Housing Downturn Slows Sacramento Job Growth; Bay Area Migration Cools Off

From SRRI.net:

Housing-related slowdowns took their toll on the Sacramento Region’s economy in 2006, generating declining job growth and causing the Region to fall to the middle of the list of major and neighboring regions in the state.

The six-county Sacramento Region ended 2006 with 1.4 percent job growth, a 2 percentage point decline from the 2006 peak in February of 3.4 percent. The December 2006 rate reflects a year-over-year gain of 13,300 jobs. Over the last quarter of 2006, job growth continued to decline, posting rates lower than the Region has seen since mid-2004 and falling toward the national average. The declining job growth throughout most of 2006 is primarily the result of slowdowns in housing-related sectors (Construction and Financial Activities) coupled with decreasing growth rates in other large sectors (such as Manufacturing; Professional & Business Services; and Trade, Transportation & Utilities).
...
The Region’s employment losses were concentrated in the housing-related sectors (Construction and Financial Activities) along with Information and Manufacturing. While Manufacturing; Financial Activities; and Construction were showing year-over-year job gains in previous quarters, acting as strong contributors to the Region’s job growth, all three posted losses in the fourth quarter of 2006.

From the Sacramento Bee:

They brought the Bay with them: upscale shops, more government services, new restaurants. But also: More traffic, higher home prices, congestion. Almost 150,000 people moved from the Bay Area to the Sacramento metropolitan region from 2001 to 2005, a torrent of 80 newcomers a day, according to a Bee analysis of new federal IRS data.
...
[I]f you want to buy a house with a typical local income, the Bay Area transplants may have helped price you out of the market. "It's pretty hard to reach any other conclusion than that that influx had a significant impact on the run-up on housing prices in the region," said Mike McKeever, executive director of the Sacramento Area Council of Governments.
...
The wealthiest Bay Area transplants tended to head straight for the suburban counties, while Sacramento County has attracted those less well-off...[A] large number of the transplants to Sacramento County are struggling to get by, tax records show. The average household income of the 90,000 Bay Area residents who came to Sacramento County -- only 31,000 left for the Bay Area -- was 7 percent lower than the average annual income of those already here.
...
Because relative housing costs were a significant factor in the Bay Area influx, there is debate among experts over whether the trend will hold now that the housing price gap has closed a bit.

The 2005 migration figures show many more are still coming in from the Bay Area than heading in the opposite direction. But a slowdown in that migration has contributed to the cooling of the area's real estate market.

In 2000, a typical Bay Area home cost more than twice as much as a typical Sacramento area home, according to real estate tracking firm DataQuick Information Systems. In 2006, the Bay Area's median home price was about 63 percent higher.

"You have lost a bit of that competitive edge," said Stephen Levy, director of the Center for Continuing Study of the California Economy, based in Palo Alto. "Sacramento is still an attractive place, but my guess is that most of the people who would move there have moved already."