IS IT A GOOD TIME TO BUY?
People often ask me, “How is the real estate market in Santa Barbara – Is it a good time to buy?”
Well, of course, the answer is a bit of a moving target, but here is a short summary with some helpful advice.
There are many sub-markets within the South Santa Barbara County residential real estate market, which include wonderful areas such as Montecito, Hope Ranch, Santa Barbara, Carpinteria, and Goleta. The following are some snapshots:
Regarding the high-end luxury market ($4 million and above): Interestingly enough, price levels have not recovered in the high-end market like they did at lower price levels since the last recession ending in 2012. Many homes with excellent architectural features in prime locations have sold at levels well below their replacement cost (not even counting the land!) which presents a great buying opportunity in this market. Given the scarcity of such properties and their beautiful geographic setting along some of the most beautiful coastline in the world with a very enjoyable climate, I believe that we will look back at this time wishing we had taken advantage of this buying opportunity. Having over 30 years in the real estate field including real estate appraisal, I am very in-tune with market value and have several “buy” recommendations at present.
Regarding the $2 to $4 million market: This market is very property specific. A well-marketed quality property with an appealing and functional design that is well-priced will typically sell fairly quickly. Remember, the two most important factors in selling a home are marketing and pricing. Again, having spent decades in the real estate appraisal industry, I know this all too well. Conversely, a home that is priced to “test the market” will likely sit on the market. And of course, it is also vital for a seller to present their home as well as possible to the market. For instance, just recently, because of years of deferred maintenance, I was able to negotiate a very good price discount for a buyer client of mine for a property with a large home situated on a large ocean view lot. Something helpful for sellers when upgrades are necessary to more effectively market a property is a new program specific to our brokerage where the cost to perform key renovations can be deferred until the close of escrow.
All that said, from a buyer’s perspective, there are plenty of good buying opportunities with the properties in this price range generally possessing excellent locations and amenities. Properties in this price range generally make very good long-term investments for those planning to stay in their home for more than a few years. Montecito is recovering nicely from the January 2018 debris-flow event in terms of sales rates, however there are still very good buying opportunities.
Please also note that given the recent wildfires in the area, property insurance can be more difficult to obtain. It is important to begin the process of procuring property insurance as early as possible when buying a home. Please contact me with my recommendation for a property insurance broker.
By the way, on December 5th, 2019 the County of Santa Barbara released the updated Debris Flow Risk (“Red Zone”) Map. The highlighted areas indicate which properties may be at risk of debris flow/flooding and areas that will be evacuated if a storm is forecasted that may cause a debris flow this season. Of particular significance to both buyers and sellers is that the updated map significantly reduces the number of properties in the “Red Zone” within Montecito due in part to the healthy revegetation in the prior Thomas Fire burn areas. The interactive map is available at ReadySBC.org
Regarding the entry-level market ($2 million and less): It’s no secret that median price levels have gone up significantly (approximately 70%!) in this category since 2012 when the last recession ended. In recent years, price level increases have been more modest with the Santa Barbara Association of Realtors reporting an approximate 3% to 5% annual increase over the past year. Therefore, while I don’t necessarily recommend “flipping” houses at this time, there are always “fixer” opportunities out there for someone with vision and cash who is willing to take the risk for the reward.
Despite the current price levels, there is a lot of competition among buyers due to several factors such as a limited supply of housing in a very desirable geographic area, still relatively low-interest rates, and the continuing strength of the economy overall including strong employment levels. Also, note that buyers will have more to work with as conforming loan limits will be higher in 2020. All in all, its an ideal time to sell in this price range.
As we close the 2019 year and look forward to all that 2020 brings, the greater Santa Barbara residential real estate market remains healthy, being a great place to live, work and play.
J.J. Gobbell has been engaged in real estate consulting for over 30 years. He also has an extensive background in both residential and commercial real estate appraisal having appraised many notable properties including ultra-high-end luxury residences, large agricultural properties, high-rise office towers, and even oil terminals! He received the prestigious MAI designation from the Appraisal Institute in 2006. Such experience is critical in many areas including setting the appropriate listing price for a seller as well as negotiating the best purchase price for a buyer. He loves living in the Santa Barbara area and very much enjoys helping clients meet their real estate goals and dreams in each unique community along the South Coast, including Santa Barbara, Montecito, Hope Ranch, Carpinteria, and Goleta. His expertise includes the highest level of service for discriminating buyers and sellers. Please call and allow him to help turn your dreams into reality regarding your next move in the real estate market. Excellent referrals are also available for top agents outside the Santa Barbara area.
Berkshire Hathaway Home Services, California Properties
1170 Coast Village Rd Montecito, CA 93108