In the midst of a dynamic and ever-changing real estate landscape, both nationally and locally, we take a moment to dissect the data and provide a comprehensive overview of the Santa Barbara housing market for October 2023. Join us as we explore the highs and lows, trends, and key insights to understand how the market performed compared to the previous year.
The month of October showcased the diversity of the Santa Barbara market. The highest-priced sale was a stunning 21 acre estate on Freehaven Dr., selling for a little over $20 million. While the property took over 100 days to sell, it aligns with historical norms for estates of this magnitude. On the other end of the spectrum, a fixer on Quinientos Street was the lowest-priced sale at $850,000.
With such an expansive range between the highest and lowest sales, it can be confusing to understand where the “normal” market stands. To grasp the overall market health, we delve into median sales prices. For single-family homes, the median sales price was $2,110,000 million, a 4% increase from the previous October. The median Condo sales price was $902,500, which was a 10% decrease from last October. Despite month-to-month fluctuations, year-to-date figures show an overall increase in condo prices in most neighborhoods.
Addressing concerns about a market crash, we analyze the percentage declines in condo and single-family residence prices, finding only a 1% dip for condos and a 3% decrease for single-family homes. There was a 67% increase in equity gained since 2019. A marginal decrease in property prices, coupled with elevated interest rates, can result in higher overall costs for buyers. To further support the market, approximately 40% of all transactions are conducted in cash.
In a notable shift, mortgage demand is showing signs of resurgence as interest rates experience a downward trend. Recent data from the Mortgage Bankers Association's seasonally adjusted index reveals a 3% increase in total application volume after rates decreased. Specifically, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) saw a decline from 7.61% to 7.41%.This decrease in interest rates is creating more buyers, more competition and if it continues to fall, higher prices.
Analyzing the relationship between interest rates and market segments, we observe that affordable condos (below $1.5 million) are most sensitive to higher rates. The decrease of sales directly correlates to the increase in rates.
However, the $2 million to $4 million range, representing Santa Barbara's middle class, remains resilient. There has been a slight drop in sales since rates have increased but it is not drastic.
Properties at $6 million and above dont show a correlation. These properties exhibit sporadic sales, often influenced by emotional factors, with cash buyers dominating this segment.
Santa Barbara maintains a low inventory level of 2.5 months, consistent with the previous month. This shortage, coupled with a median days-on-market of 24 for condos and 30 for single-family residences, underscores the continued high demand. With a balanced market typically considered to have six months of inventory, Santa Barbara remains firmly in a seller's market.
For prospective sellers, understanding the long-term price trend is crucial. Despite market fluctuations, a 30-year price trend reveals a substantial 67% increase in median sales prices from 2019 to the present. A large majority of homeowners have equity in their home and financial leverage should they need it. It may not be a pandemic market, but with the right strategy, sellers are still getting top dollar. Those who embrace strategic pricing, invest in property presentation, and leverage tools like Compass Concierge are seeing optimal results.
In this comprehensive market update for October 2023, we've navigated through the highs and lows of the Santa Barbara housing market. While challenges exist, the market's resilience, coupled with strategic insights, positions both buyers and sellers to navigate this dynamic landscape successfully. For those considering a move, our team is dedicated to providing personalized consultations and assistance in navigating the intricacies of the Santa Barbara real estate market.
Contact us for a strategic plan tailored to your unique situation.
