Despite a sinking real estate market and job losses at two major employers, Ventura County could still dodge a much feared recession if interest rates continue to fall and Congress passes an emergency stimulus package, a local economist said Thursday.
"Recession is likely to be avoided in Southern California, but we'll be close," said Mark Schniepp, director of the California Economic Forecast, which released its county projections for 2008. "It's a slowdown, not a recession."
But the county still faces a tough road ahead. Sales of existing homes hit bottom in the fall, Schniepp said. The number of mortgage defaults and foreclosures reached record levels in 2007, and the trend will continue through the new year.
Unemployment is also expected to rise, and there will be few additional jobs created in the new year, Schniepp said. Amgen Inc. and Countrywide, two of the county's largest employers, trimmed their ranks last fall by about 2,000 employees overall, and it's unclear if more cuts are possible.
"It's pretty bleak," he said during a conference in Thousand Oaks. "We've got retail sales going down. We've got the apartment market that's softened. We've got the Amgen and Countrywide fallout. We have got a housing market that is absolutely at rock bottom. . . . I think 2008 will be the transition year; 2009 will be a lot better."
Schniepp said it's not all bad news. Bank of America announced last month that it would buy Countrywide for $4 billion. He said there is little duplication between Countrywide and BofA operations and that further job cuts would probably occur gradually.
Also, former Amgen employees received up to a year's pay as severance, Schniepp said. Such highly skilled workers should have little trouble finding replacement jobs in the region, he said.
Unemployment in the county climbed from 4.3% to 4.9% in 2007. It is projected to reach a five-year high of 5.5% this year, according to Schniepp's report.
Agricultural employment took a large hit last year, down 925 jobs, mostly attributed to a major freeze that wiped out more than $280 million worth of crops, the report said.
The overall number of jobs in the county last year rose 2,000 positions to 322,683, the report found. But Schniepp said a revision of the state's 2007 labor statistics scheduled for this spring could show an overall job loss in the county for the first time in 15 years.
Sales of existing homes last year were down nearly 30% to less than 4,100 homes, the lowest level in 25 years, Schniepp said. Further pressuring the market were default notices -- warnings from mortgage companies about nonpayment -- which more than doubled to 5,022 last year.
But the median price for existing homes only slipped about 2%, to $673,786, in Ventura County, according to the California Assn. of Realtors. The median price is the point at which half the homes sold for more and half for less.
"There is a limit to how far a home can go down. It's time for buyers to realize they are about as low as they'll go," Schniepp said.
Schniepp said he expects home prices to remain steady if a provision in President Bush's stimulus package survives -- raising mortgage loan limits from $417,000 to $729,750 to assist high-cost states -- and interest rates remain low.
"It you don't have to sell, then hold on until 2010. If you do have to sell, sell right now, immediately," Schniepp said. "And if you're a buyer, buy new -- these are the best deals you're going to get."
Among the forecast's bright spots is commercial real estate. Retail vacancies remain at record lows, and construction is set to begin this year on about 1 million square feet of office space.