Appreciation Expected for Housing
About a year and a half ago Robert Shiller predicted that the appreciation for housing would remain low, at around 1.1% per year, for the next five years. Well known real estate enthusiast and mentor David Kohler responded to that prediction with the following: Shiller is wrong – again!! We are on the verge of the biggest real estate boom in history! NOW is the time to re-balance your portfolio and ‘leave the shills behind’!!
David’s strong feelings about another real estate boom in the works comes from the United States currently holding over $60 trillion in paper investments (stocks, bonds, mutual funds, 401Ks, currency, etc.) and the increasing urge to move it more into commodities like real estate. The US has currently been trading only around $1 trillion in real estate a year. That figure has huge potential for increase relative to the amount of paper that could be transferred.
Perhaps somewhere in the middle is where the present real estate cycle will end up. One thing is for sure, David’s response to Robert Shiller more accurately follows the numbers that the current market is producing. Santa Barbara’s year-to-date median home price is up now 15% over last year, from $802,500 to $929,000, and the median condo price is up 20%, from $400,000 to $480,000.
I look forward to keeping you up to date on the most current real estate trends, as well as property inventory, and appreciate your inquiries.
Challenges in the market
It’s easy to find more challenges these days in just about everything one sets out to do. Layered complexities have made even some of the simplest tasks more difficult. To try and overcome these difficulties and challenges we’ve seen many changes made in the way things are approached and regulated. This is ever so apparent in the real estate market where the way properties are bought and sold has changed dramatically over the past decade.
Some of the biggest challenges buyers are facing include historically low inventory levels, extremely strict loan qualifying standards, and heavy completion against multiple offers on well-priced properties. An overabundance of information can also confuse the issues at hand for many buyers in today’s market. “Paralysis of analysis” is not a good thing when in real estate “timing is everything”.
Even with prices on the rise sellers are seeing their share of difficult challenges. A lack of comparable sales supporting the high prices now seen has led to more escrows falling out. This can happen due to buyer’s cold feet, but more often as a result of lender’s cold feet. With strict appraisal regulations that have been scrutinized for favoring inexpensive out-of-area appraisers, local sellers have seen more errors made in property valuations than ever. Read more on appraisals.
With an elevated level of complexity in buying and selling it makes sense that the most active and seasoned real estate professionals are in very high demand. This can be seen in many facets of the market, including a recent statistic that the percentage of for sale by owners trying to sell on their own has dropped in half over the past 20 years, from 19% to 9%; and that 93% of buyers and sellers now seek professional assistance very early on.
I appreciate the opportunity to share my eighteen years of local expertise with you in overcoming the current challenges of the market. Thank you for your inquiries.
Prime time in Paradise
For the past 10 years the month of June has averaged more closed sales in Santa Barbara real estate than any other month of the year. The homes that close escrow in June are the ones that go under contract in April and May. That means that if you’re planning to sell your home, now is prime time.
So far this April we’ve seen 114 homes and condos go under contract. That’s a 10% increase over the first half of last April and a 31% increase over the first half of this March. We’ve also seen some inventory increases this month, which is a good thing for buyers, however the number of properties for sale in Santa Barbara is still 26% lower than it was in April of last year.
I appreciate and look forward to your inquiries during this year’s prime time buying and selling season in Santa Barbara.
Spring in Santa Barbara
We’ve seen a lot of spring in the real estate market already this year, with the median price up 18% and sales volume up 20% over last year’s first quarter. Santa Barbara’s also staying in step with many great events to enjoy during the spring season. Here are a few to kick things off during the month of April.
Sam Adams Multi-Event Meet w/Olympic decathlon champion Ashton Eaton on April 5-6
Santa Barbara Symphony on April 13-14
Santa Barbara Kite Festival on April 14
Santa Barbara Downwinder on April 18
Santa Barbara County Vintners’ Festival Weekend on April 19-22
Santa Barbara Chardonnay 10-Miler & 5-K on April 20
Earth Day Festival on April 20-21
Santa Barbara’s 231st Birthday on April 21
Santa Barbara Fair & Expo on April 24-28
Sea Festival on April 27
Click here for more events.
I look forward to seeing you this spring and appreciate your real estate inquiries.
The median in Santa Barbara
Median home sale prices are a hot topic these days since they are now on the rise in most metropolitan areas. The scenario for Santa Barbara’s real estate market is no different. Year-to-date median sale prices are up 17 percent for homes and 12 percent for condos over last year’s figures. The biggest jump is in Montecito for homes, up 50 percent, and South Goleta for condos, up 86 percent.
With more sales happening and higher median prices Santa Barbara’s sold volume has increased 32 percent for homes and 76 percent for condos over last year. Hope Ranch leads the way in homes with a 159 percent increase and Carpinteria in condos with a 282 percent increase.
There are some skeptics that say when interest rates start rising home prices will fall. That has not been the case historically. Rising interest rates are typically the product of a booming economy, and when the economy booms the real estate market does not take long to follow.
The good news for buyers is that the median home sale price in Santa Barbara is still down roughly 24 percent from what it was in 2005, and interest rates are holding. If you can find what you’re looking for amidst the low inventory your timing may be perfect. I appreciate your inquiries and the opportunity to assist you with locating a great property in Santa Barbara!
When the price is right
Whether you are new to the market or have been following real estate consistently for some time it’s not always easy to determine when a property is priced right. This is especially true when inventory is low and recent sales of similar properties took place months or sometimes years ago. In cases where recent comparable property sales are not available it’s important to look at past or current market trends to calculate reasonable values and prices.
Comparing a property’s asking price to its final sale price is the most accurate way to determine if a home was priced right in its current market place. Here are the current month’s home and condo sale numbers in the Santa Barbara area.
Under $1M price range
Total closed sales: 84
Average asking and selling price: $644,016, $645,943
Sold at or above asking price: 44
$1M to $2M price range
Total closed sales: 26
Average asking and selling price: $1,365,769, $1,328,244
Sold at or above asking price: 6
$2M to $4M price range
Total closed sales: 9
Average asking and selling price: $2,915,544, $2,788,532
Sold at or above asking price: 2
Over $4M price range
Total closed sales: 3
Average asking and selling price: $6,366,667, $5,900,000
Sold at or above asking price: 1
These numbers show that the properties selling in Santa Barbara are drawing very near their asking price, and in the under $1M price range more often than not they are selling for over their asking price. The good news for buyers is that there are many sellers pricing their properties right and still much lower than the highs of eight years ago.
If you would like a comprehensive market analysis of any property in the Santa Barbara area I’m happy to assist you. My consultations are free and your inquiries are appreciated.
Santa Barbara’s velocity increases
In December of last year I published the months of inventory or “market velocity” in Santa Barbara for six different price ranges. This is the amount of time it would take all of the homes on the market to sell at the current sales pace. The calculation is made by dividing the number of homes now available by the number of homes that have gone under contract over the past month. December of last year actually saw more closings in South Santa Barbara County than any month prior dating back to August 2005.
The months of inventory or “market velocity” for Santa Barbara today compared to December is as follows:
For Homes and Condos:
Under $500K: .3 months (9 days) of inventory (down from .9 months (27 days))
$500k – $1M: 1.2 months of inventory (down from 1.8 months)
$1M – $1.5M: 2.7 months of inventory (down from 6 months)
$1.5M – $2M: 3.3 months of inventory (down from 4.5 months)
$2M – $4M: 8.7 months of inventory (down from 11.1 months)
Over $4M: 38 months of inventory (down from 126 months)
According to the National Association of Realtors the average months of inventory in December nationwide was 4.4, the lowest recorded level since May 2005. Santa Barbara’s market velocity rate is now faster than that in all price ranges under $2M, and almost 15 times faster in the under $500K range.
In a quick moving multiple offer environment it can be more difficult and take more commitment to make an optimal purchase or successfully obtain the best offer possible when selling your property. Experience and hard work can help you tremendously in achieving the results you’re looking for. I appreciate the opportunity to assist you in these areas and thank you for all of your inquiries.
