Santa Barbara Real Estate Market News – Is The Market About to Crash – A Bubble Burst?
Welcome to our April 2022 real estate market report for the Santa Barbara area market. Lots of people are asking if the market is shifting or if a bubble burst is coming. Let’s take about what we are seeing.
The opinions we are sharing are based on what we are personally seeing, what the 100+ agents we work with have noticed and feedback from agents we know across the country.
Is The Santa Barbara Real Estate Market About To Crash?
When talking about a market crash or real estate bubble burst, a lot of factors have to be taken into account. Interest rates, mortgage products, inventory levels, cash reserves, social issues, fear, and much more affect the real estate market.
FYI: Anything that causes a change in supply or demand will have an effect on market behavior.
We are seeing some things that tell us the Santa Barbara real estate market is cooling down a bit but nothing suggests anything approaching a bubble burst is happening soon. From a behavioral perspective, we are seeing:
- Fewer multiple offers
- Less fervor or sense of frenzy
- Fewer over asking price offers
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April 2022 Real Estate Market Report - Is a Crash Coming?
What is causing a softening of the Santa Barbara real estate market?
We feel the real estate market is calming down for several reasons. Let’s look at some.
Interest rates are going up. This makes homes less affordable for those getting a loan. One of our lenders tells it like this…
If you look at loan costs today versus a year ago, home buyers are paying more per month for a mortgage. On a million-dollar loan, they may be looking at monthly payments over $1000 more today than last year.
Inflation has an effect on everything, including real estate. It causes uncertainty and fear which, in turn, creates a hesitancy to take on big purchases like real estate.
Markets are cyclical. We’ve been in a booming market for a long time, it is only natural for it to shift the other way. Nature and markets are always trying to find balance.
April 2022 Real Estate Market Report: The Bottom Line
Although interest rates are rising and the market is less edgy, we don’t not see a bubble burst happening in the Santa Barbara real estate market any time soon. Why, you ask?
Inventory levels are still very low. That’s the supply part of the equation. As long as supply is lower than demand, the market should remain vibrant. We do see the home inventory levels rising over time, but not at a rate to cause instability. While this is the case for Santa Barbara, things may get dicey in places like Las Vegas, Phoenix and other markets that have more opportunities for increased listings.
Joe Parker, Garrett McCaw, Avi Becker
The Santa Barbara Group at Berkshire Hathaway Home Services California Properties
3868 State Street Santa Barbara, CA 93105
(805) 886-5735
https://TheSantaBarbaraGroup.com
Cal BRE #01314939
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