Real estate outlook grim

BY COLBY FRAZIER
DAILY SOUND STAFF WRITER

The recent crumbling of the mortgage and lending industry and its fallout on the real estate industry was on full display yesterday when hundreds of local realtors and business people gathered at Fess Parker’s Doubletree Resort to hear the Real Estate and Economic Outlook for Santa Barbara County.
The news was no better yesterday than it has been for the past few weeks.
“It’s fairly bleak,” said Paul Spring, president of Exchange Resources Inc., who said part of the reason the mortgage and lending business took such a steep plunge was due to the high number of foreclosures that tumbled all the way back to the lenders. “That is something we haven't really seen before.”


According to the economic outlook booklet distributed at the meeting, Santa Barbara County was on par with the rest of the country, with record numbers of home foreclosures so far during 2007.
During the first part of this month there have been 578 home foreclosures and defaults in the county. On the south coast, 91 foreclosures were recorded, while there were 14 in the Santa Ynez Valley, 121 in the Lompoc Valley and 352 in the Santa Maria Valley, the booklet says.
The reason for the high number of foreclosures also mirror national statistics, which have pointed heavy issuing of subprime loans during the past few years.
“Many new mortgage loans during the 2004 to 2006 period were made to borrowers who had insufficient credit, income, or both,” the booklet says.
In 2004, 29 percent of the loans issued to home buyers in Santa Barbara County were subprime. This number peaked in 2005 when 34.4 percent of the loans were subprime. But the local total in 2005 was still far below Southern California’s total of 48.1 during that same year.
The cause for the abrupt meltdown, according the the booklet, was when subprime loans, which were issued with adjustable interest rates, were adjusted significantly upward. This readjustment usually happened after 24 months and increased the average subprime homeowner’s payment by $1,500.
Not all of the economic outlook was focused on doom and gloom, however.
Laurie Tamura, president of Urban Planning Concepts, who resides in Santa Maria and specializes in North County analyses, talked briefly about development projects scheduled in the that area.
Tamura showed the crowd a slide demonstrating the large swaths of land separating various cities in the North County, saying the majority consists of prime agriculture land and tiger salamander ponds.
The tiger salamander, and efforts to preserve the ponds, got significant attention from Tamura.
She said a proposed development must conduct a two-year survey, during which time there must be at least 24 days of rain. If California Department Fish and Game officials find that tiger salamanders reveal themselves at any time during the survey, the development won’t be approved.
“It’s a big investment and it’s really bad for North County,” Tamura said of the surveys and the elusive tiger salamander.
Tamura did say the onslaught of development in North County, which has been the engine for growth in the area for the past couple of years, is being done with careful attention paid to infrastructure by Santa Maria officials.
She said water, waste water and other forms of infrastructure are being planned for 10 years ahead of development.
Though growth has slowed during recent years in North County, the booklet identifies 2,809 residential units that have already been initiated, whether in construction or awaiting environmental impact reports.
Tamura noted that some of Santa Maria’s draw will come as a result of being the “North end of the wine trail.” She said more vineyards are planted and producing fruit in the Santa Maria Valley than in the Santa Ynez Valley.
While the main inhibitors for growth in North County are the tiger salamander and agriculture, the main “obstructions” to growth and development in the South County, as they were referred to at the conference by Raymond Appleton, president of Permit Planners, are a lack of public transportation and Highway 101.
Though many developers leave planning commission, board of supervisors and city council meetings cursing under their breath and complaining that the planning process is too stringent, Appleton, who boasts that he and the clients he represents have never had a project turned down, said government is not the No. 1 obstruction.
“Public transportation,” Appleton said. “I see that now as the No. 1 obstruction to new development on the South Coast.”
He said just when a project looks like it will float through planning without a hitch, a traffic report will slam with door.
Appleton said future Highway 101 closures as a result of freeway widening will compound the problem and noted that it won’t be long before the extra lane is full of cars.
He recommended implementing a fleet of buses that transport workers, who can’t afford to live in Santa Barbara, from their homes to the north and south, to their jobs.
Appleton also recommended finding common ground on the renewal of a sales tax measure, such as Measure D, which will expire shortly.