A New Chapter! Around the middle of May our Santa Barbara real estate market changed. The voracious buyer activity, with record sales volume and high prices that we experienced for the last two years subsided.  It appears that the negative economic news, rising interest rates, Inflation, and two years of rapid price appreciation have caused buyers to be much more cautious.

A change occurred in Mid-May and this is what we experienced.

First, a noticeable decrease in sales. Sales had been slowing before May, but it was connected to a lack of inventory to sell. Until May, generally speaking, everything that hit the market sold as quickly as sellers would accept an offer.

By May, our inventory for the first time began to gradually creep up and it has continued.  On July 26, our total homes and condos available for sale between Carpinteria to Goleta grew to 218 properties. This is still a low number, but compared to the middle of April when we only had 97 homes and condos available, it is a sizable increase.

The second change was in the approach.  For months, buyers and agents were asking how much over the list price do they need to go to secure a home and, in general, it was a lot. Though we can still point to exceptions, we noticed that buyers began to be much more contemplative. Starting in May, more questions were being asked about the direction the market was headed.  Homes that were garnering a dozen offers started to only see a couple of offers. Buyers began to not feel as pressured to be aggressive on what they offered.

And with that fewer homes are selling dramatically over asking.  It is now more the norm for properties to sell at asking or even a little under. We recently wrote offers for buyers on a few homes and have tracked many others. In two cases, we were one of three offers, and not one of the offers went above the asking price, a rarity just a few months back.

In addition, many other properties going under contract are only receiving one offer.  Some fairly priced properties are sitting on the market and not going under contract quickly.  And at the same time, we are seeing a few properties still go over asking.

Though this sounds strange compared to what we experienced for the last two years, if we go back prior to COVID, this is more like our market during very normal times.

Over the last couple of years, we have witnessed many quick and extreme reactions.  Sometimes in retrospect, they were wise, and other times overreactions.  As we move into a more normal market, I am mindful not to quickly flip one way or the other, but make sound long-term decisions.

THE HIGH & LOW

June 2022 Highest Sale  | 810 Buena Vista Dr, Montecito |  Sold for $17,000,000

June 2022 Lowest Home Sale  | 730 E Cota St, Santa Barbara |  Sold for $775,000

June Statistics

Year-To-Date | 2022

• Total Sales:   832 in ’22 vs 1,154 in ’21  |  Down 28%
• Total Home Sales:   579 in ’22 vs 823 in ’21  |  Down 30%
• Total Condo Sales:   253 in ’22 vs 331 in ’21  |  Down 24%
• Median Home Price:  $2,272,000 in ’22 vs $1,930,000 in ’21  |  Up 18%
• Median Condo Price:   $931,777 in ’22 vs $825,000 in ’21  |  Up 13%
• Sales Above $5M:   84 in ’22 vs 108 in ’21  |  DOWN 23%

June 2022

• Total Sales:   147 in ’22 vs 194 in ’21  |  DOWN 24%
• Pending Sales:   107 in ’22 vs 191 in ’21  |  DOWN 44%
• Total Off-Market Sales:   17 Sales  |  12%
• Total Cash Sales:  50 Sales  |  34% 
• Average 30-Year Fixed Rate Mortgage:   5.13% as of July 29, ’22