A tale of two Central Valleys
June 7, 2007
• Southern counties lead northern
• Fresno is middling
It was the best of economic times, it was the worst of economic times, to paraphrase Dickens’ “Tale of Two Cities.”
California’s Central Valley is being seen as two separate economic groupings in a new report on the state’s economy from Keitaro Matsuda, senior economist for Union Bank of California.
A different north-south pattern has emerged in the Central Valley, including eight counties along Interstate 5 between Stockton and Bakersfield, he says.
“The Valley, with its year-to-date growth of 2.1 percent, has lost momentum since its spectacular performance in 2005,” Mr. Matsuda writes.
He says the Valley’s most populous southern counties – Kern and Tulare – are seeing stronger employment growth than two major northern counties, San Joaquin and Stanislaus.
Kern County has seen an employment gain of 3 percent so far in 2007 and Tulare County has seen employment increase by 2.1 percent, Mr. Matsuda notes.
Both “are performing considerably better than the northern counties — San Joaquin (+1.3 percent) and Stanislaus (+0.4 percent). Fresno County, located in the middle, has a mid-range growth rate of 1.8 percent,” he says.
The pace of employment growth in these counties is highly correlated with local housing market conditions, the economist says.
The Office of Federal Housing Enterprise Oversight recently reported that one-year home price appreciation as of the first quarter 2007 was positive 3.8 percent in the Bakersfield Metropolitan Statistical Area (Kern County) and positive 3.0 percent in the Visalia-Porterville MSA (Tulare County), but was negative 4.4 percent in the Modesto MSA (Stanislaus County) and negative 4.0 percent in the Stockton MSA (San Joaquin County).
Statewide, there are what Mr. Matsuda terms “vast regional differences” among various housing markets.
“Generally speaking, coastal urban markets, such as the San Francisco Bay Area and Los Angeles, have fared well, with firmer home prices and fewer mortgage delinquencies and foreclosures.
“On the other hand, inland markets, including Sacramento, the Central Valley, and the Inland Empire region, are experiencing price decreases and serious mortgage-related problems,” he says.