(watch here for weekly updates on the state of the local Sonoma County Marketplace, thoughts, trends and more!)

What a tentative and confusing year it may shape up to be in the economy. Layoffs have begun to rise again, GDP growth is appearing to slow again and yet the local real estate market remains strong.

The entry level real estate marketplace county wide remains strong. The market for homes priced under $400,000 in Santa Rosa is red hot, and hot in the West County. Homes priced (as I have stated before) in the $400,000 to $700,000 range in Santa Rosa are moving well, in Sebastopol strong, in the Russian River-slower! Homes priced above $700,000 in Santa Rosa begin to slow markedly, in Sebastopol and Healdsburg $700,000 to $1,000,000 remains healthy. Everywhere- homes priced over $1,000,000 are encountering choppy water (certainly longer list periods).

Outlook- The very bright spot emerging in the marketplace is that interest rates are holding steady and Greenspan has indicated that the FED sees no need to raise rates (probably) before the end of the summer. Why- as per his testimony this week-signs of less than a robust economic picture (airlines are bleeding money, manufacturing is treading water, high tech is plain old dead in the water with talk of a resurgence now pushed off into 2003)- so what is strong? Other than real estate- not much. It will be very interesting to see how this unfolds. I would suspect that the real estate market will stay strong through the summer (if pricing does not get too far ahead of the market) but the market come fall and winter could weaken. I say this hesitantly and with less than full conviction but how long can real estate be the sole economic driver in the economy? Thoughts, comments, fire away! [prudential@prudentialsonoma.com]