Archive » August 31, 2006
Real Estate View
By Mark Schneidman
Build It And They Will Teach?
Coming soon to a vacant parcel near you: housing for teachers. Dr. Brian Sarvis, superintendent of the Santa Barbara School Districts, says up-zoning is not the school district’s focus or goal, but the idea was introduced by UniDev, the company the district paid $150,000 to study the possibility of building teacher housing on school district-owned land. UniDev presented its findings on Tuesday, August 8 to the School Board and the public.
The Santa Barbara School Board is now studying the possibility of either selling or developing two vacant parcels it owns. One is the Tatum property, just under 23 acres located near Turnpike and Hollister; the other is the Hidden Valley property, 12.3 acres located at the end of Palermo Drive.
One School Board member, Dr. Bob Noel, asked whether teachers would eventually be able to sell at a market rate value after purchasing at an inordinately low price. I believe the response was no, but there will be some limited equity gain allowed. If this goes through, I’m ready to quit my job, sell my house, and become a teacher. I’d like a brand new 1,750-square-foot home for $495,000. My best capitalist friend, John Blankenship, believes it is foolish to buy a “below-market-rate” property because it takes one out of the real estate market due to the restrictions on resale, thus preventing the buyer the advantage of appreciating real estate.
There will be much discussion and debate on this possible development project in the coming weeks. The City and County Planning Commissions will eventually be the ones to decide whether and how units are built and whether and how many will be “market-rate” homes, workforce housing or nothing at all. As for me, I wish the School Board had paid me $150,000 for a market analysis. I’d have simply put a “For Sale” sign on the two properties and be done with it.
Home sales numbers for Santa Barbara were off 33% through July 21 compared to the same period in 2005, based on single-family residential sales report from the Multiple Listing Service (MLS). National Association of Realtors chief economist David Lereah observed that “when you look at states with high housing costs or that have experienced a prolonged period of rapid price gains, you typically see slower home sales. By contrast, states with moderately priced areas that have experienced healthy job creation are seeing sales gains.”
Santa Barbara and Montecito sellers can still command a healthy price in this “different” market that we’ve transitioned into, but it’s unreasonable to lament that your house would have sold for a higher price a year or a year and a half ago. Look at it this way: add your down payment plus the money you’ve spent for improvements on your home and calculate what your rate of return is if you sell today. In all likelihood, you are probably still doing well, in spite of the current slow market.
Falling Mortgage Rates
Interest rates declined for the seventh time in eight weeks and as of August 25, are at a five-month low. Fixed mortgage rates have fallen nearly half a percentage point since the Fed last hiked rates at the end of June. According to HSH Market Trends, the California statewide 15-year fixed mortgage rate the week ending August 25 is 6.27%; the average for a fixed 30-year mortgage is 6.60%
Market Trends also reminded its readers that, while sales “are well off their record-breaking peaks of a year ago,” it was only three years ago that existing home sales began to break 6 million. The July annualized sales pace is still 6.33 million units.
In Santa Barbara, although the 16.4 sales per week average through July 21 is down from the previous year, we’ve averaged more than 20 sales per week for the past six weeks, and 22.6 pending sales.
Nationally, according to the National Association of Realtors, “the pace of second quarter existing-home sales slowed seven percent compared to second quarter 2005.” On the other end of the spectrum, existing-home sales in Alaska rose 48.6%; Arkansas rose 17.9%; Texas rose 11.3%. Regionally, the South was down 4.2%; the Midwest down 4.7%; the Northeast down 5.2%; the West down 14.7%.
Remember, if you bought a house anywhere but Santa Barbara (or Montecito), you didn't pay enough. Besides, goodness is the only investment that never fails.
(Mark has lived in Santa Barbara since 1977 and has been a full-time Realtor with Coldwell Banker since 1988. He is host of “Radio Real Estate,” broadcast on KZSB 1290 AM live on Monday mornings at 11 am and rebroadcast on Monday evening at 9 pm and again on Saturday at 2 pm (www.radiorealestate.com)
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