Current Santa Barbara Real Estate Market

Overview: Supply & Demand

The real estate market in Santa Barbara has overgone a market correction since August of 2005, with prices softening in all sectors of the market below $2 million. The luxury market, classified as either above $2 million or above $3 million (depending who you ask), has actually had very good sales activity the last three years and by all reports has actually appreciated. The "affordable" segment of the market, or the below $2 million market has seen a significant reduction in prices with single family homes now available even in the $500-600k price range. In many segments of the market, especially the below $900,000 segment, prices seem comparable to those seen in 2002 or 2003.

Current inventory levels are fairly high with a consistent, but slower # of sales compared to the last two years. The volume of sales is down roughly 30% compared to the last two years at this time. Many local buyers that have been watching the market believe, as I do, that real estate prices won't soften much more and that we have reached the bottom of the price curve. As such, we've seen a flurry of activity in the $500-800k single family home market, and consistent activity in the above $1 million single family home segment. Our recommendation is that now is best time to move back into the market before the market firms up. The market is still classified as a buyer's market, and it is a great time for dialogue between both parties to negotiate win-win situations. Sellers now have much more realistic expectations and are bringing their properties on at more competitive prices.

We expect sales to be significant this Summer as more and more end-users and investors realize that our current market shows more opportunity on the purchasing side than we have seen in the last 5 years.

Buyers

It's a great time to buy in Santa Barbara County if you are looking for a longer than 2 year hold. Our take on the market is that the next 8 months will be the most opportune time to purchase a home in Santa Barbara. After that, the market should be fairly firm with level pricing and potentially low single digit appreciation for 1-3 years. A large amount of buyers who have been watching the market have decided it's time to start purchasing. As such, be prepared for those well-priced "hot properties" to see multi-offer scenerios again, as the best deals are in escrow now within just af ew days. As long as you are looking at a minimum 3-5 year hold I would encourage you to get in to the market here in the next few months and beat the eventual larger wave back in. Seller's are motivated right now and are willing to make concessions on price and terms to interested buyers. Most sellers who are not motivated have put a long-term tenant in place to wait out the present dip. Buyers click here for more info.

Sellers

To home owners, it is a bit harder to make a blanket recommendation. If you need to sell, plan on pricing it competitively and getting a real estate professional to market it aggressively. Trying to price your property too high and you'll end up chasing the market and losing more money in the long run. Be sure you have a competent agent representing you as the market has changed and For Sale By Owners are only getting noticed by tire kickers and low-ballers. Your property needs active and aggressive marketing and representation or you'll become another one of last month's statistics. Again, it is CRITICAL to list your property competitively and not try to reach for a slightly higher sales price you may have gotten at the peak of mid-05. Price your property too high and you'll be chasing the market and any potential buyers that would have been interested--a mistake that could cost you tens of thousands of dollars. Click here for more info on selling your home