What a year 2016 was!
The Dow went from around $17,400 at the beginning of the year and flirted with the $20,000 mark by the end of the year; though it never quite stayed there. The election was a roller coaster ride from beginning to end. There is uncertainty in the air. The one constant factor through this tumultuous time has been the Santa Barbara area real estate market.
We can refer to this past year as a steady, normal market.
In the graph below, note that the number of houses sold, both single-family homes & Planned Unit Developments (PUD’s) appear to be an average number over the years.
At this point, there does not tend to be a trend in which we could predict what 2017 will be. The same goes for the sales of condos, the number is rather average. It should be noted that there were no large developments of condos for sale during 2016. There is however, a new development that is currently underway, The Village at Los Carneros and expect escrows to begin closing in 2017; in fact, we anticipate well over 100 units within the first quarter of the year.
The median price is moving in the right direction, as you can see in the graph below. For homes, this is the fifth year of an increase in the median price. But it is not extreme; it went up about 4.5% compared to last year which is a very gentle rise. When we see large jumps in the median, there is always fear that a “bubble” may be occurring in the future, but that does not look to be a concern at this point. We have not surpassed the height of the last market, which was around $1,250,000, but we may get there eventually.
The condo median price range has also steadily increased over the last four years. This past year, it has risen just less than 1% compared to the end of 2015.
In the chart below, we do a finer breakdown for year-to-date information along with stats just for the last month. The information is broken down into general areas around Santa Barbara.
Let’s start with a review of the number of active listings. At the time this chart was made, there were only 294 active listings, that is a relatively low number. The lowest it has been since these figures have been tracked. Areas like Carpinteria/Summerland and Hope Ranch tend to have widely changing MOI’s (Months of Inventory) and median prices.
The MOI for condos is 2.2 months. This is primarily due to the low inventory of 89 condos currently available. Throughout the year, there have typically been well over 100 condos for sale each month. Along with that, having 40 condos in escrow in the month is a strong number. These tend to be the “starter homes” for many first-time home buyers.
The Months of Inventory (MOI) is an interesting number to watch. This indicates roughly how long it would take to sell all of the current active listings. The overall for houses is currently at 4 months. This is a good indicator that we are in that steady, normal market. When the number is between 0 and 3.0, that implies that the market is favoring the seller. If the number is between 4.0 and 6.0, that represents a steady, normal market. Anything over that, then the market is favoring buyers or a “Buyer’s Market”.
The highest number of active listings occurred in July 2010 when it hit 678. Later in the article, the 294 is broken down into categories based on list price. Of those areas, they tend to have small sampling sizes of active listings and sales, so their numbers may not be truly reflective of their activity.
It is interesting that Montecito had the same number of sales for the last two years. Even though 2015 overall sales were higher and there were more high-end sales, the final number of sales for each year is the same.
Looking at this year-end information, we can compare it to year-end 2015:
As a matter of information, the following table compares the number of all closed sales for homes over the last two years, by price range.
In regards fact there may have been fewer sales in the under a million dollar range possibly due to some properties inching over into the $1M range. The $1M-$2M is a few ticks higher than the year before; probably our most active market price range. The over $8 Million sales category is down compared to last year.
There were over three times as many sales last year compared to this year in that range. into selling price, there is a calculation as to how close it was to the list price at the time of sale on average. For houses, the selling price was around 96% of the list price. For condos it is a bit closer, the selling price was around 98% of the list price. This is not to imply all houses and condos meet this percentage. There was a fair share of properties that the seller received offers well over the list price. Contrarily, there were properties that received much less than the list price. These percentages just balance everything out.
The following table gives you an idea of the price ranges where the available inventory resides:
The under $1M range is becoming uncomfortably low. Last year at this time, almost 19% of the inventory was in this range. This has typically been considered the more “affordable” range for houses. The only other range that is noticeably different is the $2M – $4M which is up by almost 10% compared to last year.
The Fed Funds rate had increased twice during 2016. There is a possibility that we will see it continue to do so in the new year. If so, mortgages may be higher and it may be harder for people to buy homes base on affordability.
With so much uncertainty at present, it is best to stay positive. There are always people who either need or want to sell, and there are always buyers anxious to buy in the Santa Barbara area. If you or someone you know is thinking of taking advantage of the real estate market, be sure to contact Robert Watt at Village Properties who can guide you through the process. www.wattrealestategroup.com