Santa Barbara Real Estate Market Update – Q3
The third quarter of 2024 has brought continued resilience and growth to the Santa Barbara real estate market, maintaining its reputation as one of the most competitive and desirable markets in California. Despite shifting economic conditions and rising interest rates in many parts of the country, our local market remains strong, driven by high demand and limited inventory.
Market Trends
High Demand, Low Inventory:
The demand for homes in Santa Barbara remains intense, with inventory levels still well below historical averages. Buyers, both local and from out of town, are competing for a relatively small number of available properties, which continues to drive up prices, particularly in prime neighborhoods.
Rising Home Prices:
Home prices have continued to appreciate in Q3, with the median sale price for a single-family home in Santa Barbara hovering around $2.4 million. Desirable areas such as Montecito, Hope Ranch, and the Riviera have seen even higher average sale prices, as luxury properties remain a hot commodity.
Buyer Behavior:
Although rising interest rates have affected some segments of the national housing market, the Santa Barbara market has seen a unique trend—over 40% of transactions have been all-cash deals. This has reduced the impact of higher interest rates for many buyers, especially those in the luxury and second-home markets. Buyers who are financing are expanding their search areas to find properties that fit within their price range, which has widened the pool of prospective buyers for homes in traditionally quieter neighborhoods.
Days on Market
- Homes in Santa Barbara are spending slightly longer on the market compared to the height of the post-pandemic real estate boom, but the market is still moving quickly. In Q3, the average home stayed on the market for approximately 30-40 days before entering escrow, which is consistent with the "scaled-up" version of a normal market we are experiencing. Turnkey homes in highly sought-after areas can still sell within days, often with multiple offers and over asking prices.
Luxury Market & Non-Buyer's Remorse
Non-Buyer’s Remorse:
One of the notable trends emerging this quarter is the concept of "non-buyer’s remorse," where prospective buyers who passed on properties in the previous years are returning to the market, realizing they missed significant opportunities. We’ve seen multiple instances of buyers paying significantly more for homes they had previously bid on, underscoring the enduring value of real estate in Santa Barbara.
Luxury Market Strength:
The luxury market has shown exceptional strength in Q3, with properties priced above $5 million continuing to attract interest from both local and international buyers. The combination of lifestyle appeal, investment potential, and limited inventory has kept this segment particularly competitive.
Looking Ahead
As we move into the final quarter of 2024, we expect these trends to continue. Buyer demand is not expected to cool down significantly, and inventory challenges will likely persist. Sellers can still take advantage of the high demand, particularly if they price their homes strategically and work with knowledgeable agents who understand the nuances of the local market.
For buyers, the key will be flexibility and diligence, as competition remains fierce. However, opportunities abound for those who are well-prepared, whether they’re seeking primary residences or investment properties.
If you are considering buying or selling in Santa Barbara, now is an opportune time to take advantage of these unique market dynamics. Feel free to reach out for personalized insights and strategies to help you navigate this exciting market.
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Key Takeaways for Q3 2024
Median Home Price: ~$2.4 million
Inventory: Limited, with high demand
Average Days on Market: 30-40 days
Luxury Market: Strong, with significant competition
-Cash Transactions: Over 40% of deals
July
Median sale price: $1,800,000
Average Sale price: $2,500,000
August:
Median sale price: $2,100,000
Average Sale price: $4,600,000
September
Median sale price: $2,500,000
Average Sale price: $4,200,000
