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Part Two: Leslie Appleton Young

February 13th, 2013 · No Comments · Santa Barbara Real Estate

Part Two

     On February 6, 2013 Leslie Appleton Young, the Chief Economist for the California Association of Realtors, spoke at the Fess Parker Hotel in Santa Barbara to about 100 local realtors that attended.  Besides calling 2013 the “Year of the Political Economy” Leslie discussed other trends that affect the California real estate market. Here’s a brief summary:

     Curiously the greater number of buyers interviewed right now see prices going up, while the greater number of seller’s interviewed see their home prices going down?  The reality is a little different. Inventory is down, buyers are out in droves, and the the real estate market here in Santa Barbara shows signs of picking up. Possibly, the best real estate market we’ve seen in six to seven years (see the video post below from ABC World News below) And yet, at the same time ABC World News was making these claims Robert J. Shiller (Case Shiller Index) asked in the New York Times, “A New Housing Boom? Don’t Count on it!” 

     In Santa Barbara some properties that are priced “competively” are attracting multiple offers. Someone in the audience offered that, “the Santa Barbara market is as good as it’s going to get right now, and overpriced TURKEYS are Not selling…sellers waiting for 2005 prices will have to wait longer….much longer.” 

     On January 13, 2013 the consumer confidence index dropped from lack of job growth.  In California job growth is at an anemic 1.5%.  Some possible good news is that three years ago the California real estate market bottomed out. Home equity is up, and the shadow inventory is diminishing.  What’s making the current real estate market difficult for some buyers is that they’re competing with all cash buyers/investors in a lending enviroment where for conventional financing you need a credit score of 750 and 30% down. And, California is experiencing appraisal issues everywhere. More on this in a future post.

     Investors represent approximately 30% of the California real estate market right now. And, investors are renting not flippling, which has Ronald Reagan’s economist David Stockman suggesting that down the line when these investors put these homes back on the market that they may flood the market, and create another real estate bubble that could burst in 3 to 6 years (if all these investors put their properties on the market at the same time).  Curious theory?

     CAR’s Chief Economist also shared that: There are approximately 9.9 million homes in California, and there are approximately 7.4 million mortgages in California. 29% (2.1 million) are currently  “Under Water.”  435,000 have currently defaulted, and 117,000 have received NODs (Notice of Default). Leslie sees a “Housing Boom” coming. California will need 577,000 more households.  Currently rental demand is up, and new housing starts is only 10%. But, demand for housing is getting stronger with the constrictive inventory (lack of).

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