Noozhawk: UCSB Economic Forecast Project Offers Snapshot of South County Markets

The UCSB Economic Forecast Project held its annual South County Economic Summit on Wednesday morning — after not hosting the event in the past two years — at Santa Barbara’s Granada Theatre, where updates on the real estate market, the labor market and more were presented.

While the unemployment rate in the area is very low, there are also more job openings — the opposite of the normal relationship between the unemployment rate and job vacancy.

“If you just look at the unemployment rate … it looks like the labor market is fantastic, but there are many, many puzzling things going on in the labor market, in my view,” said Peter Rupert, executive director of the UCSB Economic Forecast Project. “We have more job openings in the history of this data, and it’s much higher than the number of unemployed people.”

Additionally, as the current average hourly earnings have increased 4% to 5%, inflation also has increased, to 8.5%.

Meanwhile, as David Kim of Village Properties explained, housing prices are up and the residential real estate inventory in the South Coast is very low, making it a seller’s market with homes selling for prices above the listing price.

“Inventory of homes has always been slim here in Santa Barbara,” Kim said. “Historically, we’ve had limited inventory, not a lot of space for new building or new construction.”

In 2019, when there were 624 active listings, the median sales price was $1.29 million, and in 2022, there were 348 active listings, and the median sales price was $2.25 million.

For commercial and hospitality real estate, Gene Deering of Radius Commercial Real Estate said Santa Barbara has an office vacancy of 9.7% — which does include new tech offices — and Goleta’s office vacancy is 6.1%. Santa Barbara also has an industrial vacancy of 0.8%, and Goleta’s currently sits at 3.5%.

Later during the summit, Rupert discussed and presented arguments against rent control.

He said that some of the effects of rent control include housing deterioration, haphazard income redistribution, racial discrimination, a tax base loss, a reduction in labor mobility and a worsening of the initial housing shortage.

“If you thought about this quickly, rent control would mean landlords are going to get less, poor residents are going to get more — so that’s a redistribution of income from the landlords to the tenants because landlords can’t get the rent that they would get otherwise,” Rupert said. “It turns out that in most studies we find, it’s the opposite. The rich benefit more than the poorer people.”

Instead of rent control, Rupert suggested a system similar to Section 8 housing and food stamps that would give the money directly to eligible individuals seeking housing as “rent stamps.”

“Let’s just do it the most efficient way — get it to the people who need it most,” Rupert said.

Other speakers during Wednesday’s program included Josh Williams of BW Research and Jagdeep Singh Bacher, chief investment officer and vice president of investments at the University of California Office of the President.