Whether you are a first-time home buyer or a seasoned veteran who has bought and sold properties for decades, buying or selling a home can be a complex process. While I have compiled this list of Santa Barbara Home Buying and Selling Tips as a resource for both buyers and sellers just like you, there is nothing that can replace the guidance provided by a knowledgeable and trusted member of the real estate community. As a Santa Barbara Realtor with more than three decades of experience in the Santa Barbara and surrounding markets, it would be my great pleasure to share my vast experiences with you. Perhaps one of the biggest preparations sellers can make when listing their Santa Barbara CA houses for sale is to get their home ready for buyers’ first impressions. Items such as the walkway, front porch and entryway can be crucial in a buyer’s first impression. Be sure to keep these areas free from clutter, updated and fresh. Kitchens and bathrooms are also known to “sell homes.” These are great areas to consider a few upgrades to maximize your return. As part of the Santa Barbara Real Estate Services I offer to sellers, we will walk through your home together to determine if any updates or changes need to be made to emphasize your home’s most marketable qualities. For buyers, it is important to first ask yourself why you want to buy a home: To stop paying rent? To start building equity? To raise a family? To have a place of your own? To entertain business associates? To move up to a bigger home? Next, you should determine the type of home you would like to have. Be specific and be sure to separate the “needs” from the “wants.” Once you have started this process, it will be imperative to speak with a qualified loan consultant regarding a pre-qualification. These Santa Barbara Home Buying and Selling Tips will assist you in being ready to explore communities and tour homes of interest without going on a wild goose chase.
Should you have any questions about these Santa Barbara Home Buying and Selling Tips, I encourage you to contact me. As a local real estate professional who lives, works and plays within the communities I service, it would be my great pleasure to welcome you to our area or to help you find the perfect buyers for your Santa Barbara home. Please do not hesitate to contact me today. I look forward to hearing from you soon and to earning your trust and business. Let’s get started!
Why is Santa Barbara Real Estate so expensive?
The Santa Barbara County South Coast may be the most attractive area in all of California to live due to its coastal setting, weather and no/slow growth policies which have been legally, and more importantly mentally, in place since 1972. With a total population of just over 200,000 coupled with a job base larger than the number of housing units available, the unrelenting demand for residences far outstrips the limited supply. Demand to live on the South Coast comes not only from local South Coast buyers (who account for 69.1% of the sales), but from North County buyers (1.2%), California buyers (14.7%), Western United States buyers (6.4%), Eastern United States buyers (5.8%) and Buyers from Abroad (2.8%). The South Coast’s Median Home price runs over twice the price of California’s Median Home price. Santa Barbara is a world-class destination and a highly desirable place to live; real estate values are driven by lifestyle choices, not just by economics.
What is the Median Home Selling Price?
The Median Price represents the price point at which half the homes sell for more and half sell for less. The Median Price can fluctuate from month to month depending on the price-mix of homes sold.
Current Price Trends
South Coast of Santa Barbara County
For January 2020
Single Family Residence Market
Median Sales Price = $1,302,500
Lowest Sale Price = $670,000
Highest Sale Price = $6,400,000
Median Sales Price = $740,000
Lowest Sale Price = $347,000
Highest Sale Price = $2,000,000
Where can I see Santa Barbara homes for sale?
Just go to “Property Search” to listings currently available in any given price range.
Buying Your Santa Barbara Home
Meet with me to get a general overview of the current market and to discuss what you are looking for in a home. Contact Stan by e-mail at [email protected] or on his direct line at (805) 689-2305.
Since you will be making a serious financial commitment, your next task is to determine your budget for your investment in Santa Barbara Real Estate. If you need a mortgage, you should start the Pre-Approval process with a local lender and determine your comfort level.
Determine the size of Santa Barbara home you will require, or can live with, by identifying the spaces you need for your family’s activities. No house will ever fully live up to your dreams, so you will probably have to make some compromises. Break the process into parts and prioritize those parts. Mentally budget for the parts your really care about!
Select target neighborhoods that meet your needs for commuting, shopping access, quality of schools, availability, style and recreational activities. There is an array of possibilities; during this step we will tour homes in a few Santa Barbara neighborhoods to give you a overall view of the area.
After determining which Santa Barbara neighborhoods and will fit your desires, we will concentrate your home search in the chosen areas. This may entail e-mailing the new listings to you as they come on the market or calling you with the information.
After locating a home acceptable to you, we will prepare an offer to be presented to the Seller. This offer will contain your inspection and financing contingencies.
Upon mutual acceptance of your negotiated offer, an escrow will be opened to handle the paperwork and title insurance needed for you to purchase the property. In California, the escrow company is a neutral third party which follows mutually agreed upon instructions from the Buyer and Seller. Your deposit check, which is usually in the amount of 3% of the purchase price, will be deposited into this escrow account.
The length of escrow is negotiated in the offer and can be long or short, but the usual length is 30-45 days. Usually the Buyer has a 17 day inspection contingency and the Buyer has the right to inspect the property and review any disclosures the Seller can provide. If the Buyer requires a mortgage, the time frame for removing the loan contingency is usually between 17 and 21 days. These time frames are all negotiable.
Assuming that property checks out and you have removed all your contingencies, the balance of your funds is due in escrow the last business day prior to the escrow closing. Property transfers are recorded at 8:00 AM each business day and we usually get confirmation between 10:00 and 2:00, depending on how busy the County Recorder’s office is that particular day. Upon receiving confirmation the Seller usually releases the keys to the Buyer who is then free to occupy their new property.
Santa Barbara South Coast Real Estate Update
January 7, 2020
A limited supply of available properties along the South Coast of Santa Barbara County is keeping values higher than one might expect as compared to many inland areas of California and most areas of the United States. The appreciation rate along the South Coast has softened and multiple offer situations are now few and far between. On the South Coast of Santa Barbara County as of January 2nd there were 268 active House/PUD listings (down from 336 in December and 400 in November) and 76 active Condominium listings available for sale (down from 87 in December and 103 in November). Seasonally the total number of listings go down in the winter, but there is much more inventory available in the higher price ranges than in the lower ranges as 123 (45.9%) of the 268 active House/PUD listings are located in Montecito and Hope Ranch. Compare these available listing totals to the years 2007 to 2011 when the total number of available listings ranged between 734 and 1,026. Historically the highest number of available listings along the South Coast was recorded in June of 1992 when there were 1,297 listings available for sale!
After no bank-owned sales on the South Coast of Santa Barbara since September 2018, there were 3 in March 2019, 1 in April, 3 in May and zero in both June & July, 1 in August and 1 in September, 1 in October 2019 and zero in November. There was one bank-owned sale in December; a house and land on Painted Cave Road @ $2,700,000. That totals 11 bank-owned sales in all of 2019. As of December 2nd there is 1 bank-owned listing available for sale: a House on Orena Street for $1,350,900. There are no bank-owned listings in escrow. During the last few years, the foreclosure activity along the South Coast of Santa Barbara County has diminished dramatically. According to Molly Boesel in her December 10, 2019 CoreLogic blog, in September 2019 3.8% of home mortgages were in some stage of delinquency, down from 4.4% a year earlier and the lowest for the month of September in more than 20 years. In September 2010 the delinquency rate was 11.3% and between 2000 and 2006 the delinquency rate averaged 4.7%. The link to full article is: https://www.corelogic.com/blog/2019/12/five-states-show-large-decreases-in-their-overall-delinquency-rate.aspx . The RealtyTrac link to California’s foreclosure by county is: California Foreclosure Trends by County .
As of November 2019 (the latest data available from CoreLogic), the highest recorded County median sales price in California was in San Francisco County @ $1,342,000 (up 3.2% from 2018) and the lowest recorded County median sales price was in Siskiyou County @ $195,000 (down 1% from 2018). The median sales price in the County of Santa Barbara was $583,500 (up 16.7% from 2018) and the median sales price in the City of Santa Barbara was $1,225,000 (up 19.3% from 2018). The lowest median sales price recorded in any California city was in Paradise in Butte County @ $38,000 (down 82.1% from 2018 due to the Camp Fire) and the highest was in Atherton in San Mateo County @ $7,000,000 (down 8.5% from 2018). You could buy 184 median priced House fire-lots in Paradise, 12 Houses in the County of Santa Barbara or 5.7 Houses in the City of Santa Barbara for the same price as 1 House in Atherton. If you care to see a House fire-lot you can buy in the Paradise for $38,0000 check https://www.realtor.com/realestateandhomes-detail/5092-Foster-Rd_Paradise_CA_95969_M26789-61712?view=qv . If you care to see a House you can buy in the Atherton for $7,900,000 check https://www.realtor.com/realestateandhomes-detail/14-Flood-Cir_Atherton_CA_94027_M29586-15188#photo0 .
On December 31st the Conference Board reported that the Consumer Confidence Index stood at 126.5, down from 126.8 in November. The highest recent Index levels recorded were 136.4 in November 2018 and 137.9 in October 2018. Historically the highest Consumer Confidence Index level was recorded in September 2000 when the Index stood at 142.5. “Consumer confidence declined marginally in December, following a slight improvement in November,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
The Federal Reserve (the Fed) raised the overnight lending rate four times in 2018; the last raise was to 2.5% in December 2018. In 2019, the Fed lowered the overnight interest rate numerous times, thereby reversing nearly all of 2018’s rate increases. At their December 10, 2019 meeting, the Fed kept their overnight interest rate to 1.5-1.75%. The Fed’s decision to leave the rate unchanged signals that policy would remain in force through 2020, keeping the central bank on the sidelines during a presidential election year. The average of the 30-year fixed mortgage interest rate as of January 3rd was in the 3.875% range, far below their recent November 2018 highs of 4.94%. If you borrowed $600,000 in November 2018, your monthly payment would be $378 higher than it would be today; that would be a savings of $4,536 a year! To put this all in historical perspective, the lowest 30-year mortgage interest rate since 1970 was recorded in 2012 @ 3.31%, and the highest was recorded in 1981 @ 18.63%.
Of the 168 Multiple Listing System sales in December 2019, 102 sold for over $1,000,000 which equates to 60.7% of the total MLS sales. The coastal areas of California are not inexpensive places to purchase real estate as compared to most areas of the United States, but again many people will pay more to live and invest in areas like Santa Barbara. According to Forbes the national average for all cash real estate sales averages 20%; on the South Coast in December 2019, 15.5% of the MLS sales were for cash.
As for the cost of living, Expatistan has compiled data from 297 major metropolitan areas around the world. Expatistan’s list of cities indicates Grand Cayman (Cayman Islands) is the most expensive and Mendoza (Argentina) is the least expensive. Of the top 20 most expensive cities in the world, 4 are in California; #2 Mountain View, #3 Palo Alto, #7 San Francisco and #15 Oakland. The least expensive city in the USA is Memphis, Tennessee which is rated 162 on the list. Santa Barbara is not on the list since it is not rated as a major metropolitan area, but nearby Los Angeles came in as #23. This is a very interesting list: https://www.expatistan.com/cost-of-living/index?ranking=1 .
As per the November 14, 2019 article by Nicolas Bedo at Realtor.com®, “California luxury markets have been struggling for the past several months, with price growth decelerating over time. However, August marked some troubling milestones for some key California markets. Los Angeles, California’s largest luxury market, saw its first price declines since 2016, as prices dropped 0.5 percent year-over-year. Million-dollar sales in Los Angeles are also down 4.5 percent since last year. Santa Clara experienced its largest decline since realtor.com started tracking luxury markets in 2010, with prices reaching $2.8 million in August, down 2.6 percent compared to a year ago. Million-dollar sales in Santa Clara are also down 23.2 percent. Marin County also saw its largest price decline since we started tracking luxury sales, with luxury prices reaching $3.1 million, down 6.5 percent year over year. San Mateo prices were flat, one of only a handful of months on record not showing price growth. Million-dollar sales were down 9.1 percent in August. Luxury home prices were also flat in Orange County for the first time since 2012. Million-dollar sales in Orange County were down 10.1 percent. The saving grace for California continues to be the center-coastal markets of Santa Barbara, San Luis Obispo, and Monterey counties. Santa Barbara was the fastest growing market in the country, with luxury entry point prices growing 20.1 percent year-over-year, reaching $2.7 million. San Luis Obispo prices reached $1.3 million this month, up 7.6 percent year-over-year. Million-dollar sales in San Luis Obispo were up 17.9 percent compared to last year. Monterey luxury prices reached $2.1 million this month, up 7 percent year-over-year. Riverside and San Diego, two of California’s southernmost counties, are also showing signs of resilience in a tough market. Riverside County luxury prices reached $791,000 this month, up 3.6 percent year over year. Million-dollar sales in Riverside were up 62.8 percent in August. Likewise, San Diego prices reached $1.5 million, up 2.7 percent year over year. Sales in San Diego were up 9.2 percent.” Check out the whole article: https://www.realtor.com/research/tag/luxury-homes/ .
Historically the highest Year-to-Date median sales price recorded on the Santa Barbara South Coast was recorded in 2007 at $1,031,500. The November 2019 Year-to-Date median sales price was $1,020,000. The current median sales price has been hovering just below or just above the historic high for most of 2017, 2018 and now most of the way into 2019. This is an indication of a leveling off in market values along the South Coast of Santa Barbara.
Based on the Santa Barbara Multiple Listing Service, as of January 2nd, in the City of Santa Barbara there were 94 active House/PUD listings and 37 pending sales, which equates to only a 2.5 month supply of listings for Buyers to choose from. Generally up to 3 months of inventory would be considered a Seller’s market where demand is high and inventory is scarce; lower than 2 months of inventory points to a more feverish Seller’s market. Historically a 4 to 5 month supply of available inventory would indicate a well-balanced market between Buyers and Sellers. Typically a 6+ month supply is considered to be a Buyer’s market where inventory is plentiful; Buyers are slower to make decisions and want to see everything on the market. Based on Santa Barbara Multiple Listing Service data and as of January 2nd, Carpinteria/Summerland had a 1.8 month supply, Montecito had a 6 month supply, Goleta had a 1.8 month supply and Hope Ranch had a 10 month supply. These inventory statistics indicate that Santa Barbara, Carpinteria/Summerland and Goleta are in a Seller’s market, Hope Ranch is in a Buyer’s market and Montecito is nearing being in a Buyer’s market. With a total of 85 House/PUD pending sales and only 268 active listings on the South Coast of Santa Barbara County, there is only a 2.5 (same as in November) month supply of House/PUD listings to choose from. With a total of 31 Condominium pending sales and only 76 active listings on the South Coast of Santa Barbara County, there is a 2 month supply (same as in November) of Condominium listings for Buyers to choose from.
Still the ramifications of the Federal tax cuts, planned increase in government spending, limits on mortgage interest deductions, rising insurance premiums, recent stock market corrections, trade tensions between China, Canada and Europe, the Federal $10,000 limit on State tax deductions and the memories of the fire damage & debris flows in Montecito are a concern to many Buyers along the South Coast of Santa Barbara. The median sales priced Santa Barbara home would translate to a real estate tax of $15,000+/- per year. Only time will tell how all these external and internal influences will play out and how they will affect Santa Barbara neighborhood values in the future. As always, supply and demand dynamics have and will affect the South Coast of the Santa Barbara Real Estate Market for a long time to come.
Feel free to contact me with any real estate related questions.
Stan Tabler, CRS, GRI, ABR, GREEN
801 Chapala Street
Santa Barbara, CA 93101
CalBRE Brokers License #00774377 since 1980