Mark Schniepp was back recently to speak on the economy in Santa Barbara South County. The Santa Barbara Newspress article (dated Sept 17th by Sonia Fernandez) covering the event opened by asking the question that everyone wants answered, "Are we heading into a double dip recession?" Mark Schniepp says we are not.
The outlook was focused mainly on commercial real estate, but Mark also covered the local and national economy, and local residential real estate. According to Mark, the recent drop in the unemployment rate is due to a "hangover" caused by the ending of census jobs and "not indicative of a second recessional dip." He says that jobs will recover and we will see job growth from here on out....just slowly, and that part of the speed of the recovery has to do with people and their behavior. Consumption is a large portion of our GDP and the amount that people are spending is down, due to saving more and changed financial circumstances. (I know I am one of them ... I have been much more conservative about my spending in this market. I see it in my clients too.)
Investors are looking for more certainty when they spend their money, and Mark counted real estate as a more solid investment for people to make & said he believes stocks will continue to put out a lower percent in returns over the next ten years. Real estate prices are expected to rise gradually. Compared to other locations in California, Sonia Fernandez wrote that "the South Coast real estate condition is somewhat protected, given location, constraints on growth, and what Radius Group Commercial Sales Principal Broker Scott Glenn called the "93108 effect" -- that is, Montecito-based investors who are taking advantage of the lower prices and investing cash in local real estate."
In terms of commercial real estate, "Downtown Santa Barbara is still king," according to Scott Glenn. Also, the students in the area are the reason why Isla Vista has the lowest vacancy rate of anywhere in the South Coast. The general vacancy rate for rentals (for the entire South Coast) is still only at 3-4%. This is also due to more people renting instead of buying at the moment.
Dr. Schniepp believes improvement is more likely to be visible by 2012, which is the same summary he gave earlier this year. (Earlier this year, he said 2010 will be better than 2009. 2011 will be better than 2010. And, 2012 will be better than 2011, etc.) He still believes there are some uncertainties out there that could impact consumer confidence and behavior, including the end of Bush-era tax credits, our health care system, and some energy policies that will impact the bottom lines of people and businesses ... but credit is starting to loosen which helps buyers and investors get back in the market. It was essentially the same news we've all been hearing. We
are seeing improvement. It's just a gradual shift, and quite honestly, I think a gradual shift is the more sustainable thing we could ask for. It might not be sexy and full of instant gratification, but that's fine with me.
Feel free to share your thoughts!
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