Overview

Santa Barbara Real Estate through the end of January ‘08 for Montecito, Hope Ranch, Santa Barbara, Goleta, Carpinteria and Summerland
These numbers were compiled on the 2nd of February so they will rise probably around 10% to 15% throughout the month as offices complete reporting the January sales figures. That said, we see that on February 2nd from Carpinteria to Goleta for Homes Estate/PUDs in January there were 40 closed sales posted. That means the final numbers should be about 44 to 46 for the month of January. This compares to the 44 for December ’07.

Median Home Price

The Median Sales price for the month is again over $1 million coming in at $1,130,000 compared to the $929,000 mark for December. This means that there is more balance in this month as compared to last. 17 of the 40 sales were $1 million and below and 12 were $2 million and above. Also returning in January we see that 3 properties closed escrow at $5 million plus. It was this upper end of the market that drove the numbers throughout the first half of ’07 so hopefully it will lead the way again.

What is definitely leading the way at this point is the numbers of properties which entered escrow in January. While we posted only 40 sales for the period, 56 Home Estates entered escrow. This activity is definitely below ’06 and ’07 for the months of January but it does mean there are more people coming into the marketplace who are willing to make offers which have been accepted by the sellers than we’ve seen in the last two months.

Hot Market

The hot market right now seems to be in the area of $600,000 to $800,000. I’ve heard reports of multiple offers on some properties in this price range and have even seen some price increases. I think the price increases are coming from the banks if they find themselves in a short pay situation where they are owed more than the property is currently worth, but we’ll have to see whether these rises will act as a drag on that segment of the market or whether there is enough interest to keep it moving forward.

Investor Sense

There is definitely a lot of interest from investors which tells me that they think the bottom of the market has been reached. I know of an investor who purchased a property at auction for about $415,000 and immediately placed it on the market below $600,000. If the investor is able to turn the property in the mid to low $500,000s that would be a substantial profit and more importantly to me it means that more homes in that price range would bring a substantial number of people into the marketplace that up until now have been squeezed out.

Home Estates 

At this time the inventory of Home Estates is continuing to grow with 479 units on the market as of the end of January. The Median List price for those almost 500 homes is $1,559,000 which means that homes priced in the $1 to $2 million range are starting to stack up while those in the $600,000 to $1.2 million range are continuing to move.
One of the numbers that jumped out at me was the over 100 Listings that Expired in January and interestingly the Median List price of those homes was $1,595,000. Compare those Expired Properties to the 151 properties that came on the Market with a Median List price of $1,299,000. When you look at that Median List price for new homes and then calculate the Sales Price to Original List Price ratio of 90% you get $1,169,100 which is certainly within spitting distance of the current Median Sales price of $1,130,000.

Upward Sale Trend 

While what we’ve seen is certainly not a tidal wave of activity it is still activity in the right direction. Properties are coming on the market at a Price Range which potential buyers have not seen in years and some sellers seem willing to find a number which results in a sale. Couple that momentum with Interest rates that continue to trickle down and I think the potential to turn the market around sooner rather than later is alive and well in the Santa Barbara area. I’m particularly encouraged by the broad spectrum of properties that sold during the month all the way from a high of $9.49 million to a low of $615,000.

The Condo Market

For Condos I’m not nearly as optimistic. We saw 17 sales so far in January compared to the 12 we saw in December, but the numbers that went into escrow in January was also 17 which means we’re going to stay about at the same level of activity we’ve seen for the past 2 months. The Median Sales price for January was $590,000 which compares to 1 year ago when it was $662,000. But $590,000 is up from where it was in December when it was $526,000.

At the end of January there were 188 Condos for sale from Carpinteria to Goleta with a Median List price of $685,000. When you compare that to the Median Sold price of $590,000 you see a substantial gap of almost $100,000 between what people are asking for the properties and what people are willing to pay.

Just like with Home Estates there were a substantial number of Condo Listings that Expired in January. For the 42 Expired Listings the Median List price was $675,000 just $10,000 off the current overall Inventory Median List price of $685,000. But when you look at the 61 New Listings coming on the market with a Median List price of $630,000 and you then factor in the Sales Price to Original List Price ratio of 90% you get $567,000 which is actually below the current Median Sales price. This tells me that the people coming on the market now with their condos are more likely to get a sale than in the previous couple of months but at this point that’s only a theory.

The Price Range of Sales for Condos in January shows us a top of $1,750,000 and a low of $290,000. This means that there is a rather wide diversity in the marketplace and that activity is not confined to only one part of the spectrum.

The one really worrisome element to me in the Condo Market is the dramatic increase in Condos that have fallen out of escrow.  With 17 Sales and 17 properties entering escrow we’ve seen 7 Condos fall out of escrow for about a 41% Fall Through rate. This is a combination of Buyers getting cold feet, Lenders not wanting to take even somewhat marginal risks and the general feeling that prices are going to drop even further.

At this point it’s difficult to come up with a scenario that will break the condo market open. List Prices have continued to drift downward but so far the buyers are still standing on the sidelines.