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Real Estate Market Update

Posted May 30, 2012

Local real estate market appears to reflect positive conditions. Sales are up strongly and inventory is down. Months of inventory for Santa Barbra’s South Coast, from Carpinteria to Goleta is at 2.6 months; 2.8 months for houses and Planned United Development (PUDs) and 2.3 Months for condos. Currently, buyers are signing offers, writing deposit checks negotiating great prices, and entering escrow at increasing rates. Essentially, these positive indicators along with current house and condo prices, has contributed to an increase in the number of qualified buyers in the market place. For instance, the number of house and PUDS entering escrow through the end of April 2012 was up 46% over the first four months of 2011, while closed escrows for houses and PUDS totaled 340.

However, buyers in the under-$800,000 market and in other higher price ranges are now having to cope with the multiple offer process. This in effect has led to a situation in which buyers who have been waiting on an appropriate time to enter the market, find that two, four or six other prospective buyers are bidding on the same property. The only way to ease this problem is for buyers to work closely with their Realtor, who in turn will let them know when a property does become available.

In terms of prices, the median price for house and PUDs through the end of April is $785,000, which is down 3.1% for the same period reported a year ago.  By removing both Montecito and Hope Ranch, the median is down 0.8%. These statistics represent a decrease of 33.5% from 2008’s first quarter median price of $1,180,000. Additionally, from 2005-2008, the South Coast median price for houses and PUDs was around $1,200,000; 2009 the median fell to $827,500. In 2010, the median increased slightly to $840,000, while in 2011 the median dropped to $810,000. For condos, there were 102 closed escrows with a median price of $3999,995.

Furthermore, the effect in recent years of distressed sales on the local market has been notable. Consequently, sellers have had to price their homes in the same range as the new level set by both neighborhood sales of bank-owned properties and short sales. The percentage of these sales in Santa Barbara County has persisted around 30% while cities such as Fresno have experienced 70% of distressed sales closings. Additionally, the short sale process has been improved, with most closing in 3-5 months.

Table  1 reflect months of inventory separated by each community. For instance, Goleta has only 1.3 months of inventory, while Montecito, which has a larger proportion of higher-priced homes has 5.6 months of inventory. This statistic appears to illustrate both an active and varied market between buyers and sellers.

Table 2 demonstrates how much stronger sales have been ompared to the 5-year averages for houses, PUDs, and condos. As you can see, sales have increased each month since November 2011. Furthermore, the line above the bar graph shows current pending sales on an upward trend, thus providing further indication of strong market activity. Lastly, Table 3 illustrates the distribution of market activity across a wide spectrum of prices. Clearly, the largest number of sales for houses and PUDs is occurring in the $500,000 to $700,000 price range, while for condos, the most dynamic range is from $300,000 to $500,000.

In conclusion, it appears that environmental conditions for Santa Barbara and its surrounding communities reflect attractive opportunities for expansion. However, the supply of current homes remains sparse while the demand to live in our community continues to increase. Ultimately, by analyzing current real estate market signals along with an increase in buyer’s confidence may indicate the fact that current prices have reached the bottom.

Downloadable PDF: Santa Barbara South Coast 2012 MLS Market Activity

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