“NO GREAT DISCOVERY WAS EVER MADE WITHOUT A BOLD GUESS.” Isaac Newton But even the great mind of Isaac Newton might not have guessed that Bonds and home loan rates would continue on such a volatile course. But let’s get bold, and discover what caused the latest rock and roll action in the financial markets, and take a look at what the coming week might have in store.

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The media may be broadcasting that the “sky is falling” in the real estate industry but the savvy GenXers are not letting the media stop them from taking full advantage of the current market.

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The last time I ran the market data regarding the number of months of inventory available, (approx. September, 2007), the $0-1 million price range had 10.9 months of inventory.

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As a person that bought a new home in 2007, I lied awake last night wondering if I made a mistake.  It’s not hard to second-guess oneself in the wake of all the negative national news, even when real estate is your business.  So this morning I went to my computer to check on the strength and velocity of our local market.  Looking at the key indicators, this is what I found:

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“JUST WHEN I THOUGHT I WAS OUT…THEY PULL ME BACK IN.” Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility…they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%.

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“I’M GOING OFF THE RAILS ON A CRAZY TRAIN…” OZZY OSBOURNE And speaking of going off the rails crazy…Bonds and home loan rates just experienced one of the most volatile, crazy weeks ever seen, with fixed home loan rates rising by about .375% by the time the smoke cleared.

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This is GREAT NEWS and a temporary gift to us who are buying real estate and those of us who have 2 loans on our property here in the Santa Barbara area now have a possible opportunity to refinance into one loan.  By raising the conforming loan limit to $729,750.  this allows buyers to obtain the best price available for an owner occupied purchased property all in one loan rather than having a combination of loans, at different interest rates like before.

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“I DON’T MEASURE A MAN’S SUCCESS BY HOW HIGH HE CLIMBS…BUT HOW HIGH HE BOUNCES WHEN HE HITS BOTTOM.” General George S. Patton And the General himself would certainly consider Bonds to be a success last week, as they moved lower to hit a technical “bottom” at the 200-day Moving Average, but then bounced significantly higher throughout the course of the week, helping fixed home loan rates improve by about .25 to .375%.

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I bought my house in 1995 for a little over $350,000. Being in the business, I thought that I had made a good deal, but within 6 months, I think my house was worth around $25,000 less and I felt pretty sick. Today, 13 years later, my home is worth over $1,100,000, three times what I paid for it and I now I know that I made the right decision. In fact, when looking back, even if I would have paid $400,000 ($50,000 more than what it was worth), it would have been a smart purchase. You see, many of my clients ask me, when is the best time to buy a home considering what the market is like right now.

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All real estate is local! “South County” real estate is doing very nicely thank you! With only 40 foreclosures total on the South Coast in the whole of 2007, there is no tipping point here to bring values down any further. (Those foreclosures have, for the most part, been purchased, not sitting unsold as is happening in other locales.) Indeed, only 2 local areas have had downturns in their median prices over the past 3-4 years: Carpinteria and Goleta, both down around 15%. Santa Barbara’s median price has remained steady for 3 years at $1,015,000-$1,050,000 and Montecito has enjoyed a “non-downturn” adding around10% to its median price each year for the past 4 years.
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