“IT REQUIRES A GREAT DEAL OF BOLDNESS AND A GREAT DEAL OF CAUTION TO MAKE A GREAT FORTUNE.” ~ Ralph Waldo Emerson. And a great deal of caution was definitely important last week, as “earnings season” began on Wall Street. First quarter earnings for Stocks got off to a bit of a rough start, with disappointing news from aluminum company Alcoa - always the first in line to report.

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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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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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In the past 30 days we have seen more activity in the market than in the past few months.  116 residential properties have gone into escrow leaving about a 6 month supply of homes for other buyers.  This is a significant reduction in inventory over the last few months.  What does this mean to buyers?  It means the time to act is now if you want to have negotiating power on your side.

With so much confusion, fear & doubt in the media concerning the real estate market Warren Buffett brings us back to reality with his statement, “all real estate is local.”  The market from Carpinteria to Goleta is very good compared to the rest of the nation.  We are selling 2-3 homes a day with 1 buyer to 9 sellers.  Since interest rates are extremely low, inventory is plentiful are you beginning to see the opportunity like I do for you who are looking to own for the first time, downsize or get your next larger home? Let’s talk about all your options today.

“If you don’t like the weather, wait a minute”…That’s a saying heard often in places where the weather can turn on a dime, making it very difficult to forecast. And while the weather patterns can change direction quickly, the recent movement of stocks and bonds rivals the rides at an amusement park.

“Turbulent” and “volatile” best describe the action in the markets. Stocks and bonds have had wild swings of late as the possibility of a recession loom. The Federal Reserve is concerned about a recession, but doesn’t want to cut rates too deeply because it may stoke the flames of inflation. In a speech last Thursday, Fed Chairman Ben Bernanke signaled the Fed will step in with interest rate cuts as necessary in an effort to prevent a full-blown recession from taking place. It sure looks like the Fed will break off a 50 basis point (1/2%) interest rate cut in its battle to fight a potential recession when the Fed next meets to determine monetary policy on January 30th.

But remember that because Fed rate cuts may add to inflation pressures, home loan rates may actually increase after a cut by the Fed. We have seen this type of chilly response to Fed cuts many times before. Just back in September, the Fed cut by 50 basis points, but home loan rates worsened by 0.25% in just 3 days!

THE MARKET ACTION SURE IS HEATING UP, BUT IT MAY BE TIME TO PUT A FREEZE ON YOUR CREDIT PROFILE TO STOP IDENTITY THEFT. FIND OUT IN THIS WEEK’S MORTGAGE MARKET VIEW!

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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…)

This article is being written in August 2007, and by the time you read this some things may have changed, yet I hope to provide insight into the real estate and mortgage markets. It can be difficult to understand what’s happening and the media can add to the confusion. There are mixed opinions out there, but I hope to help clarify things.

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