Santa Barbara South Coast Real Estate Update
July 16, 2024
According to data obtained from the County Recorder’s Office by Fidelity National Title, residential property sales on the Santa Barbara South Coast increased by 3% in June 2024 with 120 sales as compared to June 2023. Out of the 120 sales in June 2024, 81 were houses or in planned unit developments (PUDs), down 1% from 2023. The median sale price of these House/PUD sales was $1,995,000, down 16% from 2023 and the average sale price was $4,884,338, up 42% from 2023. There were 39 Condominium sales in June 2024, down 5% from 2023. The median sale price of these Condominium sales was $929,000, up 15% from 2023, and the average sale price was $1,227,624, up 11% from 2023. As of June 2024, there were a total of 625 Year-to-Date residential sales on the Santa Barbara South Coast, up 12% from 2023. As of June 2024, the Year-to-Date median sale price for all residential sales was $2,250,000, up 7% from 2023, and the average sale price was $3,714,928, up 11% from 2023.
In Carpinteria, there were a total of 10 residential sales in June 2024, up from 12 in May. In June 2024 there were 5 House/PUD sales, the same number of sales as in May. In June 2024 the median price of these House/PUD sales was $2,400,000 and the average price was $21,179,000. In May there were 5 Condominium sales, down from 7 in May. In June the median price of these Condominium sales was $964,100 and the average sales price was $916,320. The lowest-priced Carpinteria sale in June 2024 was a Condominium on Hickory Street @ $615,000 and the highest was a beachfront Estate on Padaro Lane @ $96,000,000.
In Summerland, there were a total of 2 residential sales in June 2024, up from 0 in May. In June 2024 there were 2 House/PUD sales, up from 0 in May. In June 2024 the median and average sale price of these House/PUD sales was $2,572,500. In June there were no Condominium sales in Summerland. The lowest-priced Summerland sale in June 2024 was a House on Varley Street @ $2,395,000 and the highest was a House on Whitney Avenue @ $2,750,000.
In Montecito, there were a total of 15 residential sales in June 2024, up from 11 in May. In June 2024 there were 13 House/PUD sales, up from10 in May. In June 2024 the median price of these House/PUD sales was $8,900,000 and the average price was $11,016,312. In May there were 2 Condominium sales, up from 1 in May. In June the median and average sale price of these Condominium sales was $2,595,000. The lowest-priced Montecito sale in June 2024 was a Condominium on Plaza de Sonadores @ 2,500,000 and the highest was an Estate on San Ysidro Road @ $32,000,000.
In Santa Barbara, there were a total of 48 residential sales in June 2024, down from 56 in May. In June 2024 there were 32 House/PUD sales, down from 48 in May. In June 2024 the median price of these House/PUD sales was $2,060,000 and the average price was $2,622,773. In May there were 16 Condominium sales, up from 8 in May. In June the median price of these Condominium sales was $1,106,250 and the average sales price was $1,458,024. The lowest-priced Santa Barbara sale in June 2024 was a Condominium on Modoc Road @ $825,000 and the highest was an Estate on Via Pradera @ $10,000,000.
In Hope Ranch, there were 2 residential sales in June 2024, down from 3 in May. In June 2024 there were 2 House sales, down from 3 in May. In June 2024 the median and average sale price of these House sales was $4,724,063. There are no Condominiums or PUDs in Hope Ranch. The lowest-priced Hope Ranch sale in June 2024 was a House on Las Palmas Drive @ $4,698,125 and the highest was a House on Via Esperanza @ $4,750,000.
In Goleta, there were a total of 43 residential sales in June 2024, up from 38 in May. In June 2024 there were 27 House/PUD sales, up from 19 in May. In June 2024 the median price of these House/PUD sales was $1,625,000 and the average price was $1,777,870. In May there were 16 Condominium sales, down from 19 in May. In June the median price of these Condominium sales was $1,140,630 and the average sales price was $1,045,773. The lowest-priced Goleta sale in June 2024 was a Condominium on Hollister Avenue @ $315,000 and the highest was an Estate on Via del Rey @ $4,625,000.
Analysis
As of June 1st in the Santa Barbara MLS, there were 146 active House/PUD listings, down from 152 in May, and 39 active Condominium listings, up from 36 in May, available along the Santa Barbara South Coast. The current housing supply shortage will continue to put pressure on housing values as the reduction in supply has now continued well into 2024. Compare our current supply levels to the years 2007 through 2011 when the total number of active listings for Buyers to choose from 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.
Inventory of available properties remains relatively low and this is creating tough competition among Buyers with bidding wars pushing up prices. During June, many Santa Barbara properties sold over their list (asking) price. The most notable overbids were: Fairway Road which sold $600,000 over the list price, Franciscan Drive which sold $225,000 over the list price, San Miguel Avenue which sold $180,000 over the list price, Las Alturas Road which sold $176,000 over the list price, Ella Lane which sold $175,000 over the list price, Paseo Ferrelo which sold $126,928 over the list price, Cannon Green Drive which sold $121,260 over the list price, and Plaza Rubio which sold $113,000 over the list price. These examples are limited to listings that sold $100,000+ over the asking price; many other listings sold at less than $100,000 over the asking price. Most of these were cash sales. These overbids are tame compared to Silicon Valley where reports show a staggering 74 properties sold for $200,000 or more over their listing prices, with nearly half commanding prices exceeding $500,000 over the list price. Santa Barbara Buyers are once again seeing multiple-offer competitions, so they are willing to pay a premium price for a home with great amenities and in a great location. People enjoy living along the Santa Barbara South Coast to enjoy our Mediterranean climate and casual lifestyle.
According to NAR Economists’ Outlook, all-cash home buyers have trended up significantly in recent months. Since October 2022, all-cash home buyers who did not finance their recent home purchase have been more than 25% of the sales. In May 2024, all-cash buyers now stand at 33.5% of home sales for non-first-time Buyers. In highly sought out areas, including Santa Barbara, cash Buyers represent a much higher percentage of sales: 69% in the City of Carmel, 64% in Manhattan (New York), 57% in Pebble Beach, and 54% in Pacific Grove. On the Santa Barbara South Coast in May 2024, the percentage of cash sales was 44%, down from 50% in April.
Inflation in the United States is slowing again after higher readings earlier this year, Federal Reserve Chair Jerome Powell said on July 2nd, while adding that more such evidence would be needed before the Fed would cut interest rates. After some persistently high inflation reports at the start of 2024, Powell said, the data for April and May “do suggest we are getting back on a disinflationary path.” Speaking in a panel discussion at the European Central Bank’s monetary policy conference in Sintra, Portugal, Powell said Fed officials still want to see annual price growth slow further toward their 2% target before they would feel confident of having fully defeated high inflation. “We just want to understand that the levels that we’re seeing are a true reading of underlying inflation,” Powell added. “The most recent inflation readings, though, have shown some modest further progress,” Powell told the Senate committee on June 9th, “and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”
Mortgage interest rates have more than doubled since the beginning of 2022. As of July 3rd, you could lock in an $838,350 30-year fixed-rate conforming mortgage at 6.95% (down from 7.249% in June). 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 current rates are still lower than that average. Mortgage rates of 7.79% in October 2023 were at a 23-year high following all-time lows reached just three years ago highlighting 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 an $838,350 loan in 1981 would have been $13,066/month, the payment in July 2021 would have been $3,378/month, and as of July 28th 2024, that payment would be $5,549/month. Buyers will have to accept that mortgage interest rates are not going down anytime soon. One reason for low inventory levels is that many would-be Sellers are still hesitant to sell their homes as roughly 59% currently have mortgage interest rates below 4%, and close to 23% of homeowners have rates below 3%.
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. In 2023 there were no bank-owned sales and only 1 short sale of a House on W. Figueroa Street. Locally there are no bank-owned properties for sale at this time, and none are on my radar. According to the latest MBA National Delinquency Survey (NDS) as of February 2024, the overall delinquency rate for mortgage loans on one‐to‐four‐unit residential properties increased to a seasonally adjusted rate of 3.88% of all loans outstanding at the end of the fourth quarter of 2023. The delinquency rate was up 26 basis points from the third quarter of 2023 but down 8 basis points from one year ago. The historical average for the seasonally adjusted mortgage delinquency rate from 1979 through 2023 is 5.25%. To review the entire Mortgage Bankers Survey, check out this link: https://newslink.mba.org/mba-tag/mba-national-delinquency-survey/ .
Of the 120 residential sales in June 2024, 97 were over $1,000,000 which equates to 85.8% of the total sales, down from 91% in May. 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 once-a-year report (November 2023), 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 cities listed 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, 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 article, check out https://wallethub.com/edu/happiest-states/6959
After a large (6 point) drop in May, the National Association of Homebuilders’ confidence index fell again by an additional 2 points in June to 43. That is well below the 50 breakeven point between bullishness (expansion) and bearishness (contraction). Here’s what NAHB Chairman Carl Harris had to say: “Persistently high mortgage rates are keeping many prospective buyers on the sidelines. Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages, and a dearth of buildable lots.” To review the entire article and graphs, check out https://tradingeconomics.com/united-states/nahb-housing-market-index
The Consumer Confidence Index dipped in June to 100.4 (1985=100), down from 101.3 in May. “Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, Confidence could weaken as the year progresses,” said Dana M. Peterson, Chief Economist at The Conference Board. “Consumers expressed mixed feelings this month: their view of the present situation improved slightly overall, driven by an uptick in sentiment about the current labor market, but their assessment of current business conditions cooled.” To review the entire article check out https://www.conference-board.org/topics/consumer-confidence
As for the worldwide cost of living as of July 1st, Expatistan compiled an index of 174 major worldwide metropolitan areas. In the United States, the most expensive area to live in is #2 New York City with a @ 228 Price Index score (the least expensive gallon of regular gas costs $3.39/gallon) and the least expensive is #114 Cedar Rapids, Iowa @ 93 ($3.12/gallon). Searching the entire state of California, the least expensive gallon of gas can be found in Tulare County @ $3.55/gallon. Of the top 25 most expensive areas worldwide, two are in California (down from four in June); #5 San Francisco @ 213 ($4.99/gallon), and #18 Los Angeles @ 169 ($3.89/gallon). The most expensive area to live in the world is #1 London (England) @ 236 ($5.79/gallon) and the least expensive is #174 Yogyakarta (Indonesia) @ 37 ($3.12/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 $4.73/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 economist Hannah Jones’ June 29th report, “Mortgage rates have trended lower over the past two months, and fell for the fourth consecutive week last week. Rates have eased nearly four-tenths of a percentage point since early May, and this week’s data shows that the housing market might be starting to respond. Price growth and new listing growth both picked up compared with the previous week, suggesting an uptick in both buyer and seller activity. More fresh listings is great news for buyers, but higher price growth might be a bit discouraging. Nevertheless, the share of homes seeing a price reduction continues to climb year over year, suggesting sellers are continuing to adjust their expectations.” Check out the entire report at: https://www.realtor.com/research/weekly-housing-trends-view-data-week-june-29-2024/
According to CoreLogic’s July 2nd report “Home prices nationwide, including distressed sales, increased year over year by 4.9% in May 2024 compared with May 2023. On a month-over-month basis, home prices grew by 0.6% in May 2024 compared with April 2024 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results). The CoreLogic HPI Forecast indicates that home prices will rise by 0.7% from May 2024 to June 2024 and increase by 3% on a year-over-year basis from May 2024 to May 2025.” To see the whole report, check out: https://www.corelogic.com/intelligence/us-home-price-insights-july-2024/
Historically the highest Year-to-Date median sale price recorded on the Santa Barbara South Coast was recorded in 2007 at $1,031,500, but this is now ancient history. The median sale price of all residential sales Year-To-Date in 2024 is $1,757,600, up 3% from 2023. The median sale 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 the first half of 2022 before leveling off throughout most of 2023. Now in 2024, the median sale price is slowly climbing again. The average sale price of all residential sales Year-To-Date in 2024 is $2,976,837, up 12% from from 2023.
Based on the Santa Barbara Multiple Listing Service data, as of June 1st in the City of Santa Barbara, there were 67 active House/PUD listings (up from 57 in May) and 36 pending sales (down from 43 in May), which equates to a 1.9-month supply (up from 1.4 in May) 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 4-to-6-month supply of available inventory would indicate a fairly well-balanced, normal market between Buyers and Sellers. 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 June 1st, Carpinteria/Summerland had a 4.2-month supply (up from 3.4 in May), Montecito had a 4.4-month supply (down significantly from 9.3 in May), Goleta had a 1.1-month supply (down from 1.6 in May) and Hope Ranch had a 6.5-month supply (up from 4.3 in May). These inventory statistics indicate that Goleta and Santa Barbara remain in a Heated Seller’s market. Montecito and Carpinteria/Summerland have moved into a fairly well-balanced market. Hope Ranch is in a Buyer’s market. With a combined total of 63 House/PUD pending sales (down from 69 in May) and 146 active listings (down from 152 in May) along the South Coast of Santa Barbara County, there is only a 2.3-month supply (up from 2.2 in May) of House/PUD listings from which Buyers can choose. With a combined total of 24 Condominium pending sales (same number as in May) and only 39 active listings (up from 36 in May) on the South Coast of Santa Barbara County, there is a 1.6-month supply (up from 1.5 in May) of Condominium listings from which Buyers can choose. The total South Coast of Santa Barbara County market is in a state of transition with property values remaining static for most of 2023 and into the first months of 2024, but taking recent sales prices into account, values are on the rise once again.
While concerns about the pandemic’s economic impact have diminished, there are many other concerns for many Buyers and Sellers. These include the wars in Ukraine and the Middle East, continued tensions in other parts of the Middle East, inflation, rising insurance premiums, higher mortgage interest rates, and still the possibility of a recession or a “soft landing”. Now a major concern for Buyers and Sellers is the scarcity of homeowners’ insurance coverage, especially since State Farm, Nationwide, Kemper, Marine America, Trans-Pacific, and Allstate have refused to issue new and are canceling existing home insurance policies. California’s Proposition 19 allows homeowners aged 55+ to transfer their existing real estate tax base to a home anywhere in the State; this newer law may encourage some older Sellers who wish to sell their current homes and downsize. Lack of inventory means high demand and therefore higher prices, so over many years 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 2024 may remain on the market just a bit longer than in 2023, but each week we are still seeing multiple offers on certain well-priced properties (recently I have seen 10+ offers on listings). Home values in the Santa Barbara South Coast Real Estate Market continue to be positively affected by supply and demand dynamics due to our market’s persistent low listing inventory; I expect this value dynamic to continue into the foreseeable future.
Review the attached list of the 120 properties sold on the Santa Barbara South Coast in June 2024 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
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