Jobs are the principal driving force behind the demand for housing and regional home sales. Right now there are near unlimited job opportunities as well as rising incomes, yet home sales have been unimpressive. In much of California, they even declined last year.
The demand for rental housing has dominated the housing choices, as both Millennial’s and Boomers look to non – ownership housing. Consequently, the emphasis has been on building apartments, though new single family home production is also rising inmost cities, including Santa Barbara.
Existing home sales are forecast to remain at muted levels in 2019 and beyond. The fall – out that occurred in 2018 (with sales falling 9 percent in Santa Barbara – Goleta – Montecito and 5 percent statewide) is unlikely to be reversed this year or next. This late in the expansion, home buyers are reticent to buy homes at record high prices with the expectation that a recession is coming. There is still the memory of the 2006 – 2007 housing bubble and the fear of buying at the top.
While lack of inventory had been a constraining factor on home sales in recent years, this year inventory is rising. With more supply and a reticence to buy, look for softening prices in 2019.
A meaningful correction in prices is not being forecast because the economy will remain strong, incomes will continue to rise, and many households will still elect to buy, especially as interest rates move lower.
Year to date, the median sale price is about 2 percent lower than values a year ago along the South Coast. For the first 3 months of 2019, the number of sales is actually ahead of last year’space. Our base forecast for home price appreciation does moderate however, and the alternative forecast will turn negative if sales fall off. Again, a major correction in prices is unlikely to occur.
Housing Forecast - Montecito Marketplace Under the Microscope
For 41 years I’ve helped Montecito/Santa Barbara sellers get the most money possible at closing, in the least amount of time, with less hassle. I help sellers deal with the real marketplace rather than make believe pie in the sky promises that cannot be delivered.
I don’t believe it should take ten months and repeated major price reductions to sell homes in Montecito. Seethe chart below for how business as usual currently operates. Call me to see how I can do better for you.
Most Realtors in Montecito feel optimistic that the real estate market should get stronger. Their thinking goes, “People love Montecito and are willing to pay to live here; we are strong and we are bouncing back.”
However, trends well in place in California over the past year show that:
- There are more homes for sale
- Fewer homes are selling.
- Prices are generally lower than the year before in higher priced areas
The direction of the market has very little to do with recovery from the debris flow. According to the Anderson Forecast from UCLA, the downward price direction is “widespread and substantial” in California’s metropolitan areas.
In places like Montecito, where homes cost more than the median California price of $570,000, the market is under performing. Listings are up 57% to 15% from the Bay Area to the Central Coast. Sale numbers are down 10 percent. The hottest market of California – SiliconValley – experienced a price drop last year of 20 percent. In Santa Barbara, the 2018 price drop was 5 percent including Montecito.
Don’t spend 12 months finding out the market is less optimistic than your Realtor thought. That thinking will cost you money. Call me before you sign a listing.
Montecito Market Report
The data relating to real estate for sale on this web site comes from the Internet Data Exchange Program of the Santa Barbara Multiple Listing Service. Real estate listings held by brokerage firms other than the displaying broker(s) are marked with the ‘MLS’ logo and detailed information about them includes the name of the listing brokers. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor displaying broker shall be responsible for any typographical errors, misinformation, or misprints. 2021 Santa Barbara Multiple Listing Service. All rights reserved.
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