February 2023 Santa Barbara Real Estate Market

The real estate market in Santa Barbara and Montecito, as well as many other areas in the US, has seen a sudden surge of activity since mid-January. This increase in activity appears to reflect increased consumer confidence, and we’re now seeing multiple offers and contingency-free offers. The trend of increased activity does not necessarily appear to be unique to Santa Barbara alone, many of the national real estate teams that we mastermind with regularly are reporting a similar trend.

We are continuing to see a severe shortage of inventory, which is at its lowest now compared to the last five years. As a result, homes that do come on the market present exciting opportunities for buyers ready to engage, likely resulting in the multiple offer scenarios that we are seeing. As a clear example of this trend, every one of Zia Group’s recent listings has sold with multiple offers, and two new listings brought in a total of 16 offers between both properties. When we look at the homes that have gone into escrow, it’s taking about three weeks for the average home to go into escrow now, which is much quicker than they were at the beginning of the year. Despite this increase in activity, the number of sales has decreased by 25%, which is a reflection of a lack of inventory rather than buyer demand.

If you are a home seller in our area, now is a great time to sell. Not only is our city green and vibrant thanks to all of the recent rain, but interest rates are also down and buyers are excited about the market. Although the percentage of home selling is slightly down from last year, it is still fairly good, with about 76% of homes that come on the market selling quickly.

When looking at home values, data is conflicting when you look at just the year to date and compare January 2023 against January 2022. The data is conflicting in that while the median and average sales prices are down year to date over year to date, when you remove Hope Ranch and Montecito from the equation the number actually gets skewed such that the average sales price is then up year over year by about 13%. So, while we know that as a whole prices were up in 2022 compared to 2021, now we’re beginning to see the effects of the latter half of 2022 appear in today’s data. It appears that home values “stutter-stepped” in the last 6 months, and it is likely that we will continue to see more conflicting data in the median and average home prices as the months progress.

The reality is we have more buyers out there than we have homes to sell. Basic supply and demand economics should say that the market should go up, but when you have the national government trying to control inflation and trying to force the market to go down, there’s a little bit of tension between inflation and supply and demand. Locally, we shouldn’t see local prices affected based on that basic supply and demand, but at the same time, the national headlines and social media headlines are cutting against that and may affect the overall outcome.

If you want to reach out and connect with a true neutral fiduciary and advisor that can walk you through the nuances of your own situation and help you determine whether it’s the right time to buy or sell or develop strategies to accomplish those goals, we encourage you to reach out to your preferred Zia Group realtor partner.