Weird, would not be the word I would normally pick to start off an email, conversation, or even our news letter, but it just seemed appropriate.

The other day, we were talking with a Compass colleague and I was asking him about their market and the first word out of his mouth was, “weird”.  It is actually been the word we have been using too.

So Why Weird? First, the market has not been that predictable and it has reacted differently than most expected.

Some homes seem to garner a lot of activity and prices are bid up beyond previous highs.  Other properties are sitting on the market, though the price seems to make sense.  Then others are quiet for weeks to then see two buyers showing up at the same time.

Second, what traditionally is expected when a market changes directions, is to see prices dropping and inventory growing as sellers start to out number buyers.  But this market is oddly different.  Buyers are still out numbering sellers and inventory is staying low.  We have noticed over the last month or so, that our historically low inventory has started to grow from a low around 110 properties to 157 available properties on May 23.

Gone are the days of a seller just naming a price because their home has four walls, but a good home at a fair price has ample buyers and attention even with interest rates in the mid to high 6% range.  What has definitely changed is the home with a difficult attribute (like being right next to the freeway) is not flying off the market in days, like it did just a year ago.

The Stats, what are the numbers showing us?

For the first four months of 2023, we experienced a substantial decrease in sales volume, 38% fewer than 2022.  Because 2022 was an anomaly, we looked back at our more stable market of 2010-2019 and we found that sales are still down 35%.  Currently, unless we see a substantial increase in inventory and a change in direction, 2023 is on track for a record low year for sales.

Prices, what is happening with our home values?  To us on the ground overall pricing is staying fairly flat, though it depends on the property type.  We can point to some home garnering new highs and other homes seeing price drops, which seems to be dictated by if the home has mass appeal or not.  But as you look at the median home price YTD through April there is a 13% drop comparing the first four months of 2023 to 2022.  The median is not a perfect way to measure this, but it is a good indicator.

So why does it feel like prices have not dropped?  2022 experienced one last quick price bump up in the first couple months, which quickly fell off in the following months.  This means that a handful of homes in 2022 saw a record price before they fell back to where they were only a few months before.  And if you look at the median home price by year-end it was down to $2.1M much closer to where we are today.

Overall, though the market has changed, we are grateful that there are buyers in the market who would really like to find a home in Santa Barbara.  The biggest challenge that we face today is trying to find a home that matches what our buyers are looking for.

As always, real estate is dynamic and it is important to have a knowledgeable and caring advisor to help you through the process. If you are considering buying or selling, we would be honored to help. And we are always grateful for your recommendation!

THE HIGH & LOW

April 2023 Highest Sale  | 1850 Jelinda Dr, Montecito |  Sold for $18,000,000

April 2023 Lowest Home Sale  | 1115 Hutash St, Santa Barbara |  Sold for $850,000

The Statistics

YTD | Jan-April 2023

• Total Sales:  337 in ’23  vs  545 in ’22  |  DOWN 38%
• Total Home Sales:  240 in ’23  vs  378 in ’22  |  DOWN 37%
• Total Condo Sales:  97 in ’23  vs  167 in ’22  |  DOWN 42%
• Median Home Price:  $2,000,000 in ’23  vs  $2,300,000 in ’22  |  DOWN 13%
• Median Condo Price:  $925,000 in ’23  vs  $896,000 in ’22  |  UP 3%
• Sales Above $5M:  37 in ’23  vs  63 in ’22  |  DOWN 41%

April 2023

• Total Sales:  96 in ’23 vs 136 in ’22  |  DOWN 29%
• Pending Sales:  102 in ’23 vs 134 in ’22  |  DOWN 24%
• Total Off-Market Sales:  8 Sales  | 8%
• Total Cash Sales:  31 Sales  |  32%
• Average 30-Year Fixed Rate Mortgage: 7.12% as of May 25, ’23