Without a doubt the big news in the real estate market this month is… The long-awaited, predicted, and anticipated drop in the Fed Fund Rate, yahoo!

While many anticipated an initial cut of 0.25%, it came as a surprise to many when the Fed decided on a 0.50% reduction. Although the Fed funds rate doesn’t directly dictate mortgage rates, it does influence them. Lenders set their rates based on a variety of factors, with the 10-year T-bill being a key benchmark. They closely monitor economic conditions, and the Fed funds rate plays a role in shaping their projections. As illustrated in the chart below, rates that were around 8% less than a year ago have now fallen to the low 6% range.

As we previously noted, our market has slowed significantly, with a sharp reduction in the number of transactions. July marked one of the slowest months for sales volume on record, and August followed closely as the second slowest in the past 22 years. Despite this decline in volume, overall prices in most segments have remained stable.

This shift isn’t solely due to interest rates, but they have certainly played a major role in affecting buyers’ purchasing power and keeping many sellers from entering the market, especially those reluctant to give up their low interest rates. With borrowing costs decreasing and more cuts anticipated, could this spark activity in the real estate market? We certainly hope so, though we acknowledge our bias.

One key metric we’ve been monitoring is available inventory. As we mentioned last month, inventory has continued to rise from its all-time low but has plateaued over the last 10 weeks, hovering in the 280s to 290s range.

In the past few weeks, we’ve observed a slight uptick in properties going under contract. While this is too small a sample to draw any definitive trends, it’s an interesting development.

As always, real estate is dynamic, and we’re here to help. If you have any questions or want to discuss the market further, please don’t hesitate to reach out. Thank you!

THE HIGH & LOW

August 2024 Highest Sale  |2039 Boundary Dr., Montecito |  Sold for $11,050,000

August 2024 Lowest Home Sale  | 2784 Alta, Painted Cave |  Sold for $715,000

The Stats

YTD | Jan. – Aug. 2024

• Total Sales:  832 in ’24  vs  761 in ’23  |  UP 9%
• Total Home Sales:  594 in ’24  vs  530 in ’23  |  UP 12%
• Total Condo Sales:  238 in ’24  vs 231 in ’23  |  UP 3%
• Median Home Price:  $2,200,000 in ’24  vs  $2,060,000 in ’23  |  UP 7%
• Median Condo Price:  $970,750 in ’24  vs  $950,000 in ’23  |  UP 2%
• Sales Above $8M:  39 in ’24  vs  40 in ’23  |  DOWN 3%

August 2024

• Total Sales:  115 in ’24 vs 106 in ’23  |  UP 8%
• Pending Sales:  103 in ’24 vs 105 in ’23  |  DOWN 2%
• Total Off-Market Sales:  7 Sales  |  6%
• Total Cash Sales:  49 Sales  |  43%
• Average 30-Year Fixed Rate Mortgage: 6.18% as of Sept. 24, ’24