Santa Barbara South Coast Real Estate Update
November 10, 2023
According to data obtained from the County Recorder’s Office by Fidelity National Title, residential property sales on the Santa Barbara South Coast decreased by 8% in October 2023, with 90 sales recorded, compared to 98 in 2022. Out of the 90 sales in October 2023, 70 were houses or planned unit developments (PUDs), equal to the sales in 2022. The median price of these House/PUD sales was $2,110,000, up 4% from 2022, and the average sale price was $3,286,204, up 13% from 2022. There were 20 Condominium sales in October 2023, down 29% from 2022. The median price of these Condominium sales was $902,500, down 10% from 2022, and the average sale price was $1,225,100, up 5% from 2022. Year-to-date in 2023, there has been a total of 949 residential property sales on the South Coast of Santa Barbara County, down 26% from 2022. The year-to-date median price for all residential property sales as of October 2023 was $1,715,000, down 1% from 2022, and the average sale price was $2,653,265, down 2% from 2022.
In Carpinteria, there were a total of 6 residential sales in October 2023, down from 13 in September. In October 2023 the median price of the 4 House/PUD sales was $1,977,978 and the average price was $2,195,239. In October 2023 the median and average price of the 2 Condominium sales was $902,500. The lowest-priced Carpinteria sale in October 2023 was a Condominium on Foothill Road @ $820,000 and the highest was a House on Shepard Mesa Drive @ $3,625,000.
In Summerland, there was a total of 1 residential sale in October 2023, down from 4 sales in September. In October 2023 the price of the 1 sale was $1,800,000. The 1 sale in Summerland in October 2023 was a House on Whitney Avenue @ $1,800,000.
In Montecito, there were a total of 14 residential sales in October 2023, down from 17 in September. In October 2023 the median price of the 12 House/PUD sales was $7,000,415 and the average price was $7,885,852. In October 2023 the median and average price of the 2 Condominium sales was $3,442,500. The lowest-priced Montecito sale in October 2023 was a House on Barker Pass Road @ $2,250,000 and the highest was an Estate on Freehaven Drive @ $20,350,000.
In Santa Barbara, there were a total of 43 residential sales in October 2023, down from 45 in September. In October 2023 the median price of the 35 House/PUD sales was $1,929,000 and the average price was $2,170,000. In October 2023 the median price of the 8 Condominium sales was $902,500 and the average price was $991,625. The lowest-priced Santa Barbara sale in October 2023 was a Condominium on Richland Drive @ $600,000 and the highest was a PUD on Lighthouse Way @ $3,700,000.
In Hope Ranch, there were a total of 2 sales in October 2023, equal to 2 in September. In October 2023 the median and average price of the 2 sales was $6,535,500. There are no Condominiums in Hope Ranch. The lowest-priced Hope Ranch sale in October 2023 was a House on Las Palmas Drive @ $4,960,000 and the highest was an Estate on Cresta Avenue @ $8,111,000.
In Goleta, there were a total of 21 residential sales in October 2023, up from 17 in September. In October 2023 the median price of the 16 House/PUD sales was $1,497,500 and the average price was $2,235,781. In October 2023 the median price of the 5 Condominium sales was $705,000 and the average price was $832,714. The lowest-priced Goleta sale in October 2023 was a Condominium on Overpass Road @ $650,000 and the highest was an Estate/Ranch on Franklin Ranch Road @ $8,000,000.
Analysis
The real estate market on the Santa Barbara South Coast has been affected by various factors. Many Sellers who were previously hesitant to list their homes due to the pandemic, listed and sold their properties in 2022, but the inventory of 2023 listings for sale still remains relatively low. Historically low mortgage interest rates have risen dramatically since earlier in 2022 and as of November 1st they lingered just below 8%. Another reason for our low inventory levels is that homeowners with mortgage interest rates of 3% or 4% are reluctant to sell and buy another home at a much higher rate.
As of November 1st, there were 153 (down from 168 in October) active House/PUD listings and 33 (up from 31 in October) active Condominium listings available along the Santa Barbara South Coast. This is a significant reduction compared to the inventory levels from 2007 to 2011 when the total number of active listings fluctuated between 734 and 1,026. Historically the highest number of active listings along the Santa Barbara South Coast was recorded in June of 1992 when there were an astonishing 1,297 active listings available for Buyers to choose from.
Bank-owned sales on Santa Barbara’s South Coast have been very rare; in all of 2021 and 2022, there were only 4 bank-owned sales. There have been no bank-owned sales in 2023. Currently the one bank-owned listing that was available expired after 436 days on the market; an oceanfront estate on Marina Drive in Hope Ranch listed for $21,500,000 (this may rate as the highest value bank-owned residential property in all of California). Mortgage payment delinquency rates fell to 3.37% at the end of the second quarter of 2023, according to the Mortgage Bankers Association’s National Delinquency Survey, their lowest since the MBA began collecting data in 1979 and down from 3.64% year-on-year. Rising home equity has allowed most owners to “bail out” of their financially distressed properties, pay off the mortgage, and avoid foreclosure. There have been a few short sales and bankruptcy sales where an owner’s debt has had to be restructured resulting in the sale of a property. To check out California’s foreclosure list by County, check out this link: California Foreclosure Trends by County .
On November 1st, Federal Reserve (The Fed) Chair Jerome Powell said that while he has always believed that a so-called soft landing was a “plausible outcome” for the economy, it isn’t guaranteed and that he wasn’t willing to give up on bringing down inflation to achieve it. The Fed left interest rates unchanged at the moment, but economic projections showed one more quarter-point rate hike is possible this year. Higher inflation is waning, but soaring energy costs could muck up a recovery.
Mortgage interest rates have more than doubled since the beginning of 2022. As of November 1st, you could lock in a $726,200 30-year fixed-rate loan at 7.750% with a 1% loan fee (up from 7.375% in September). Historically the lowest 30-year mortgage interest rate since 1970 was recorded in February 2021 at 2.65% and that rate was matched yet again in July 2021 during the pandemic. The highest historical 30-year fixed-rate interest rate was recorded in 1981 @ 18.63%. The average 30-year fixed-rate mortgage interest rate over the last 50 years has been 7.74%, so interest rates are now matching that average. The 23-year high in mortgage rates follows all-time lows reached just three years ago and highlights the effect that financing costs have on the housing market, a particularly rate sensitive sector of the economy. As a comparison, a mortgage payment for a $726,200 mortgage in 1981 would have been $11,318/month, the payment in July 2021 would have been $2,926/month, and as of November 1st, that payment would be $5,203/month. Many potential buyers have switched to applying for adjustable-rate loans in anticipation of fixed-rate mortgages moving lower in the future. At the same time, many homeowners are waiting, unwilling to list their homes and trade their sub-3% mortgages to borrow at 7.9% for a replacement home. This mortgage rate factor is one of the reasons there is limited listing inventory and therefore limiting 2023 home sales as compared to 2022.
According to Business Insider, cash buyers represented 33.4% of the national sale transactions, far above average levels of around 25% during the last 10 years. In highly sought out areas cash Buyers represent a much higher percentage of sales; 69% in the City of Carmel, 65% in Manhattan (New York), 57% in Pebble Beach, and 54% in Pacific Grove. On the Santa Barbara South Coast in October 2023, 39% of the sales were cash sales, down from 47% in September.
Of the 90 residential sales in October 2023, 76 were over $1,000,000 which equates to 84.4% of the total sales, down from 86.7% in September. The South Coast of Santa Barbara is not an inexpensive place to purchase real estate compared to most areas of the United States, but again many people will pay more to live and invest in Santa Barbara. According to PropertyShark’s 2023 report, California had 6 (down from 7 in 2022) of the 10 most expensive median-priced ZIP codes in the country. Montecito’s 93108 ZIP code came in at #4 (up from #8 in 2022) of the most expensive ZIP codes in the USA, even beating out Beverly Hills. Check out the full report: https://www.propertyshark.com/Real-Estate-Reports/most-expensive-zip-codes-in-the-us
U.S.News compiled surveys on the 24 most expensive places to live in the United States during the last year. Their surveys were based on the median gross rent and annual housing costs for mortgage-paying homeowners of each city. California had 12 of the 24 (50%!) cities that require the most wealth to live comfortably: Santa Barbara came in at #5. To see the entire article, check out https://realestate.usnews.com/places/rankings/most-expensive-places-to-live
WalletHub assessed the states where people experience the most stress based on Work-related, Money-related, Family, and Health and safety-related stress……the top 7 most stressful states are West Virginia, Louisiana, Tennessee, Arkansas, Kentucky, Alabama, and Mississippi. The least stressful states are Utah, Hawaii, Maryland, Minnesota, New Jersey, Connecticut and California! To review this interesting article, check out https://wallethub.com/edu/happiest-states/6959
The NAHB/Wells Fargo Housing Market Index in the United States fell by 4 points to 40 in October 2023, falling short of the market consensus of 44. It was the third consecutive month of decreases, bringing the index to its lowest level since January, as high mortgage rates have been heavily impacting builder confidence and consumer demand. Specifically, the sub-index for current single-family home sales decreased by 4 points to 46, while the sub-index for expected home sales over the next six months also saw a significant 5-point drop, landing at 44. Additionally, the gauge for prospective buyers dipped by 4 points to 26. To review the whole article check out https://tradingeconomics.com/united-states/nahb-housing-market-index
The Conference Board Consumer Confidence Index declined moderately in October to 102.6 (1985=100), down from an upwardly revised 104.3 in September. “Consumer confidence fell again in October 2023, marking three consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “October’s retreat reflected pullbacks in both the Present Situation and Expectations Index. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East.” To review the entire article check out https://www.conference-board.org/topics/consumer-confidence .
As for the worldwide cost of living as of November 2023, Expatistan compiled an index of 200 major metropolitan areas. Gas prices were checked on November 1st. In the USA, the most expensive area to live in is #2 New York City with @ 226 Price Index score (the least expensive gallon of regular gas costs $3.53/gallon) and the least expensive is #132 Cedar Rapids, Iowa @ 88 ($2.98/gallon). Expatistan’s list indicates that #5 San Francisco @ 201 is the most expensive area in California ($4.83/gallon) and the least expensive is #38 Walnut Creek @ 141 ($4.89/gallon). Searching the entire state of California, the least expensive gallon of gas can be bought in Madera County for $4.38/gallon. Of the top 25 most expensive areas worldwide, three are in California (down from four in October), #5 San Francisco, #11 Los Angeles @ 186 ($4.65/gallon), and #13 Oakland @ 183 ($4.98/gallon). The most expensive area to live in the world is #1 Grand Cayman @ 217 ($6.19/gallon) and the least expensive is #200 Yogyakarta (Indonesia) @ 37 ($2.48/gallon). Santa Barbara is not on the list as Expatistan does not rate it as a major metropolitan area. Local gas prices as low as $5.09/gallon are similar to other California coastal areas. Expatistan’s Cost of Living Index is an interesting way to compare the cost of living in cities around the world: https://www.expatistan.com/cost-of-living/index
According to Realtor.com®’s October housing data dated November 2nd, the inventory of homes for sale continued to grow late into the year when it would typically decline as mortgage rates passed 20-year highs and continued to provide headwinds to both listing and home buying activity. The nation’s median home list price remained stable at last year’s levels but the share of price reductions continues to grow. While lower than last year, the share of price reductions rising could signal a softness in prices in the coming months. Check out the full article at https://www.realtor.com/research/october-2023-data/
Historically the highest Year-to-Date median sales price recorded on the Santa Barbara South Coast was recorded in 2007 at $1,031,500. In October 2023 the median sales price for all residential sales was $1,715,000. The median sales price had been hovering near 2007’s historic high for most of 2017, 2018, and 2019, then started an upward climb in 2020, accelerating in 2021 and into most of 2022. In early 2022 record-high median sales prices were set each month and now in 2023, they have leveled off or declined slightly. The average sale price of all residential sales in October was $2,653,265 which is up from $2,275,881 in 2022.
Based on the Santa Barbara Multiple Listing Service data, as of November 1st in the City of Santa Barbara, there were 64 active House/PUD listings (down from 77 in October) and 29 pending sales (up from 25 in October), which equates to a 2.2-month supply (down from 3.1 in October) of listings for Buyers to choose from. Generally, a 1-month supply would indicate the listings would all be sold within one month. A less than 1-month supply of inventory indicates a feverish Seller’s market, a 1-to-2-month supply indicates a heated Seller’s market and a 2-to-4-month supply would be considered a basic Seller’s market where Buyer demand is still high and inventory is scarce. Historically a 5-to-6-month supply of available inventory would indicate a fairly well-balanced, normal market between Buyers and Sellers. Typically more than a 6-month supply is considered to be a Buyer’s market where inventory is plentiful; Buyers will be slower to make decisions as they compare the numerous properties on the market. Based on Santa Barbara Multiple Listing Service data and as of November 1st, Carpinteria/Summerland had a 16-month supply (dramatically up from 2.2 in October), Montecito had a 8.4-month supply (up from 4.8 in October), Goleta had a 1.5-month supply (up from 1.4 in October) and Hope Ranch had a 12-month supply (up from 5.5 in October). These inventory statistics indicate that Goleta remains in a heated Seller’s market. Carpinteria/Summerland, Montecito and Hope Ranch have all moved into a Buyer’s market. The City of Santa Barbara remains in a basic Seller’s market. With a combined total of 47 House/PUD pending sales (down from 51 in October) and 153 active listings (down from 168 in October) along the South Coast of Santa Barbara County, there is a 3.3-month supply (same as it was in October) of House/PUD listings from which Buyers can choose. With a combined total of 23 Condominium pending sales (down from 53 in October) and only 33 active listings (up from 31 in October) on the South Coast of Santa Barbara County, there is a 1.4 -month supply (up from .58 in October) of Condominium listings from which Buyers can choose. These statistics show that the Sellers of Condominiums are in firm control of sale prices, especially in Goleta. The total South Coast of Santa Barbara County market remains in a state of transition and appears to be moving towards a Buyer’s market due to numerous factors. While today’s Buyers are running into fewer multiple-offer situations, they will still pay a premium for a home with great amenities. In many Buyer’s minds, the sense of urgency to purchase a home has tapered off a bit with more inventory to choose from and listings to pursue. People still want to live along the Santa Barbara South Coast to enjoy the Mediterranean weather and our casual lifestyle.
While concerns about the pandemic’s economic impact have diminished, there are several other concerns for many Buyers and Sellers. These include the wars in Ukraine and the Middle East, inflation, the cost of gasoline, rising premiums, rising mortgage rates, and the possibility of a recession. Now a major concern is the scarcity of homeowners’ insurance coverage, especially since State Farm and Allstate have recently refused to issue new insurance policies to California home buyers. California’s Proposition 19, which has now taken full effect, allows homeowners aged 55+ to transfer their existing real estate tax base to a home anywhere in the State; this change should be encouraging to some older Sellers who wish to sell their current homes and find a suitable replacement. Due to low inventory and increased migration trends towards smaller cities during the pandemic, a trend which continues to this day, there has been a surge in property values on the Santa Barbara South Coast. While market corrections may still negatively impact property values on the Santa Barbara South Coast, the impact is expected to be less severe compared to many other areas in the state and country. New listings in 2023 may remain on the market a bit longer than in 2022, but each week I am still seeing multiple offers on certain well-priced listings. Home values in the Santa Barbara South Coast Real Estate Market continue to be positively affected by supply and demand dynamics due to persistent low listing inventory; I expect this dynamic to continue into the foreseeable future.
Review the attached list of the 90 properties sold on the Santa Barbara South Coast in October 2023 and feel free to contact me for information on specific sales in our area.
Stan Tabler, CRS, GRI, ABR, GREEN
Compass
801 Chapala Street
Santa Barbara, CA 93101
805.689.2305
CalBRE Brokers License #00774377 since 1980
Realtor of the Year