Finance, said he also sees a continued housing decline for the first half of 2007.

"In my forecast," Roth said, "I have housing continuing to deteriorate for the next two quarters, as it did in the last two quarters, and stabilizing by midyear ... improving in 2008."

Home construction looks bleak, but Roth suggested that developers properly responded to buyers' reluctance to enter the market.

"Housing permits are down about 22% statewide," he said, "It means the builders are backing off fairly quick ... unlike the large inventories that existed during [the recession of] the early '90s."

Robert A. Kleinhenz, deputy chief economist of the California Assn. of Realtors, said the setback in home sales and construction should be put in perspective. Despite last year's decline, Kleinhenz said 2006 was the 10th-best year on record for sales of existing single-family homes. And California's median home price remains above $560,000, compared with a U.S. median closer to $230,000.

Fears that the recent downturn in sales and price appreciation signals a new recession are unfounded, he maintains.

Meanwhile, average rents for apartments in Ventura County are $1,485, less than in Los Angeles and Orange counties. But it represents the largest increase, 8.8%, of six Southern California counties.

greg.griggs@latimes.com

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