Business

Biz Buzz: Housing prices may exit basement

California’s housing market is beginning to show signs of stability after a collapse that led to falling prices and slowing sales.

That’s the assessment of the California Association of Realtors, which released its housing market forecast for 2010 on Wednesday.

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” said Jim Liptak, president of the association and a North County real estate agent. “2010 will mark the beginning of the new normal for California’s housing market. This new normal likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

The association forecasts that the median home price in California will rise 3.3 percent to $280,000 next year. That’s compared to a projected median of $271,000 this year. Sales are expected to decline 2.3 percent to 527,500 units, down from 540,000 projected in 2009.

Liptak said the market is poised for a rebound because inventory is shrinking, interest rates are still attractive and first-time buyers, lured by falling prices and tax incentives, are in the market. As well, investors are returning to buying properties.

“I’ve said many times that there won’t be a bell that rings when we’ve hit the bottom, but we’ve reached a point where it makes good sense to buy,’’ he said. “It’s a good indicator when you see investors getting into the marketplace. There are a lot of them that buy, especially distressed properties to fix them up and roll them over. I’ve talked to a number of them that will sit on them for awhile with the theory that, long-term, real estate in California is a good proposition.”

While Liptak is bullish about the future of the local and state housing market, he is also cautious in his outlook.

“Buyers and investors are getting back into the marketplace, but that doesn’t mean everything is rosy and wonderful,’’ he said. “There are still clouds on the horizon. Unemployment is an issue, and the government in the state of California is in disarray.”

Leslie Appleton-Young, chief economist with the association, noted that the housing market isn’t completely on the mend. Home prices could slide downward if a greater-than-expected wave of foreclosures hits next year, she said.

“The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government,’’ she said.

— Julie Lynem

Pacific Capital sees stock jump

In a flurry of activity, Pacific Capital Bancorp shares rose nearly 24 percent on Wednesday, with more than 3 million shares traded on the Nasdaq.

That’s about twice the normal volume.

The company’s stock price also increased, closing at $1.81, 35 cents higher than its previous close at $1.46. Pacific Capital Bancorp is the parent company of First Bank of San Luis Obispo.

The activity comes on the heels of a recent vote by shareholders to increase the number of shares of its stock and to authorize a reverse stock split — moves designed to strengthen its capital and bolster its stock price. Shareholders of the Santa Barbara-based company approved the increase from 100 million shares to 500 million shares with the goal of making the company more attractive to investors and raising additional capital.

Shareholders also voted to carry out a reverse stock split of not more than one for 10 before Aug. 31. The ratio is yet to be determined by the company's board.

Firms carry out reverse stock splits — which reduce the number of shares and increase the share price proportionately — when their stock price is sinking and sometimes to avoid being delisted from an exchange.

The company, which is considered well-capitalized according to federal regulatory standards, has been under the scrutiny of regulators who have raised concerns about its financial health and its ability to achieve a higher level of capital. The company had a Tier 1 leverage ratio of 5.7 percent and a total risk-based capital ratio of 11.2 percent as of the second quarter ending June 30. The Tier 1 leverage ratio — its cash as a percentage of its assets — was insufficient to meet the higher level the bank had agreed to with the federal Office of the Comptroller of the Currency. The company had agreed to maintain a minimum Tier 1 leverage ratio of 8.5 percent as of June 30 and 9 percent as of Sept. 30.

Pacific Capital Bancorp suffered a substantial second-quarter loss of nearly $363 million, compared to a net loss of $5.9 million in the same quarter the year before. The company does not comment on its stock activity as a matter of policy, said Debbie Whiteley, spokeswoman for the bank.

Meantime, Donald Toussaint, executive vice president and division manager of Pacific Capital Bank’s commercial banking and wealth management group, has joined Rabobank as the president of its South Central Coast Region.

Toussaint, a banker for 33 years, will oversee delivery of bank services and strategic growth strategies in southern Santa Barbara and Ventura counties. That includes 19 retail branches and two financial service centers from Santa Ynez Valley to Westlake Village.

— Julie Lynem

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