Throughout Southern California, home prices remained stable while the number of sales fell to a six-year low, according to research from DataQuick. Home buyers purchased 14,027 new and resale homes and condos in Southern California in February, which was 12 percent less than a year prior. While there are many reasons for this, two of the major influencers are price appreciation and tight inventory.
Even still, in some areas, there is more inventory available than there was a year earlier, according to Realtor.com, but the ever-increasing prices are keeping many home buyers at the sidelines.
“The drop in housing affordability is enough to nudge some out of the market,” DataQuick President John Walsh said in a statement. “Other would-be buyers have no doubt called ‘time out’ while reevaluating their housing priorities, or watching for signs the market has overshot a sustainable price level.”
But take for example areas like Santa Barbara where inventory sits very low and prices have climbed much higher than where they were a year ago, according to statistics from Altos Research, a data analytics company. In Santa Barbara, there were about 279 properties for sale as of March 14. The low inventory met with high demand for homes in Santa Barbara drove the median home value up from around $2.1 million a year ago to $2,703,731 in March.
While demand for homes in Santa Barbara is in seller’s territory, it’s so close to the neutral zone that buyers will find plenty of benefits in the area’s market. Altos’ Market Action Index measures conditions to determine whether an area favors buyers or sellers with a neutral value of 30. The index in Santa Barbara fell slightly in the second week of March to 30.49, just above buyer’s territory. It’s likely that demand has fallen a bit in Santa Barbara because the high prices and low inventory are keeping some potential home buyers on the sidelines.
Home Builder Confidence
The traditional buyer and seller season is just around the corner and that means that more home owners are going to be looking into the market in Santa Barbara and throughout the U.S. According to the National Association of Home Builders/Wells Fargo, the builder sentiment index showed a slight uptick in February from 46 to 47. However, a reading below 50 shows a pessimistic attitude toward the conditions for home building.
“A number of factors are raising builder concerns over meeting demand for the spring buying season,” said David Crowe, the NAHB’s chief economist. “These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale.”
The housing market still has a ways to go before reaching its peak, but in areas like Santa Barbara, it is well on its way. We’re a luxury real estate company who specializes in exquisite properties throughout Southern California. Please contact us so that we may assist you with your luxury real estate needs.
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(all data current as of 10/22/2017)
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