Friday, November 16 , 2018, 8:43 am | Fair 55º


South Coast Real Estate Faring Well in Turbulent Market

Some observers say that at least locally, there are signs of recovery on the housing front

Even though Americans purchased new homes at the weakest pace in nearly a half-century, the July pace was the slowest in 47 years and the past three months have been the worst on record, some local observers say they don’t think the sky is falling on the South Coast.

“I think this stuff is a little overblown,” Mark Schniepp, head of the Goleta-based California Economic Forecast, told Noozhawk on Thursday. “The news media usually latches onto the most negative news.”

Schniepp and other observers point to statistics that differentiate the South Coast from other parts of the county — especially Santa Maria, where the real estate market has been steadily grim for the past two years. He said some numbers show the South Coast is actually doing a little better than last year in the face of federal stimulus programs, such as first-time homebuyers credits that have expired.

Pending sales on the South Coast did drop quite a bit, which is likely to show as slower sales for August.

“The bottom line is, if you don’t have to sell, don’t,” said Ruth Ann Bowe, a South Coast Realtor with Coldwell Banker. “And if you have to sell, be prepared to have a backup plan if you can’t get the price you want.”

Bowe said putting a home on the market that is overpriced will end up costing sellers more in the long run with a longer time on the market.

“What’s interesting is the media focus is one month of the year over the same month last year, not taking into account the year-to-date statistics,” Bowe said. “Our year-to-date statistics show a pretty big bump up — 437 to 519 — and our median home price is up a little — $850,000 to $860,000 — showing some stability.”

South Coast pending sales are still more than the last year-to-date at 489 to 570.

“What we want to look for are trends,” Bowe said. “When we see a consistent rise or fall in both sales and active inventory over four or five months, that’s when we can start predicting real changes.”

South Coast observers say it’s a buyer’s market, and their perception of value is what drives this market. With interest rates as low as ever and prices seeming to have stabilized, it is a great time to buy. Investors are back and competition for properly priced homes is strong, but not as strong as it will be when everyone feels more comfortable.

“We’re seeing multiple offers regularly in this situation, and that’s the best situation a seller could ask for in today’s market,” Bowe said. “All in all, Santa Barbara seems to be doing pretty well.”

Nationwide, housing hasn’t fully recovered from the recession. Builders have been forced to compete with foreclosed properties offered at sharply lower prices. Sales of new homes across the country fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,000, federal officials said. About 600,000 new homes were sold in an average year from 1983 through 2007.

Analysts say anemic housing sales equal fewer jobs in the construction industry, which pushes economic recoveries. The National Association of Home Builders estimates that each new home built on average creates about three jobs for a year and generates about $90,000 in taxes.

Meanwhile, mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks, as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week — the lowest since Freddie Mac began tracking rates in 1971. The average rate on a 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week — the lowest on records starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering its yield. Mortgage rates tend to track those yields.

Builders have sharply scaled back construction because of weak sales. About 210,000 new homes were up for sale at the end of July, the lowest level in four decades.

Businesses are ordering fewer goods. Home sales are the slowest in decades. Jobs are scarce, and unemployment claims are rising. Manufacturing, which had been one of the economy’s few bright spots, is faltering.

The economy has grown for a full year now, but some experts say the recession ended in July 2009. However, the pace of expansion has calmed down in the past six months.

Economists are predicting the government soon will announce that the economy grew from April to June even more slowly than previously thought, at an annual rate below 2 percent, which is weak for normal times and sickly right after a recession.

Schniepp said the glum statistics will not amount to what economists call a “double-dip” recession.

“It’s going to be sawtooth,” he said. “We will come out of the recession in fits and starts.”

Noozhawk business writer Ray Estrada can be reached at .(JavaScript must be enabled to view this email address).

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