The end of the year and the start of a new one is a great time to look back and reflect. Even though it’s arbitrary, it’s a helpful marker to consider where our market is, what’s trending, and what might happen in the future.

So what is the current state of the real estate market?

In the beginning of 2024, many anticipated 2024 would experience a noticeable improvement in sales volume. The logic was that buyers had been waiting and interest rates were broadcasted to fall.

In 2024, 1,233 single-family homes and condos were sold between Carpinteria to Goleta. We are grateful for the 12% improvement over 2023 and the trend is moving in the right direction, but still more sluggish than we would like.

So why? Overall, it is clear that buyers were not feeling as confident in the economy and expensive financing put a damper on sales.

INTEREST RATES

Forecasting the future is a tricky business. The main reason for this belief, was the Fed’s broadcasting their plan to lower interest rates. Though not directly correlated, with three rate cuts in 2024 and the Feds lowering their fund rates by 1%, it did little to affect mortgage interest rates.

In 2024, the average 30-year fixed mortgage rate started the year at 6.7% and ended the year slightly over at 7.06%. Most of the year, they stayed north of 6.5%, with a brief period under 6.25% in September and October.

Should we make some future predictions about 2025 ;)? We are not feeling optimistic about our abilities. The Fed is now anticipating only 2 rate drops in 2025, but we will see how the mortgage interest rates respond to the Fed, 10-year Treasury Bill, and the current administration.

VALUES

While sales volume has remained lower, overall prices have been stable or improving. Despite a few exceptions at the beginning of 2022, prices have not fallen and, in fact, have shown improvement for the last 12 years.

INSURANCE

One necessary component, home Insurance, has continued to be complex and more expensive. Over the past few years, numerous insurance carriers have ceased operations in California, rates have risen significantly for most homeowners, and homeowners in higher fire risk areas have encountered substantial difficulty finding suitable insurance options. With the recent fires, we can only imagine that the situation will be exasperated.

FIRES

On that note, the new variable in our market is the recent fires in Los Angeles. With over 10,000 homes lost in Los Angeles and our close proximity to the area, we have experienced some new renters and buyers entering our market.  Due to our proximity to LA, we experience a good number of buyers relocating from the area every year. Though it is a little early to see the full effects, we anticipate that more buyers who have the means will expedite their plans to relocate to the Santa Barbara area due to the fires.

Do we dare to make a prediction? Why not? What’s the worst that can happen, we might be wrong.

The current trend is a little more inventory, but it is still not an abundance. Buyers seem to have adjusted to the new normal with our low interest rates pretty far back in the rearview mirror. Overall buyers are more value-focused and are weighing out their purchases with a longer-term perspective. We are seeing signs of more inventory coming on the market and more buyers likewise entering, which are all good signs for a nicely balanced market.

We are guessing that sales volume will slowly increase and interest rates will hopefully drop slowly through the year.

We are excited about 2025 and helping our clients achieve their long-term goals.

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

December 2024 Highest Sale  | 770 San Ysidro Rd, Montecito |  Sold for $13,500,000

December 2024 Lowest Home Sale  | 6222 Avenida Gorrion, Goleta |  Sold for $1,250,000

The Stats

YTD | Jan. – Dec. 2024

• Total Sales:  1,233 in ’24  vs  1,105 in ’23  |  UP 12%
• Total Home Sales:  894 in ’24  vs  773 in ’23  |  UP 16%
• Total Condo Sales:  339 in ’24  vs 332 in ’23  |  UP 2%
• Median Home Price:  $2,172,130 in ’24  vs  $2,100,000 in ’23  |  UP 3%
• Median Condo Price:  $995,000 in ’24  vs  $945,000 in ’23  |  UP 5%
• Sales Above $8M:  61 in ’24  vs  57 in ’23  |  Up 7%

December 2024

• Total Sales:  97 in ’24 vs 77 in ’23  |  UP 26%
• Pending Sales:  78 in ’24 vs 65 in ’23  |  UP 20%
• Total Off-Market Sales:  10 Sales  |  10%
• Total Cash Sales:  35 Sales  |  36%
• Average 30-Year Fixed Rate Mortgage: 7.05% as of Jan. 30, ’25