Merry Christmas & Happy New Year!  We are very grateful for you. The question we get asked most is, “How’s the real estate market?”

Well, this has been a unique year.  The metaphorical brakes have been applied by the Fed through rising interest rates for some time now. Though the Fed’s Fund Rate is not directly tied to Mortgage rates, they sure influence it. This began in March of 2022 with the Fed’s rate hikes and continued with more and more pressure through July of 2023. Then they left their foot there for the last few months.

Interestingly, though rumored for a little bit, they announced on December 13th that they will start releasing the brakes in 2024. The Fed’s forward guidance is that they expect to drop rates at least three times in 2024. Talk about some advanced signaling.

The Fed’s announcement caused a major adjustment in interest rates.  Over the last two months, Interest rates have dropped significantly. The index we follow, shows the average 30 year fixed rate mortgage dropping from 8.03% on 10/19/23 to 6.64% on 12/19/23.  Rates dropped by almost a 0.5% on the date of their announcement.  Something us realtors and all buyers are very excited about.

The rising interest rates of the last year and a half, as we mentioned previously, has really caused a slow down in sales. The total sales volume of 2023 will be about half of the peak volume of 2021.

The rates were not the only reason for a slow down in sales. We continue to lack inventory as total homes and condos on the market between Carpinteria to Goleta is only 183 available on December 19.  Inventory grew some in 2023, but has been remarkably low with our highest inventory levels peaking at about 220 available properties on the market.  But again, rates even play a part in this as it is hard for sellers to trade in a 3 or 4% mortgage for today’s rates.

As we enter 2024, we have some encouraging signs of a much more normal market.  If we continue to see rates drop, hopefully our inventory will grow and  for buyers affordability will increase.

We love to talk about the market and all things real estate, so feel free to reach out if you need anything.

THE HIGH & LOW

November 2023 Highest Sale  | 130 Montecito Ranch Lane, Summerland |  Sold for $13,000,000

September 2023 Lowest Home Sale  | 1315 Alta Vista Road, Santa Barbara |  Sold for $900,000

The Statistics

YTD | Jan-Nov 2023

• Total Sales:  1,028 in ’23  vs  1,367 in ’22  |  DOWN 25%
• Total Home Sales:  722 in ’23  vs  957 in ’22  |  DOWN 25%
• Total Condo Sales:  306 in ’23  vs 410 in ’22  |  DOWN 25%
• Median Home Price:  $2,100,000 in ’23  vs  $2,104,000 in ’22  |  FLAT
• Median Condo Price:  $950,000 in ’23  vs  $958,000 in ’22  |  DOWN 1%
• Sales Above $5M:  112 in ’23  vs  125 in ’22  |  DOWN 10%

November 2023

• Total Sales:  79 in ’23 vs 85 in ’22  |  DOWN 7%
• Pending Sales:  78 in ’23 vs 74 in ’22  |  UP 5%
• Total Off-Market Sales:  11 Sales  |  14%
• Total Cash Sales:  35 Sales  |  44%
• Average 30-Year Fixed Rate Mortgage: 6.64% as of Dec. 20, ’23