Realities

The other evening, I attended the Santa Barbara economic forecast, and I left with a feeling of optimism about our South Coast real estate. My feelings diminished, however, as I looked carefully at the charts and graphs and the "howevers" that ran through the presentation. The good news is that foreclosures are down, inventory is low, and prices seem to have stabilized. That's the good news. But why is that the Realtors, people in the field, with day to day contact with buyers and sellers, continue to worry? Is it because, as someone famous I can't recall, said: it's human nature to believe that things will always be the way they are today? In other words, when prices were rising we believed they would continue to rise, and when prices were falling we believed they would fall even more. At the moment, most Realtors are cautiously optimistic--but with plenty of caution. Behind the encouraging data loom some dreadful possibilities: a "shadow inventory"of people struggling to keep paying their mortgages, and the specter of even more job losses. It's like the goblin behind the closet door, and there's not only one goblin to dread.

In my own real estate practice, with my office being in Montecito, I've specialized in that area. Few properties are valued at less than $1million--and those tend to be condos. Many homes sell over $3million, with the occasional sale in excess of $10million. The graphs and charts mentioned above reveal a discouraging fact: in the over-$1million sector, both inventory and foreclosures are increasing. So, I guess even the high-net-worth crowd is not immune from the downturn in our economy.

What does this all mean? It means it's a great time to buy real estate, and not a bad time for sellers to sell.. Sellers are more flexible these days and I've seen some real bargains--unusual for Montecito/Santa Barbara. As for sellers, with the uncertainty of our market, it's not a bad time to sell. If inflation occurs, that would be beneficial for real estate, but it seems highly unlikely (according to CA economists)that inflation will happen anytime soon. What does seem likely is for interest rates to go up, meaning fewer buyers will be able to afford homes. So, many sellers are opting to sell now.

Our company is doing well. Last year was a down year, but we're finding 2010 to be a more active market. I'm so lucky to be with Village Properties and to sell real estate in our fabulous "American Riviera."