As we settle into 2017, and into the beautiful summer months here in Santa Barbara, we want to take a quick look back at the first half of 2017 and share a few thoughts moving into the second half of this year.
In general, our market is very similar to 2016. While it has been a really active beginning of the year, we are seeing prices and supply tighten. We are also seeing some home sellers act more optimistic than they should regarding appreciation and are pricing their homes too high. This is causing increased price reductions, more buyer leverage in negotiation and lower sales prices compared to their original listing price. For instance the median listing price has been 10% higher than in 2016, yet the median sales price has been almost identical, also reflecting that for some areas appreciation is not actually as fast as some sellers believe.
If sellers start making this mental adjustment and pricing their homes more accurately at the start of their listing period, we believe this will lead to lower inventory levels and buyer confidence, which should result in additional single digit appreciation the rest of the year. If sellers don’t adjust to this trend, we may see more buyer hesitancy, as the increase in price reductions appears to be a market drop, and not just a reflection of sellers’ unrealistic expectations.
In May, 116 single family homes and estates sold ranging from $600,000 to nearly $16 million. Homes that closed escrow took a little over 2 months to go into escrow, while homes that went into escrow in the month of May averaged an “on market” time of closer to 2.5 months. The homes that sold averaged over 10% below their original listing price and 4% below their last listing price. That means that buyers, on average, were able to negotiate about 4% off of the list price in their final contract price (or contract price + negotiation for repairs in escrow).
In May, condos sold for 4% below their original listing price, and 3% below their last list price. This means on average home buyers are seeing sellers move about 3% during negotiation. The 30 condos that did sell took an average of 69 days to go from day 1 on the market to entering escrow.
Looking ahead, we expect to see continued growth and demand in the market for both single family homes and the condos, with continued pressure on prices as buyers from around the world set their sights on the Santa Barbara area. We are seeing almost 20% of homes sold today selling off the market, and we have helped numerous buyers the last few months find their dream homes without the competition of the open market.
The Zia Group family is excited to partner with you and your Santa Barbara real estate needs as we see what the rest of 2017 holds.
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