Overview:

With Home Sales remaining in the mid 80s and condo sales in the mid 30s for the month things look like they're going to keep going for awhile especially when you consider the over 100 Home Escrows opened in June. The condo escrows are not piling up however but just matching the numbers of sales. But without an expanding inventory this is to be expected. The median sales price of homes is up slightly from $830,000 last year to about $860,000 this year over the 1^st 6 months while the condo median sales price is down from $467,500 last year to $437,000 this year.   

Home Estate/PUD

Looking at the Home Estate/PUD market for the greater Santa Barbara area from Carpinteria/Summerland to Goleta including Montecito and Hope Ranch for the first 6 months of '10 the numbers of sales for June was 81, down from 86 in May and 89 in April. The Medium Sales Price was up slightly however going from $902,500 in May to about $915,000 in June. But, the average sales price did drop from the previous month going from $1.425 million in May to about $1.25 million in June. This decline in the average sales price was due to a fall in the numbers of homes that sold over $1 million and an increase in the sales below $1 million.

Comparing June '09 to June '10, the sales are about the same with 85 in '09 and 81 in '10 but the median sales price has gone up substantially from about $795,000 last year to $915,000 this year. What has also gone up is the numbers of escrow rising from 84 in '09 to over 100 in '10. The median list price on those escrows did not go up a lot however with '09 having an $829,000 median list price for opened escrows and '10 showing up with an $885,000 median list price for escrows opened in June.

The inventory is up from the previous month when there were about 615 Home Estate/PUDs available for purchase with a median list price of about $1.7 million to about 650 Homes on the market in June with a $1.6 million median list price

Carpinteria/Summerland: sales are up with 35 this year compared to 26 last year and the median sales price has drifted upward from $643,000 in '09 to $675,000 in '10. What has dropped substantially this year is the numbers of escrows falling from 39 in '09 to 27 in '10. This means that most of those sales that were racked up this year were actually put into escrow last year.

Montecito: has seen 57 sales this year compared to 52 last year and the median sales price has risen slightly from $2.33 million in '09 to $2.48 million in '10. But, compared to Carpinteria/Summerland the future looks bright in Montecito because the escrows are up from 54 in '09 to 72 in '10 with the median list price on those escrows holding solid at about $2.6 million for both years.

East of State St: sales are way up from 74 last year to 112 this year with the median sales price rising from just under $900,000 last year to about $960,000 this year. The escrows are also way up this year so things should continue surging forward in the area.

West of State St: the numbers of sales are up from 78 last year to 86 this year with the median sales price also going up from $735,000 last year to about $815,000 this year. Escrows are also way ahead of last year so just like the East Side things should keep going on the West Side.

Hope Ranch: sales are up from 7 to 10 this year with the median sales price going from $2.55 million to $3.23 million. But, it looks like things have stalled in the area because escrows are holding at 11 this year compared to 10 last year with the median list price on those escrows in '10 falling to just under $2 million.

Goleta South: sales are up from 45 last year to 51 this year but the median sales price has dipped from $700,000 last year to $650,000 this year. It looks like things are slowing in the area with escrows just slightly ahead of the '09 pace but on the up side the median list price on those escrows is right about $700,000.

Goleta North: sales are up from 73 in '09 to 83 in '10 with the median sales price also rising from $704,000 last year to $735,000 this year. The escrows are way up however going from 78 in '09 to over 100 in '10.

For the Home Estate/PUD market sales are remaining in that mid 80s range for the month with the median sales price still hovering around the $900,000 range for June.

Condos

For the Condo market in the Santa Barbara area there were 33 sales in June down from 37 in May but up from 32 in April. The median sales price also fell for the month from $467,000 in May to $439,000 in June. The average sales price dropped substantially however falling from about $600,000 in May to about $500,000 in June.

In June '09 there were 43 sales compared to the 33 in June '10 but the median sales price last year of $455,000 has remained rather stable for about a year. But, when you look at the period from Jan. 1 to June 30 there were 130 sales in '09 compared to 168 this year while the median sales price slid down from $467,500 in '09 to $437,000 in '10. For June '10 most of the sales were concentrated below $550,000 with only 6 of the 33 sales above that mark and no transaction above $1 million.

Carpinteria/Summerland: has 36 sales this year compared to 19 last year but the median sales price has dipped slightly from $400,000 in '09 to $393,100 in '10. The escrows are also way up from 23 last year with a median list price on those escrows of $420,00 to 35 this year with a median list price of $409,000.

Montecito: Montecito there have been 10 sales this year with a median sales price of $1,062,500 compared to only 1 sale last year for $679,000. The escrows are also up from just 1 in '09 to 12 this year so sales should remain substantially ahead in Montecito for the foreseeable future.

East of State St: there have been 38 sales this year compared to 29 last year but the median sales price has dropped from $505,000 last year to $442,500 this year. The escrows are only slightly ahead this year with 38 compared to 33 last year with the median list price on those escrows going down from $539,000 in '09 to $499,000 in '10.

West of State St: condo sales have gone up from 29 in '09 to 40 in '10 but the median sales price has dropped from $520,000 last year to $496,000 this year. The escrows are also up from 36 last year with a median list price of $519,000 to 49 this year with a median list price of $515,000.

Goleta South: condo sales have dropped from 32 in '09 to 24 in '10 with the median sales price of $419,500 last year down to $357,500 this year. The pending properties are also way down from 44 last year to 28 this year.

Goleta North: condo sales are right where they were last year with 20 in both years and the median sales price is also solid with $408,500 in '09 compared to $405,000 in '10.  The escrows are also very close together with 30 last year and 29 this year as is the median list price on those escrows with $399,000 last year and $419,000 this year.

Quick Statistics for December 2009

The average price for the 92 properties is $1,660,874

The highest price is $25,000,000 - 2825 Padaro Lane

The median price is $845,000

The lowest price is $270,000 - 86 Nectarine Ave

The average Market Time is 94.

Santa Barbara Real Estate for all of 2009 compared to 2008 for Montecito, Hope Ranch, Santa Barbara, Goleta, Carpinteria and Summerland

Overview

There was a decline in the median sales price for both single family residences and condos in 2009.  This puts the median price in Santa Barbara right around the median sales price for 2003 which is comparable to the rest of the country.  The median price declined at the same rate and to the same point in most of the United States.  In 2003 the country and the world for that matter was awash in money for home loans. It was at that time that financial brokerages along with Fanny Mae and Freddie Mac began packaging loans and selling them to investors in derivatives and collateralized debt obligations. The effect of these packages along with looser underwriting standards for loans spurred a 20% rise in the median sales price from 2003 to 2004 and then a 25% rise from 2004 to 2005. From 2005 to 2007 the median sales price remained stable at around $1.2 million locally.  Then in 2008 those derivatives and collateralized debt obligations triggered by the looser underwriting standards began to unravel causing the decline in the median sales price almost everywhere from 2007 to 2008 and a further decline on into 2009 ending with that 30% decline in the median sales price for most of the country.

For about the last six months of 2009 prices began to stabilize locally and there has been some upward pressure on prices particularly in the condo market. There are three motivating factors in causing the upward price pressure.  First, is a general decline in the number of properties available for purchase in the sub-million dollar range.  Second, is the $729,000 maximum FHA loan limit which is evidenced by the $850,000 median sales price.  Third, is the first time buyer's income tax credit which has brought a lot of people into the marketplace.

Home Estate/PUD

For the greater Santa Barbara area including Carpinteria/Summerland, Montecito, Hope Ranch and Goleta single family residence sales trailed 2008 sales for most of the year until the end of October.  However, by the end of the year sales had moved ahead of the previous year by roughly 7% finishing the year with around 830 sales. The median sales price, which is derived by ordering sales from the highest priced property to the lowest and then going to the middle of the list however was a whole different story. 

Single family residences went from a median sales price of approximately $1,050,000 in 2008 down to about $850,000 in 2009.  When you remove Montecito and Hope Ranch from the equation, the median sales price for 2009 was roughly $750,000 for the year - down from about $870,000 in 2008. This drop in the median sales price for the whole area means that from 2007 to 2008, single family residence median sales prices fell 12.5% and from 2008 to 2009 prices fell 19%.  This means from 2007 to 2009 there was a decline of about 30% in the median sales price for the area

CONDOS

Condo sales surged forward and by the end of June had eclipsed the previous year's sales significantly finishing the year about 16% ahead of 2008.

Condo sales prices were not affected as severely as Single Family residence.  The median price in dropped from $535,000 in 2008 down to about a $465,000 for 2009. This translated into a 13% decline for the year. In 2007 the median sales price for condos was about $630,000 which means from 2007 to 2008 there was a decline of 15% and from 2007 to 2009 there was a drop of roughly 26% in the median sales price.

Market Factors

If things remain as they are right now, it looks like sales will continue to increase and will eventually cause prices to rise.  This is evidenced by the significant numbers of properties that have entered and remain in escrow at this time. However, there are a couple of elements which are lurking out there. First, there is a considerable number of what are called pre-foreclosure properties. The owners of these properties have either fallen behind in their payments or have stopped paying their mortgages altogether. Also, there are a lot of variable rate mortgages which are going to re-set in March.  A number of these loans are in the million dollar plus range. Whether these pre-foreclosure properties turn into foreclosures and whether it's a flood or trickle will have a great significance on the marketplace.

The second element that will affect prices is interest rates. At this point interest rates remain close to an all time low which has allowed Real Estate sales to continue moving forward. With the government continuing to run up huge deficits, it is only a matter of time before interest rates go up.  When interest rates go up we will have a whole different landscape to deal with. People's ability to qualify for higher loans will be diminished if rates increase which should cause prices to decline further and could mean a decline in the numbers of sales.

Two of the most important numbers that determine where the market is going is the numbers of sales compared to the numbers of properties that went into escrow. When the numbers of properties going into escrow is higher than the numbers of sales then the market is picking up and conversely if there are fewer homes going into escrow than are sold then the market is slowing. 

For 2009 the numbers of single family home escrows opened was about 120 above the numbers of sales and for condos the opened escrows were almost 100 over the numbers of sales. Both of these numbers are significantly ahead of the numbers posted in 2008 which means there is a lot more activity in the marketplace in 2009 compared to the previous year meaning that there is still a great deal of vitality in residential real estate.

A lot of this increase in activity we experienced is the increase in the number of what are called "short sales." This is a situation in which the seller owes more on the property than the property is worth. A "short sale" generally takes longer because the lending institution or investor can take a great deal of time in deciding whether to accept the reduced price as full compensation for the debt.  This is one of the big reasons that there were so many properties that remained in escrow at the end of the year.

Going into 2010 there's still a lot of strength in the Real Estate market. Sales continue to grow and there are a substantial number of properties that entered escrow in '09 most of which will sooner or later become completed sales. The number of homes available for sale has continued to decline but a lot of that is seasonal with a lot of people taking their properties off the market during the holidays. The numbers of homes for sale will grow as we move into the year and listings begin to pick up at the end of February. But, there are still a lot of short sales and bank owned properties on the market. Somewhere between 15% and 20% of the available single family residences and condos are either short sales or foreclosures, what are called REOs (Real Estate Owned) that make up the available properties for sale in the area. Until these properties are gone prices will remain roughly where they are right now with some upward pressure particularly with condos.