Outmigration continues to be a big concern for the California housing market. Caused by the state’s housing affordability issue, outmigration has resulted in about 800,000 people leaving California since 2010. As of the fourth quarter of 2018, only 28 percent of California households could afford to purchase the median-priced home. While this number is up from 27 percent in the third quarter of 2018, it is down from 29 percent one year ago. The high cost of housing is forcing Californians out of their current county or out of the state entirely.
Those who are leaving California are mostly middle class and almost entirely comprised of people who make less than $100,000. In 2017, the minimum income required to buy a median-priced home in California was $110,890, while the annual mean wage for a variety of professions, including Registered Nurse ($102,700), Police and Sheriff’s Patrol Officer ($93,550), Elementary School Teacher ($77,990), and Firefighter ($73,860) was well below that minimum.
Outmigration is even more problematic in areas that have poor affordability, most notably the Bay Area. In San Francisco the minimum income required to buy a median-priced home reached $290,630 in 2017, while the income of those same professions did not even reach half the income requirement.
Outmigration is a direct consequence of tight inventory in the housing market in California. Home building has not kept pace with housing demand in the last 12 years. Between 2005 and 2016, California only added 270 units for every 1,000 new inhabitants, and the Golden State lagged other states in housing per capita by as much as 40 percent. The more California “underbuilds”, the higher prices grow, and the lower homeownership rate becomes. In fact, California is ranked the second lowest in homeownership across all states, out ranked by only New York.
Because of the state’s low housing affordability and its difficulty in achieving homeownership, Californians are leaving and headed to more affordable states such as Texas, Arizona, Nevada, and Oregon.
Businesses and jobs follow the California exodus as well, with companies such as Toyota, Jamba Juice, and Comcast leaving the state, resulting in fewer jobs for those still in the state, higher income inequality, and a reduction in the access of less skilled workers to high-wage labor markets.
That said, California is still a place where people want to live. Results from a recent poll of those who live in California show that 63 percent would not be willing to move out of California to achieve homeownership. In addition, 31 percent of home buyers surveyed in the California Association of REALTORS® 2018 Consumer Survey said they did consider purchasing a home in another state that met their needs but ultimately ended up staying in California because they like the city that they live in/like living in California as a whole (38%), didn’t want to leave their job or friends and family (20%), and California is either their home state or they have deep familiarity with the area (11%).
According to California Association of Realtors, “California continued to move toward a more balanced market…”
“California continued to move toward a more balanced market as we see buyers having greater negotiating power and sellers making concessions to get their homes sold as inventory grows,” said C.A.R. President Jared Martin. “While interest rates have dropped down to the lowest point in 10 months, potential buyers are putting their homeownership plans on hold as they wait out further price adjustments.”
With this shift in the market, California home sales fall to lowest level in more than 10 years.
Here’s the article summary:
– Existing, single-family home sales totaled 357,730 in January on a seasonally adjusted annualized rate, down 3.9 percent from December and down 12.6 percent from January 2018.
– January’s statewide median home price was $538,690, down 3.4 percent from December and up 2.1 percent from January 2018.
– Statewide active listings rose for the 10th straight month, increasing 27 percent from the previous year.
– The statewide Unsold Inventory Index was 4.6 months in January, up from 3.5 months in December.
If you are in the wine trade, don’t miss out on this one-of-a-kind experience…
Stay on top of this year’s Barrel tastings and discover rare vintages that are offered to the public for the first time… and will never be offered again! The invitation-only fifth annual Sonoma County Barrel Auction will be hosted at Mac Murray Estate vineyards on Friday, May 3rd. You can preview the action lots on the Sonoma County Barrel Auction website.
More from the North Bay Business Journal…
Trade and media guests are invited to the preview tastings. Hosting on May 2 will be the Petaluma Gap, Russian River Valley and West Sonoma Coast American Viticultural Areas at 11 a.m.–1 p.m., and at 2–4 p.m. Alexander Valley, Dry Creek Valley and Sonoma Valley AVAs. The tastings will feature participating wineries pouring barrel auction lots and current-release wines.
Discover Highlights Of The Auction Lots This Year… Click Here
*Article & Images Courtesy of the North Bay Business Journal
A Rare Opportunity to Savor the Bounty of Mendocino County.
Join Taste Mendocino for an annual swirl through the region’s diverse showcase of fine wines, artisanal foods, enchanting destinations and unique experiences. Take a deep dive into its epic Pinot Noirs, robust reds, crisp whites and bring-it-on bubbles. Pack home a cache of collectibles at this intimate celebration of the people and products who define the Mendocino difference.
A discovery no palate can resist! Great wines and happy times!
Mendocino County is quickly becoming one of California’s top wine destinations. Featuring the famed Anderson Valley and highly acclaimed Pinot Noir wines, Mendocino is a beautiful mix of charming small towns and rugged nature.
Mendocino seems to have more than its share of natural beauty— the county is expansive, with many diverse regions, ranging from the expansive coast to the warm interior valleys. Defined by soaring redwoods, flowing rivers, an expansive coastline and, of course, lush vineyards, this county will not disappoint.
IF YOU WANT TO MAKE A PART OF MENDOCINO COUNTY YOUR OWN, CHECK OUT OUR GREAT LISTINGS IN THE AREA:
Take some time out in Mendocino and be sure to check out the following vineyards and resources as you plan your visit.
Balo Winery and Estate—This ultra-premium winery is located in the in the heart of Anderson Valley—far enough from the city to experience quiet country charm, yet close to the comforts and modern conveniences of town to attract plenty of wine enthusiasts.
Yorkville Highlands Vineyards—These vineyards represent approximately 30% of the entire Yorkville Highlands Viticulture Area. The property is comprised of eight parcels and offers numerous estate-building sites with spectacular views.
Bacchus Vineyards—103± acres of premium vineyards in Mendocino County. This property includes 2 homes, an irrigation pond, plus barns and staging area’s developed for amazing events.
TOWNS AND REGIONS
Check out this guide from VisitMendocino.com to you wrap your head around the various parts of the county. Explore the website to find a ton of useful articles and event listings as well.
“Mendocino County is not so much a place as a state of mind. Spectacular scenery, a sense of isolation, an aesthetic sensibility, and a strong sense of community are the standout highlights of a trip to Mendocino County.”READ MORE
This article is a good overview of the various appellations in Mendocino County. In it you will find descriptions of the AVA’s and which notable producers call them home.
“The overarching “Mendocino County” appellation is home to a total of eleven American Viticultural Areas (AVAs).
One of them is named, simply, “Mendocino AVA” which largely nests together six smaller AVAs that you may be familiar with (Anderson Valley, Yorkville Highlands, McDowell Valley, Potter Valley, Redwood Valley, and America’s smallest AVA, Cole Ranch).
In addition, “Mendocino County” appellation also encompasses “Dos Rios” AVA, “Covelo” AVA, and “Mendocino Ridge” AVA.”READ MORE
This article from GuildSomm describes both the history of wine in Mendocino, as well as a detailed descriptions of the various AVA’s and their exceptional features.
“Mendocino is a county with two faces. One face, the softer side, is well known. This is the coastal half that contains Anderson Valley, where delicate Pinot Noir and exceptional sparkling wines are enjoying increasing, and deserving, renown. The other face of Mendocino resides further east, in the cache of old vines that sprawl across the Redwood Valley appellation and surround the towns of Ukiah, Talmage, and Hopland. Here the vines have long labored without fanfare, their fruit blended into anonymity across county lines. But a growing number of vintners, both local and ex-county, are waking up to the remarkable quality contained within these venerable vineyards, and more attention is sure to follow. As exciting as the lacy creations of the coast may be, it’s time to turn our backs to the sea and our eyes toward the remarkably preserved historic legacy of inland Mendocino.”READ MORE
Note: At the end of January, Mark Stevens participated in the annual Unified Wine and Grape Symposium in Sacramento. The article below was written by one of the attendees of the Symposium, Dr. Liz Thach. Dr. Thach is a Distinguished Professor of Wine and a Professor of Management at Sonoma State University in Rohnert Park, California. Below is the article she wrote for 2019’s wine industry “summary”, reposted here with her permisssion:
The US Wine Industry in 2019 – Slowing but Steady, and Craving Innovation
After 24 years of continuous growth in wine consumption the US market slowed to only 1.2% in volume in 2018 (bw166). Despite this flattening of volume growth, dollar value still grew at a 3.7% suggesting that, though Americans may be drinking less, they desire higher quality wine and are spending more per bottle. This indicates that wine still maintains it place as an important American beverage, but wine marketers need to get more creative in order to bring new consumers into the category. The total dollar value of the US wine market in 2018 was $70.5 billion, with $23.3 billion (33%) derived from imported wine (Wines & Vines Analytics, 2019).
Why the Decrease in Volume Growth?
Experts suggest a series of reasons for the decrease in volume growth: 1) the aging Boomer generation who are drinking less wine due to health reasons; 2) Millennials not adopting wine as much as had been predicted; 3) the growth of new substitute products, such as cider, cannabis, and creative entrants from craft beer and spirits (see Hot Trends below); and 4) a growing focus on healthy food and less alcohol (McMillan, 2019).
US Still Largest Wine Consuming Nation and a Target for Exporters
Despite these challenges, the US remains the largest wine consuming country in the world, and therefore is a target for many foreign wine producers. Indeed, 26% of the wine volume sold in the US last year was imported, with Italy in the lead for overall sales, followed by Australia, New Zealand, France, and Argentina (Swindell, 2019). The following paragraphs provide a high-level overview of the current state of the wine industry in the US, including “hot categories” desired by American consumers.
Wine Case Volume by Channel
Total volume of wine sold in the US in 2018 was 408 million 9 liter cases (bw166, 2019), up 1.2% from 2017.
Off Premise – wine sales via grocery stores, wine shops, and other off premise establishments remain the largest channel in terms of both sales and volume in the US market. Volume was 331 million, according to Wine & Vines Analytics, but this figure included the 6 million sold DTC, so this was updated to 325 million. There are an estimated 194,000 off-premise establishments that sell wine (Brager, 2019).
On-Premise – wine sales at restaurants, bars, and other on-premise establishments is the second largest channel at around 77 million cases, according to Wines & Vines Analytics. There are around 373,000 on-premise establishments that sell wine (Brager, 2019).
DTC (Direct to Consumer) – selling wine directly to consumers via winery tasting rooms, events, ecommerce, and other direct methods continues to be a fast growing channel in the US market, but still at a very small percentage of overall volume. According to Sovos, volume increased by 9% to 6 million cases shipped, and value increased by 12% to achieve $3 billion in sales. The price of the average bottle sold DTC was $39.70, and Sonoma, Oregon, and Washington wineries showed the most volume growth in this channel in 2018. There are currently 9997 US wineries (Wines & Vines Analytics, 2019b).
Top 5 Most Popular Wine Varietals in the USA
The most popular wine varietals/styles in the US market based on volume continue to be: 1) Chardonnay, 2) Cabernet Sauvignon, 3) Red Blends, 4) Pinot Grigio, and 5) Pinot Noir (Nielsen, 2019b). It should be noted that this year cabernet sauvignon ($2.595 billion) has just inched past chardonnay ($2.549 billion) in dollar value. It is expected that cabernet sauvignon will be the number one varietal in volume as well in the next year or so.
Number of Wineries and Wine Consumer Demographics
US Wineries = 9997 as of January 2019, up from 9645 year to date (Wines & Vines Analytics, 2019b). California largest at 4,425 wineries, producing 85% of wine, followed by Washington (776), Oregon (773), New York (396), Texas (323) and Virginia (280).
Percentage of Adult Americans who drink wine = 40% of legal drinking population (240 million) (WMC and bm166)
Wine Consumption Frequency: (WMC- 2018)
High Frequency Wine Drinkers = 33% drink wine more than once a week
Occasional Wine Drinkers = 67% drink wine once a week or less
Gender of Wine Drinkers = 56% female and 44% male (WMC, 2018)
Per Capita Wine Consumption = 11 liters per person (2.94 gallons). Even though US is largest wine consuming nation by volume, per capita rates are less than many other countries (Wine Institute, 2016)
Hot Trends & Opportunities in the US Wine Market
A major benefit of attending the Unified Wine Symposium (largest wine conference in America) each year is the keynote speech delivered by Danny Brager with Nielsen. He analyzes top wine sales trends in the industry and shares the results. Here are some of the highlights (Brager, 2019):
Pink Wine – rosé wine continues to be extremely popular, with double digit growth across all price points.
Bubbles & Freshness – Sparkling wines and zippy sauvignon blanc wine continue to show growth, especially in dollar value.
Big Reds – Cabernet Sauvignon and red blends continue to be very popular, with cab starting to inch out chardonnay as the favorite US varietal
Cider, Sangria & Wine Cocktails – are gaining ground as variety-seeking Millennials explore new beverage options
Healthy Wines – though it is not legal to advertise health benefits of wine in the US, consumers are becoming more attracted to wines that use these types of descriptors: “no taste additives, gluten free, low carb, vegan friendly, sulfite free, low calorie, low alcohol, light, lighter, organic, paleo friendly, etc.” This is because of the new focus on healthy food and beverages that is sweeping the nation.
Hot Trends: Rosé, Sparkling & Wine Cocktails. Photo Credit: Pexel
Cans & Creative Packaging – wine in cans is no longer a fad. It is here to stay and growing at double digits, achieving $70 million in sales by the end of 2018. Other alternative containers (tetra, box, and mini-bottles), as well as clever packaging, such as augmented reality labels (see 19 Crimes and Bogle Phantom), are capturing the attention of younger wine consumers. I-Generation is especially fascinated by the AI labels.
$11.99 – $19.99 Sweet Spot – the sweet spot for off-premise sales continues to be $11.99 – $14.99 with 8% volume growth and $15 – $19.99 at 10% volume and value growth. Wine priced at less than $10 showed no volume growth, indicating that premiumization continued to thrive during 2018.
Oregon, NZ & France –continue to show most volume and value growth, maintaining their popularity with US consumers during 2018. Oregon led with pinot noir, NZ with sauvignon blanc, and France with rose and sparkling wines.
Cross-Overs & Cannabis – when the car industry introduced “cross-over vehicles” several years ago (SUV/car hybrid), they started a trend that has crossed over into food and beverage. Thus the US market has seen hundreds of new beer, spirit, juice, and now even cannabis beverages in which wine is a featured ingredient. Consider Oenobier beer aged on muscat wine and Rebel Coast Cannabis infused sauvignon blanc. This type of creativity is very attractive to many buyers who enjoy experimenting with new products.
There are obvious
risks and concerns for vineyards when the weather dips below thirty degrees and
it starts to snow. Vine cells can’t function at below 10°C, and vines can die
from getting too cold if the temperature continues to fall too far below zero
for too long.
Winter frosts are often a risk in cool climate regions, like Chablis, the northernmost wine district of Burgundy, France – and steps are taken to prevent the risk of frost, including using sprinklers, heaters and wind machines in the vineyards. In the Ningxia region in China, vines are buried deep into the soil to protect them from the very cold temperatures that can reach minus 30 degrees Fahrenheit.
can bring advantages to the vines as well. It is believed that a bit of winter
cold can bring a better spring germination which leads to a better vintage. And
that nitrogen from the cold air seeps into the soil, nourishing the plant. And
it is also thought that cold weather can help ward off unwanted disease and
pests for a more robust spring growing season.
Winemaking has been a part of human history for about the last 7000 years and has been practiced in many places throughout the world. The most ideal places for the best wines are indisputably in areas that have a “Mediterranean” climate—think Italy, Spain, Greece, Southern France, and of course, our very own beloved California Wine Country. But it’s also well known that cooler climates produce great wines as well, albeit of a very different nature—think of the Mosel region in Germany, famous for its Rieslings. And let’s not forget ice wines, which must freeze on the vine prior to harvest to produce its famous ultra-sweet and flavorful desert-quality wine. The majority of ice wines today are produced in Germany and Canada, with China recently making inroads into this somewhat rare varietal.
What is abundantly clear is that people will endeavor to grow grapes and make wine just about anywhere on earth where it’s possible to grow vines. Which means wine lovers have lots of choices when it comes to enjoying the subtle nuances and flavors of wine…..and that’s a good thing!