'Mild' local recession predicted

<p>PETALUMA -- The North Bay economy is in for a bumpy ride, business leaders and analysts agreed Friday at a conference on the outlook for 2008.</p><p>"We're heading into a big storm," said Lorraine Otte, a mortgage broker at First Priority Financial in Santa Rosa.</p><p>The meltdown in the housing market will last for at least another year, she told an audience at Sonoma State University's Economic Outlook Conference at the Sheraton Hotel in Petaluma.</p><p>"It will probably be another 14 to 18 months before we see the credit crunch fix itself in the mortgage market," Otte said.</p><p>Fewer home buyers, more inventory, stricter loan requirements, rising foreclosures and downward pressure on prices are part of "a perfect storm" in the market, Otte said.</p><p>Still, Sonoma County should fare better than other parts of the country, said Robert Eyler, who heads SSU's Center for Regional Economic Analysis.</p><p>"What we'll see here is a fairly mild recession," said Eyler, an economics professor at SSU.</p><p>The housing market will continue its slump, he said. "How sharp and how far the fall will be, I can't tell you," Eyler said.</p><p>The unique value of Wine Country real estate may start attracting buyers from booming economies in Asia, he said.</p><p>His 2008 forecast calls for modest employment growth, mostly in retail and other service jobs.</p><p>Sonoma County wine and tourism should benefit from the falling value of U.S. dollars, which makes them a bargain in foreign markets, Eyler predicted.</p><p>Cost pressures may drive some businesses to outsource their production to lower-cost locations in the United States, he said. Still, the Sonoma County economy should experience "a soft landing" from the downturn, Eyler said.</p><p>With building permits down 24 percent in 2007, the county's construction industry is hurting, said Keith Woods, executive director of North Coast Builders Exchange. Builders don't expect much relief until 2009, he said.</p><p>"It's not going to get a lot better soon," Woods said.</p><p>Others saw bright spots. The county's wine industry continues to grow, said Vic Motto of Global Wine Partners, an industry investment bank.</p><p>The market for high-end wines, including the ones made in Sonoma County, is expanding five times faster than the U.S. economy, Motto said.</p><p>"The small wineries are driving the innovation and growth in the industry," he said.</p><p>Sonoma County faces growing competition from imports and other U.S. wine-growing regions, but it has established a strong reputation, especially with popular varietals such as chardonnay and pinot noir, Motto said.</p><p>"We see a good outlook for Sonoma County," he said. "It's a positive picture, growing through good times and bad."</p><p>Businesses are saving money and helping the environment by adopting green technology, said Tony McCormick, facilities manager for Agilent Technologies in Santa Rosa. Agilent will install a 3-acre solar energy structure at its Fountaingrove campus this summer, producing 1 megawatt of power and saving $1 million a year in energy costs, McCormick said.</p><p>Agilent has reduced water use by 45 percent and cut its landfill waste by 74 percent, he said.</p><p>"It just makes good business sense to do it," McCormick said.</p><p>You can reach Staff Writer</p><p>Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.</p>