What is happening in Santa Barbara’s Real Estate Market? There is a lot to digest and happening.

Two big headlines:

• For the first 3 months of 2025, the median home sales price is a whopping $2,795,000. To put that into perspective, the median home sales price in 2024 was $2,172,130.

• On April 22, our active inventory of available homes and condos for sale increased to 319 properties, the highest level in years.

At first glance, the rise in median home prices would suggest increasing home values. However, rising inventory typically indicates that sales volume is declining, which often leads to a decrease in home values. These two trends do not usually align.

Add to that, this national headline stating “Existing-home sales fall to slowest pace since 2009 amid rising costs.” And yet our Santa Barbara area is actually seeing our sales volume increase from our astonishing low sales in 2024; year to date, we are up about 14%. Overall, our sales volume is well below our historic norms.

Candidly, seeing this over the last few months, made us observe the market before weighing in with some commentary (sorry for being a little quiet).

How is our median home price so high?

Great question, glad you asked! Reviewing the sales, it is a mix of two factors.

First, the entry-level home (can we say that when we are talking about homes priced starting around $1.2M to $1.7M) is hard to find in 2025, and fewer of them are selling. In 2024, 32% of the sales in the first quarter were under $1.7M compared to 24% in 2025. So fewer homes are selling in this price point, and because the inventory is so limited, the entry-level home values have been increasing. This is not happening at other price points.

Second, notably more higher-price-points homes are selling in 2025 compared to 2024. In 2025, 22% of the sales were above $5M, and for the same time in 2024 it was only 13% of the sales.  But with more inventory at this price point, prices are more negotiable. Of course, 50% of the sales in 2025 were above $2.8M, but in 2024, it was just 31% of the sales. Simply put, there are more high-price-point sales than the year before, which is why the median price is up.

What to make of the growing inventory?

A little more straightforward, more listings are hitting the market than are going under contract. The one exception would be our entry-level homes (as discussed) are still selling quickly “IF” they are not seen as over-reaching (nice way to say overpriced).

So, are prices going up or down?

Well, buyers are more in the driver’s seat than they have been in some time.

For homes that sold above the median price of $2.8M, the average sales to original list price was 94.83% for the first quarter. On average, buyers have saved 5% off the original list price.

Buyers under the median price overall have not been able to do as well, but are still able to peel a little off the list price, with an average of 96.9% of the original list price.

So, except for our entry-level price point, it seems like prices are softening a little.

One last, in the field, note. With some buyers we have represented and written offers for, we have seen that some sellers have yet to realize that the market dynamics have shifted somewhat. The days where the seller was completely in the driver’s seat are currently in the rearview mirror. Buyers have more opportunities to negotiate, and the best transactions have been where the sellers are mindful of this shift.

As always, real estate is dynamic, and we’re here to help. If you have any questions or want to discuss the market further, please don’t hesitate to reach out. Thank you!

THE HIGH & LOW

March 2025 Highest Sale  | 845 Sea Ranch Dr, S.B. |  Sold for $23,000,000

March 2025 Lowest Home Sale  | 430 W Valerio St, S.B. |  Sold for $1,oo0,000

The Stats

Jan – Mar 2025

• Total Sales:  311 in ’25  vs  274 in ’24  |  UP 14%
• Total Home Sales:  225 in ’25  vs  193 in ’24  |  UP 17%
• Total Condo Sales:  86 in ’25  vs 81 in ’24  |  UP 6%
• Median Home Price:  $2,795,000 in ’25  vs  $2,200,000 in ’24  |  UP 27%
• Median Condo Price:  $1,197,500 in ’25  vs  $910,000 in ’23  |  UP 32%
• Sales Above $8M:  21 in ’25  vs  10 in ’24  |  Up 110%

March 2025

• Total Sales:  111 in ’25 vs 100 in ’24  |  UP 11%
• Pending Sales:  116 in ’24 vs 107 in ’23  |  UP 8%
• Total Off-Market Sales:  20 Sales  |  18%
• Total Cash Sales:  44 Sales  |  40%
• Average 30-Year Fixed Rate Mortgage: 6.82% as of April 28, ’25