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Dawn is starting to nudge out the economic darkness

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POSTED March 20, 2010 2:23 a.m.
The shutting down of Toyota production at the NUMMI plant in Fremont is scarier than a runaway Prius.

Only a fool would think otherwise given the fact that when its doors shut for good on April 1 that over 4,700 jobs are history with another 18,800 primary jobs at supply firms throughout California expected to go to the wayside as well.

Toss in the fact the only real viable solution for California’s budget mess is finally biting the bullet and shedding at least 40,000 state workers and you have the ingredients needed to send an economic seismic shock wave through much of Northern California.

So is there any good news out there given the fact roughly several hundred workers who assembled Toyotas - and at one time GM products - at NUMMI plus truckers and those employed at NUMMI suppliers idle in Manteca?

Actually, there is. Bay Area housing prices - that drove the Stockton-Manteca-Modesto area to the forefront of the mortgage meltdown four years ago - are once again rebounding. The DataQuick year-to-year comparisons show the median resale price is up $370,000 from last February in the nine Bay Area counties. More importantly, the counties that impact housing prices the most in Manteca are up significantly when statistics are broken out.

Contra Costa County prices based on 736 resales  are up 18.6 percent to $365,000.

Alameda County prices based on 795 resales are up 23 percent to $255,000.

Santa Clara County prices based on 804 resales are up 21.3 percent to $510,500.

In normal times, the “six-month” rule that real estate experts in the Northern San Joaquin Valley have learned to live by goes into effect. Essentially what happens in the high-priced Bay Area happens six months later in Tracy, Manteca, Lathrop, and Ripon.  It was even true in the price collapse that preceded the mortgage meltdown. Prices didn’t start sliding backwards on this side of the Altamont Pass until about six months later than they did in the Bay Area.

Is it a trend, though, that you can bank on with the potential for job losses that are fitting like a glove to predictions economists have made that new private sector job growth in the last three quarters of 2010 will be negated by other factors such as NUMMI’s closing and the state budget crisis and continue to do so into the early part of 2011?

Like everything else it is mixed but it is important to remember that the real time bomb - the cutting of state jobs - will impact the Sacramento area more than the Bay Area. And while job growth that is starting to pick up in the Silicon Valley isn’t  good fit necessarily for those losing their jobs with NUMMI there are still tens of thousands  of other people unemployed that have the skills the high tech firms need.

In short, there will be upward pressure of some type on housing that will ripple across the Altamont Pass.

Will it be a return to the wild, wild where fast and loose lending created a hype housing bubble? No. It will, though, eventually force a major market correction involving existing  homes selling in Manteca in many cases for less than they would cost to build new. That correction - whether it starts six months from now or a year or so - will bring a climb in prices that are then expected to level out for a while.

That climb is what really will get the home building industry - the undisputed juggernaut of Northern San Joaquin Valley economic growth no matter how you dice it - going off life support.

A survey of new home builders in Manteca shows that a growing number of buyers are from the Bay Area. This time around given how Manteca’s new home building numbers last year  of 304 new starts dwarfs everyone around including Stockton that came in next at 120, Manteca is more likely to serve as the bellwether city for this side of the Altamont in terms of how well the improving Bay Area economy will impact the Northern San Joaquin Valley’s ability to put the building trades back to work.

Even with unemployment at 16.1 percent and more foreclosures , Manteca continues to serve as a city of contrasting economic news with sales tax rising, new home builders miles ahead of every city in the Northern San Joaquin Valley, and with only one of the few major retail project moving forward in Northern California.

It is dawn in Manteca after the long darkness. The problem, though, is this dawn is probably not going to widen into a bright day for a year of Sundays which gives people plenty of time to secure affordable housing or to position themsleves for the coming resurrection of an economy fueled by the much more crowded and higher priced Bay Area.
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