HOW IS THE MARKET?
(April 1st, 2023)
In our current real estate market, approximately 80% of home buyers are cash buyers coming from out of town (most predominantly LA and SF). Therefore, not only is there competition with local buyers, but also there is increased competition with out-of-town buyers.
In addition, record-breaking inflation makes conditions more difficult for buyers. We have recently seen real estate values in Montecito increasing by over 50% due to both demand and inflation.
Our non-local buyers are categorized into two groups:
- Those people who have had some sort of past connection to/with Santa Barbara - such as their relatives living here, they went to school in Santa Barbara, or those who have visited and dreamt of purchasing a home in Santa Barbara.
- Out-of-town buyers come to Santa Barbara for the very first time to purchase a house and move their family to Santa Barbara. This group tends to consist of younger and more affluent families. They typically have teenage children (or younger). This group is very initiative-taking and determined in finding their future home in Santa Barbara and have done extensive research on the best towns and counties around the country to live and raise a family.
If you are a buyer from out of town, you have either just started your home- buying journey or have been looking for about 6 months to a year. Having been a resident of Santa Barbara for almost 20 years, and serving in the Santa Barbara real estate market for over 10 years, I’ve learned that working with many out-of-town buyers that they will either purchase a home within the first 12 months, they will give up, or worse, they will be out-priced.
A common mistake that out-of-town buyers make is that they expect more and better inventory. That is a bit too much to ask for when you are shopping for a house in Santa Barbara. When that perfect property comes on the market you will see other buyers submitting offers on it along with you. Remember, 80% of the other buyers out there are looking for what you are looking for.
So, what should we do?? Buying a home in a market like Santa Barbara is truly a learning process and it is similar to playing the game of Monopoly. If you see yourself living in Santa Barbara, you have to get into it to be in it long term and build up.
The current reality of Santa Barbara is that the demand and competition is tough. Because of its prime location between the beautiful Pacific Ocean and the majestic Santa Ynez Mountains, there is no more room for development.
The one thing that will indeed grow are Santa Barbara’s real estate values.
It is critical to note that current sellers in Santa Barbara typically consist of homeowners that purchased their homes 10 - 15 years ago, if not longer. More often than not, they have built a lot of equity in their homes. I work with many sellers, the majority of whom do not have to sell or budge on their listed price. Many that I know here in Montecito and Santa Barbara who own more than one home in the same neighborhood.
Your goal as a buyer in the current market should simply be to get into the market; not to find your perfect “dream” home. While the entire population of Montecito is 8,200, the total number of homes in Montecito is roughly 4,300 and only a tiny fraction of them become available for sale.
Montecito is on its way to becoming the new Brentwood, Santa Barbara becoming the new Montecito and Goleta becoming the new Santa Barbara.
Purchasing a house in Santa Barbara is similar to purchasing limited shares of a private company that won’t be going public or issue stock splits.
Real Estate Broker