“THE BEST WAY TO APPRECIATE YOUR JOB IS TO IMAGINE YOURSELF WITHOUT ONE.” Oscar Wilde And unfortunately, last Friday’s Jobs Report indicated that many more Americans than expected are not just imagining themselves without a job, they truly are without a job.

The Unemployment Rate jumped up to 5.0% from 4.7%, and new job growth in December was reported at a paltry 18,000 jobs…with private-sector job growth actually falling by 13,000, the largest private sector drop in more than four years. And here’s an interesting note - Hourly Earnings actually moved higher than expected. While this seems somewhat contradictory to a slowing jobs number, perhaps it means that employers are attempting to save money by paying more dollars to fewer workers, rather than hiring more staff.

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What’s the weather like? A good question, but it also depends on where you are at the time. In the past week, we have seen flooding in the Northwest, blizzards on the East Coast, a drought in Georgia and a portion of the South, hot weather in the Southwest and mixed weather right here in Santa Barbara. The real estate market is just like the weather. It depends on where you are, but listening to the news media, it seems as though real estate is on its last leg. I am convinced that instead of reporting the news, the news media creates the news and shapes what we are supposed to think. The perception out there is that the entire housing market is crumbling, but that is simply not true. Real estate is local and what is happening in the Santa Barbara and surrounding areas is completely different than in many areas of California.

When I hear about the real estate market, I think of real estate from Carpinteria to Santa Barbara to the Santa Ynez Valley, as this is where my expertise is. And yes, the market may be slower than we would like it to be, but as of this date, more homes and condos have sold in 2007 than in 2006. When you compare it to so many other places in California or other areas of the United States, we are doing okay. In fact, in both Montecito and Hope Ranch, property values have increased at least 10% since last year. Santa Barbara is an incredible place to live with our climate, location, schools, and cultural activities, and these are reasons why people seek this lifestyle.

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Dr. Lawrence Yun, Chief Economist for the National Association of Realtors recently said that “Commenting on the National Housing Market is like discussing the National Temperature…like the weather, all real estate is local.” This couldn’t be truer than in Santa Barbara where both our climate and real estate market are different than most parts of the country.

The news media paints a very bleak picture of the housing market with headlines talking about slumping sales, decreasing values, and a rampant escalation of foreclosures. However, it is important to consider the source of these headlines. The majority of television news media is targeted to a national audience and therefore is summarizing countrywide housing trends. Even local newspapers are primarily printing articles from wire services which again tout national statistics. Other media sources focus on California, but don’t generally provide relevance to the Santa Barbara real estate market which is behaving very differently than most other communities across the state. Sometimes you will hear or read reports about Santa Barbara County which can still be misleading because they include statistics that lump together Southern Santa Barbara County (Carpinteria through Goleta) with North County (Lompoc and Santa Maria). Even these two neighboring communities are currently experiencing very different real estate markets.

Here’s my take on the recent headlines as to how they apply to the Southern Santa Barbara County real estate market:

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A great deal of media attention has been given to the sub prime loan market and rising foreclosures as a result of lenders making loans to marginal borrowers. Interestingly, only 9% of existing loans would be characterized as sub prime and many of those borrowers are not headed to foreclosure.

The areas currently hardest hit as a result of the sub prime loan fall out and resulting foreclosures are those that have experienced significant new construction and in many cases over building. These tend to be areas where prices are more affordable, land is available/inexpensive, and the political climate is pro-growth.

To illustrate why, picture a developer who built a tract of 300 homes in a community and sold them a few years back. You can imagine a billboard in front of the development that read “Why rent when you can own? With no money down and a teaser rate on your loan you can have payments similar to what you are paying now in rent!” These billboards certainly worked because first time buyers flooded to these developments to realize the dream of home ownership while taking part in the double digit appreciation we have been enjoying for many years. (more…)

With all the negative media out there, it’s hard to remember that “all real estate is local,” and that falling prices bring with them real opportunities. It’s true, especially here in Santa Barbara.

Here are 10 reasons to invest in today’s market: (more…)

“LIFE IS NEVER BORING…BUT SOME PEOPLE CHOOSE TO BE BORED.” Wayne Dyer Yet even if Traders had wanted to be bored last week, the financial markets had other plans. Volatility reigned supreme, with large swings throughout the week in Stocks, Bonds, and home loan rates — and once the smoke cleared, home loan rates were slightly worse than where they began the week.

What caused all the volatility? You name it — continuing concerns on the liquidity and stability of the financial markets; the Federal Reserve at work, cutting the Fed Funds and Discount Rates by .25% and the opening of a new auction facility; a red hot Retail Sales Report; and last but certainly not least, the Producer and Consumer Price Indices both showing inflation to be much higher than expected.

The big mover was the Fed rate cut of .25%, which was a disappointment to the financial markets, as a deeper cut was hoped for. The reaction was very negative for stocks, as the fear of a recession amidst the current credit crunch grows. There are increasing concerns that the Fed is not getting ahead of this problem.

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“SURVEY SAYS…?” Richard Dawson’s classic line on Family Feud is exactly the question that was on many minds at 8:29am ET last Friday morning, awaiting the official results of the November Jobs Report. After Automatic Data Processing (ADP) had released their hot numbers earlier in the week, indicating well over 200,000 new jobs created - traders and analysts began to wonder if Friday’s official number might not come in far higher than the expectations of 70,000.

So when the results came in, it did show 94,000 new jobs created during November - but prior month’s revisions took back 48,000 jobs previously counted in September and October. So…given this overall tame to semi-weak Jobs number - which generally would cause Bonds and home loan rates to improve - what happened that caused Bond pricing to worsen, and home loan rates to increase by .25%? (more…)

LAS VEGAS, November 13, 2007 - A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability, according to the latest forecast released here today at the National Association of Realtors® Conference & Expo.

Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.” (more…)

“I CAN SEE CLEARLY NOW, THE RAIN IS GONE…” Johnny Nash hit number one on the charts with this classic tune in 1972…and 35 years later, Fed Chairman Big Ben Bernanke is singing the same tune, mentioning in comments last week that the Fed would be more transparent so we all can see their policies clearly.

The new, improved, and more transparent Fed is a far cry from the days of “The Cryptic One”…Former Fed Chair Alan Greenspan, who was famous for his hidden messages. After a Greenspan speech, many traders were left scratching their heads and wondering what exactly was said. In sharp contrast, Bernanke has been very clear and easy to understand.

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