Santa Barbara Real Estate Market June 2018

Santa Barbara Real Estate Market Report – June 2018

It is hard to believe we are almost 6 months into 2018. With that said, let’s take a look at some numbers. As in past Santa Barbara real estate market reports, we will do some year to year comparisons (2017 vs 2018), give you market stats and add some of our thoughts/predictions.

Single Family Homes – Santa Barbara Real Estate Market June 2018

Year to Year Comparisons – 2017/2018

• Number of Sales: 241 – 258 – Up 7%
• Inventory: 712 – 753 — Up 5%
• Median Price: $1,235,000 – $1,250,000 – Up 1%, yet much lower than recent years
• Days on Market: 35 days – 25 days – Homes selling slightly faster.
• Sales Price versus Asking Price: 97.9% – 97.6% – Trend considered flat.

The Take-Away: Single Family Homes

In February and March, we were all wondering what effect the fires and debris flow would have on local real estate. As the numbers show, median sale prices were rather flat and more people decided to sell. The time it takes to sell a place also went down. These are somewhat conflicting stats and may reflect market uncertainty. Such ambiguity should come as no surprise after the chaos of December and January.

We expect much of the same as we go into the 2nd half of 2018 with prices remaining relatively flat.

Condos/Townhouses – Santa Barbara Real Estate Market June 2018

Number of Sales: 103 – 117 – Up 12%

Inventory: 253 – 323 – Up 22% – A huge increase.

Median Price: $635,000 – $650,000 – Up 2%

Days on Market: 37 days – 26 days – Units selling faster

Sales Price verses Asking Price: 97.9% – 97.6% – No real change

The Take-Away: Condos & Townhomes

The stats show a big elephant has entered the room, Inventory. All we can say is WOW there are a lot of condos and townhomes on the market (up 22%.) From a purely supply and demand model, we expect prices to drop a bit. People who are motivated to sell may be forced to offer price reductions or be less aggressive with price negotiations as potential buyers play one property against another.

There is a possible kicker to the high inventory. If condo sellers don’t get the price they want, will many merely pull their listings and put them up as rentals? Said actions could create a “so-called” bottom in the market. Only time will tell and you know we’ll be watching and letting you know.

Montecito Versus Hope Ranch Update

Earlier this year we posted our thoughts on the effect of the mudslides in January 2018. It was apparent there would be a downturn in the Montecito market. Equally reasonable was the likelihood of interest in Hope Ranch as a luxury alternative.

The numbers have proven our crystal ball accurate as Montecito has seen a drop in inventory, sales, and prices while Hope Ranch has been flourishing. Below are the stats:

Montecito:

• Median Price – Down 7%
• Days on Market – Up 18%
• Inventory – Down 17%
• Number of Sales – Down 33%
• Sales Price is higher than list price by 5.7%

Hope Ranch:

Median Price – Up 26% – A large shift in sales prices.

Days on Market – Up 56%  – It’s taking longer to sell a home.

Inventory – Up 12%

Number of Sales – Up 76%

Sales Price is lower than list price by 7.5% – A sign homes are overpriced. 

Santa Barbara Real Estate Market June 2018 – Overall Conclusions

There is no doubt the Santa Barbara real estate market, especially Montecito, has changed from this time last year. There appears to be a slight shift to buying homes nearer the coast and prices are generally rising very slowly. That said, there is a topic most of the public is unaware, yet is being widely discussed by Realtors, title/escrow officers and mortgage professionals. What is it?

There is a significant uptick in home buyers canceling their home or condo purchase. In the industry, we call this falling out of escrow. The number of fall-outs is substantially up, and many expect the trend to continue.

Why, is the question? We have some thoughts to share.

• Home inspections can reveal costly problems that may significantly change the cost of the property. Let’s say a foundation issue was discovered or significant termite damage. Such matters create home buyer fears and up the overall price of the home, often to the tune of 10’s of thousands or more.
• Many home sellers have the mindset their home is a still a hot commodity, since that was the case last year, and are unwilling to take on the fee of repairs or drop the sales price to cover buyer costs.
• Another issue that comes into play is remodeling costs. After the buyer has put in their offer, they often start seeing things they want to change. If the changes are significant, it can affect their budget and make the home less attractive.
• One more factor is rising interest rates that can make homes less affordable. A small change in interest rates has a more significant effect when you are talking homes that sell in a million dollar range.

Any of the above scenarios can cause prospective buyers to draw a line in the sand, especially since Santa Barbara area real estate is darn pricey compared to other markets.
The trend in fall-outs and leveling of median sales prices could indicate we are seeing spider cracks forming in our 7-year home price uptick. Again, we’ll know more in another 2-4 months and will certainly keep you informed of any changes.

Thank you for spending your valuable time with us. If you have questions, would like to know what your home is worth or need passionate representation while buying or selling a place, please know we are here for you… in all ways.

Joe Parker, Garrett McCaw, Avi Becker
The Santa Barbara Group
Berkshire Hathaway HSCP
3868 State Street Santa Barbara, CA 93105
info@thesantabarbaragroup.com