Introduction. Understanding any local economy involves three key ideas:What are the main businesses/industries?What are the epicenters of retail activity?How does the government and infrastructure constrain business activity?. Marin County's Economy. Marin County not easy to understandDifficult
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1. Assessing Our Local Economy: Marin County Robert Eyler, Ph.D.
Department of Economics
Center for Regional Economic Analysis
Sonoma State University
2. Introduction Understanding any local economy involves three key ideas:
What are the main businesses/industries?
What are the epicenters of retail activity?
How does the government and infrastructure constrain business activity?
3. Marin County’s Economy Marin County not easy to understand
Difficult to determine the focal point(s).
Can real estate, retail, health services be foci?
Large interdependency between Marin and SF.
Less, but significant, interdependency between Marin and Sonoma Counties.
Sonoma also tied to SF somewhat.
4. Marin’s Real Estate Economy Real Estate market brings revenue from many different angles
Property Taxes, including DMV fees
Services for the home lead to business taxes
Local retail for the home leads to more sales taxes
Real Estate Agency leads to more local spending
5. Marin’s Economic Identity Live in Marin and work elsewhere?
Large metropolitan areas provide both housing and jobs for many of its workers.
Is Marin a suburb of SF?
Location of employment important to understanding regional economy.
6. Economic Activity as an Indicator Retail generally supports population centers
Tough to find a store between Woodacre and Point Reyes.
Demand and land availability drive retail business location choice.
The economics of this issue are complex
Traffic flows change, local businesses lose/gain demand, political issues may come.
7. Retail Activity Sales Tax dollars normally rule government’s involvement
Dependence on taxes for budgets and forecasts key
Urban plans need good forecasts.
Very much a function of wages and salaries
Retail provides jobs and supports the population.
8. Macroeconomics Two things for sure:
Low incentive for local taxes to change downward.
Space is finite.
As state budget goes, changes in taxes are probably coming.
Cannot cut spending forever.
Betting on new tax revenues from economic growth.
This is what happened last time.
9. Microeconomics of Real Estate Economics 101: Supply and Demand
Need to estimate both well.
Convert conclusions into forecasts.
Convert forecasts into budgets.
Helps understand urban sprawl, boundaries, politics.
Also helps understand interdependencies
Macro factors influence these.
10. Supply Building Permits a good indicator
In Marin, trend shown by graph below.
An indicator of both residential space directly
An indicator of subsequent retail space
A indicator of builder forecasts.
Lumber, steel, brick, gas, and labor prices
When contractors decide to build, they assume little change.
Labor probably the most important and volatile
Inflation generally a problem, but then go the home prices.
11. Marin Residential Building Permits, 2000-03
12. Demand Interest Rates and Unemployment big here
As interest rates fall, housing prices rise.
Renters become homeowners
Rental space falls, home ownership rises.
Do not really see this in Marin.
As Unemployment rate falls, wages rise
Workers can afford higher prices, willing to pay.
Location of employment important here.
Cycles in real estate dependent on these two mainly.
13. Paradox of Inflation in Marin Inflation leads to higher home prices until unemployment reacts
What if it doesn’t?
Cost of living rises, no major emigration
Housing prices remain supported high.
US Unemployment also a good indicator of Marin:
15. Conclusions Understanding local economies is understanding what generates revenue
Sales Tax revenue a key way to see what drives the local area
Property Tax revenue shows demand for housing and price dynamics
Parking revenue shows local demand and utilization of public access.
16. Conclusions Macroeconomics shows us the path for analyzing many scenarios.
New business entry
The economic effects are constrained by government and local political environment.
17. Conclusions Real Estate Market like any other market
Supply and Demand driven
Determinants drive forecasts of real estate
Forecasts of government revenue based on this in so many ways.
This is where the assessor’s office is a huge source of information.
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