Vine + Grain restaurant in Sacramento ’ s Downtown Commons is just one of many businesses affected by the ongoing pandemic .
June 2021 , we ’ re going to be back !’” says Amanda Blackwood , president and CEO of the Sacramento Metropolitan Chamber of Commerce . Then came reality . Now Blackwood is skeptical that much of downtown will return to the office , particularly in the government sector .
“ The behavior of the state would indicate to me that some ( employees ) will come back , but it ’ s not going to be with fully-staffed buildings ,” Blackwood says . She suspects government departments like human relations , finance , administration , compliance and risk management — jobs that can be done remotely — will continue in that direction . Specifically , she notes the state is investing in training for how to work remotely , and that this is a clear signal of its intention , “ short of a press release saying we ’ re never coming back .”
Barry Broome , president and CEO of the Greater Sacramento Economic Council , agrees that a full return to the office is unlikely . “ I don ’ t think you ’ ll see more than a third to 50 percent of that recovery ,” Broome says , and adds a hybrid workplace is “ probably going to be a permanent part of the future . That ’ s going to sting and the downtown is going to be affected .”
Revenue for small businesses is only one slice of the economy . Consider the challenge of housing . Even if COVID-19 trends improve in 2022 , housing in the region is likely to become even less affordable for the average family , says Sanjay Varshney , principal and founder of Goldenstone Wealth Management and founder and chief economist of the Sacramento Business Review ( and a Comstock ’ s Editorial Advisory Board member ). “ Eighty percent of the households in Sacramento cannot afford the median home ,” Varshney says , adding the gap is between $ 30,000 and $ 45,000 , depending on the neighborhood .
That housing gap is at current prices with current interest rates . In 2022 ? “ Inflation is showing its ugly head ,” says Varshney , who predicts if the Federal Reserve begins tapering its stimulus , that will of course raise the 30-year borrowing rate , which will “ change the game plan for Sacramento .” Here ’ s how : Varshney says for every 100-basis-point change in the mortgage rate , the buying power changes by 12 percent . In 2020 , mortgage rates plunged 100-150 basis points from their prior baseline ( from 4 percent to 2.5 percent ), and if they snap back to historical levels , buyers could “ see another 25 percent loss of purchasing power .” The current problem could become a future crisis . Broome notes supply chain problems could further accelerate the cost of construction , making the problem — or crisis — even worse .
Inflation looms over everything . When Visit Sacramento produced the Farm-to Fork-Festival this past September , the costs were up a whopping 30 percent . The table and chair vendors , the linen providers , the cost of security guards — all of these costs were higher , and this was before the national news announced October prices were 6.2 percent higher than the previous year , the largest increase in three decades . At Vine + Grain , Roost says all of her costs have “ increased significantly , and this creates a chain reaction on our menu .” She does her best to avoid hiking prices , but it ’ s tough when the cost of paper , for example , is 50 percent higher than February 2020 . It ’ s easy to see a scenario in 2022 where people can ’ t stomach the
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