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 April 2020
Single Family Residence Market
Median Sales Price = $1,200,000
Lowest Sale Price = $620,000
Highest Sale Price = $6,650,000
Median Sales Price = $791,000
Lowest Sale Price = $598,000
Highest Sale Price = $1,950,000
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
May 15, 2020
Direct from the County Recorder’s Office by way of Fidelity National Title, the total number of residential sales on the South Coast of Santa Barbara County was down 44% from 167 in April 2019 to 94 in April 2020. In April 2020 there were 69 House/PUD sales, down 35% from 2019, with a median sales price of $1,200,000 and an average sales price of $1,666,464. In April 2020 there were 25 Condominium sales, down 58% from 2019, with a median sales price of $791,000 and an average sales price of $920,000. The total of the combined January through April residential sales in 2020 was 479, down 17% from 2019, with a median sales price of $1,107,500 and an average sales price of $1,463,902.
In Carpinteria there were a total of 3 sales in April 2020, down from 7 in March. In April 2020 the median and average sales price of the 1 House/PUD sale was $995,000. In April 2020 the median and average sales price of the 2 Condominium sales was $734,500. The lowest priced Carpinteria sale in April 2020 was a Condominium on Franciscan Court @ $700,000 and the highest was a House on Sterling Avenue @ $995,000.
There were no sales in Summerland in April 2020.
In Montecito there were a total of 15 sales in April 2020, the same number as in March. The median sales price of the 12 House/PUD sales was $2,793,000 and the average sales price was $3,168,250. In April 2020 the median sales price of the 3 Condominium sales was $1,200,000 and the average sales price was $1,374,000. The lowest priced Montecito sale in April 2020 was a House on East Valley Road @ $900,000 and the highest was an Estate on Jelinda Drive @ $6,650,000.
In Santa Barbara there were a total of 45 sales in April 2020, down from 58 in March. The median sales price of the 38 House/PUD sales was $1,200,000 and the average sales price was $1,214,592. In April 2020 the median sales price of the 7 Condominium sales was $1,160,000 and the average sales price was $1,038,500. The lowest priced Montecito sale in April 2020 was a House on W. Canon Perdido @ $620,000 and the highest was a House on Franceschi Road @ $2,300,000.
In Hope Ranch there were a total of 3 sales in April 2020, the same number as in March. The median sales price of the 3 House sales was $3,300,000 and the average sales price was $2,989,667. There are no Condominiums in Hope Ranch. The lowest priced Hope Ranch sale in April 2020 was a House on Via Cayente @ $1,500,000 and the highest was a House on Mariposa Drive @ $4,169,000.
In Goleta there were a total of 28 sales in April 2020, down from 45 in March. The median sales price of the 15 House/PUD sales was $972,000 and the average sales price was $1,389,900. In April 2020 the median sales price of the 13 Condominium sales was $783,500 and the average sales price was $779,962. The lowest priced Goleta sale in April 2020 was a Condominium on Cannon Green Drive @ $598,000 and the highest was a House on Via Brigitte @ $3,780,000.
The COVID-19 pandemic has not only affected our daily lives, but how everyone buys and sells real estate. The mortgage market has been functioning much more smoothly in the last few weeks than it was in March and April, but is still a mess. Open houses and Broker Caravans are not allowed and serious protocols are in place for in-person showings of listings. Due to virus concerns many Sellers have completely cancelled their listings, 21 cancelled in February, 37 in March and 42 in April. Other Sellers have withdrawn their listings from the market, 4 withdrawn in February, 48 in March and 19 in April. The unemployment rate is higher than it has ever been, but 78% of those who lost their jobs in April feel the layoffs are “temporary”, according to CNBC polling. It is hard to grasp how to analyze the future effects of the virus on how we live our lives. I do predict there will be a slower pace of sales at least during the next few months, but only time will really tell if this slowdown is also “temporary”.
A limited supply of available properties along the South Coast of Santa Barbara County is keeping values higher than one might expect, even taking into account the effects of the COVID-19, 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 there are fewer multiple offer situations, but they still do exist depending on how the property is priced. Along the South Coast of Santa Barbara County as of May 1st there were 283 active House/PUD listings (down from 378 on May 5, 2019) and 86 active Condominium listings (down from 125 on May 5, 2019) available for sale. Generally, there is much more inventory available in the higher price ranges than in the lower ranges as 106 (37.5%) of the 283 active House/PUD listings are located in the higher valued Montecito and Hope Ranch areas. Compare the current low totals to the inventory levels from 2007 to 2011 when the total number of active listings ranged between 734 and 1,026. Historically the highest number of active listings along the South Coast was recorded in June of 1992 when there were 1,297 active listings available for sale.
During each month of 2019, sales of bank-owned properties ranged between zero and three. There were no bank-owned sales in January through March 2020. As of May 1st there were no bank owned listings for sale or in escrow on the South Coast of Santa Barbara County. There was one bank-owned House on Orena Street sold for $977,500 with a listing price of $1,199,999. Foreclosure activity along the South Coast of Santa Barbara County has diminished dramatically. To check out California’s foreclosure by county, visit this RealtyTrac link: California Foreclosure Trends by County . Dr. Nothaft, the Chief Economist for CoreLogic, has recently stated “Home loan delinquency and foreclosure rates were the lowest in a generation before the COVID-19 pandemic hit. Recession-induced job losses will fuel delinquencies. However, wide-spread foreclosures across America will likely be averted because of the home equity buffer that homeowners have and the available forbearance programs. Our Home Equity Report found that at the start of 2020, homeowners with a mortgage also had an average of $177,000 in home equity.”
As of March 2020 (the latest data available from CoreLogic), the highest recorded County median sales price in California was in San Mateo County @ $1,387,000 (up 6% from 2019) and the lowest recorded County median sales price was in Plumas County @ $207,500 (down 9.2% from 2019). The median sales price in the County of Santa Barbara was $557,000 (up .9% from 2019) and the median sales price in the City of Santa Barbara was $1,192,500 (up 6% from 2019). The lowest median sales price recorded in any California city was in Del Rey in Fresno County @ $33,000 (no sales in 2019) and the highest was in Atherton in San Mateo County @ $9,880,000 (up 89.5% from 2019). You could buy 299 median priced Houses in Del Rey, 17.7 in the County of Santa Barbara or 8.3 in the City of Santa Barbara for the same price as 1 House in Atherton. If you care to see a 1,000 square foot House you can buy in the Del Rey area for $50,000 check out https://www.realtor.com/realestateandhomes-detail/136-W-El-Dorado-St_Fresno_CA_93706_M10592-10116?view=qv . Just for fun, check out what you can buy in Fresno for $565,000 (less than the median price of a Condominium in Santa Barbara): a 2,830 square foot House with a swimming pool https://www.realtor.com/realestateandhomes-detail/707-E-Hampton-Way_Fresno_CA_93704_M19702-61985?view=qv . If you care to see a 6,296 square foot House you can buy in the Atherton area for $11,500,000 check out https://www.realtor.com/realestateandhomes-detail/74-Atherton-Ave_Atherton_CA_94027_M21517-70268?view=qv .
The Federal Reserve (the Fed) raised the overnight rate four times in 2018 with the last raise to 2.5% in December 2018 and then in 2019 the Fed lowered the overnight interest rate numerous times, thereby reversing all of 2018’s rate increases. In March the Fed made an “emergency rate cut” to 0-.25%. The Fed has recognized that the COVID-19 outbreak is causing “tremendous human and economic hardship, sharp declines in economic activity and a surge in job losses, which weigh heavily on economic activity, employment and inflation and poses considerable risks to the economic outlook over the medium term. Medium term to the Fed means a year of so; this is certainly not a positive outlook coming from the Fed. On May 2nd Warren Buffet praised the current Fed’s handling of the COVID-19 crisis and said the Fed has acted with “unprecedented speed and determination” and “we do know the consequences of doing nothing and that would have been the tendency of the Fed in many years past.” As of May 8th you can get a $510,000 30-year fixed rate loan at 3.25%. Historically the lowest 30-year mortgage interest rate since 1970 was recorded in 2012 @ 3.31%, so we are now setting a new low @ 3.25%. The highest mortgage rate was recorded in 1981 @ 18.63%. If you got a $510,000 mortgage in 1981, your payment would have been $7,949/month; today it would be $2,220/month.
Of the 95 sales in April 2020 there were 54 over $1,000,000 which equates to 57% of the total sales. The South Coast of Santa Barbara is not an inexpensive place 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 Santa Barbara. According to Forbes the national average for all cash real estate sales is 20%; on the South Coast in April 2020, 16% were cash sales (the lowest percentage in recent history). See the attachment for the total list of the 94 properties sold on the South Coast of Santa Barbara County in April 2020.
On April 28th the Conference Board reported that the Consumer Confidence Index stood at 86.9, down from 118.8 in March and 132.6 in February. In recent years the highest recent Index level recorded was 137.9 in October 2018. Historically the highest Consumer Confidence Index level was recorded in September 2000 when the Index stood at 142.5. Lynn Franco, the senior director at the Conference Board, stated: “Consumer confidence weakened significantly in April, driven by a severe deterioration in current conditions. The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis. Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy. However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold. The uncertainty of the economic effects of COVID-19 will likely cause expectations to fluctuate in the months ahead.”
As for the cost of living in May 2020, Expatistan has compiled data from 251 major metropolitan areas worldwide. Expatistan’s list indicates Mountain View, CA at #3 is the most expensive area in the USA with a Price Index score of 272 and Memphis, TN at #136 is the least expensive with a score of 135. Of the top 25 most expensive areas worldwide, 5 are in California: #3 Mountain View @ 272, #7 San Francisco @ 258, #12 Oakland @ 232, #20 Los Angeles @ 213 and #21 San Jose @ 210. The most expensive area to live in the world is #1 Hamilton (Bermuda) @ 310 and the least expensive is #257 Madras (India) @ 58. Santa Barbara is not on the list as Expatistan has not rated it as a major metropolitan area. This is an interesting list to check out if you want to compare the cost of living in different cities around the world: https://www.expatistan.com/cost-of-living/index .
In his March 18, 2020 article, Nicolas Bedo at Realtor.com® wrote about the Luxury Market in the fourth quarter of 2019 and then about the current market uncertainty: “Continuing their upward trajectory, markets along the central coast of California keep thriving. Santa Barbara was the fastest growing luxury market in Q4, with prices reaching $2.88 million, up 25 percent compared to the same time last year. Million dollar sales in Santa Barbara were up 29 percent year over year. Monterey prices reached $2.36 million, up 24 percent year over year, with million dollar sales up 52 percent. San Luis Obispo luxury prices reached $1.38 million, growing 10.5 percent year over year, with million dollar sales up 72 percent. However, like the U.S. economy, luxury housing isn’t immune to the impacts both short and long-term of COVID-19. Many of the gains made in the luxury market in the fourth quarter could be erased as buyers are asked to stay home and sellers hunker down. It seems clear that COVID-19 is going to have far reaching consequences both in the U.S. and globally, the question that remains is just how much of an impact it will have.” Check out the complete 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. In April 2020 the Year-to-Date median sales price was $1,113,750. The median sales price has been hovering just below or just above that historic high for most of 2017, 2018, 2019 and now into 2020. 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 May 1st, in the City of Santa Barbara there were 116 active House/PUD listings and 32 pending sales, which equates to a 3.6 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 fairly 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 May 1st, Carpinteria/Summerland had a 16.5 month supply, Montecito had a 6.5 month supply, Goleta had a 1.5 month supply and Hope Ranch had an 11 month supply. These inventory statistics indicate that Goleta is in a Seller’s market, the City of Santa Barbara is in a balanced market and Carpinteria/Summerland, Montecito and Hope Ranch are in a Buyer’s market. With a total of 68 House/PUD pending sales and only 283 active listings on the South Coast of Santa Barbara County, there is a 4.2 month supply of House/PUD listings to choose from. With a total of 22 Condominium pending sales and only 86 active listings on the South Coast of Santa Barbara County, there is now a 3.9 month supply of Condominium listings for Buyers to choose from.
The ramifications of the concerns about COVID-19 and how it has & will affect our world, government spending in response to COVID-19, home insurance availability & rising premiums, trade tensions, the tumultuous stock market, the Federal $10,000 limit on State tax deductions and the memories of the fire damage & debris flows in Montecito are concerns to many Sellers and Buyers along the South Coast of Santa Barbara County. Forecasting the economic impacts of COVID-19 is really speculation at this point in time since the trajectory of COVID-19 itself cannot be predicted. That being said, in the first few weeks of May, we have seen an uptick in the showings of listings, multiple offers in a few cases and many new escrows. We have also seen Buyers remotely review photos and videos on line, and then make an offer prior to and subject to their physical inspection of the property. Lack of available inventory as compared to last May is continuing to drive our markets, especially in the Goleta and the City of Santa Barbara. As always, supply and demand dynamics have and will continue to 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