There is so much to talk about in Santa Barbara real estate, where to begin.

It is difficult to avoid the elephant in the room. The average 30 year fixed rate mortgage crossed 8% on Wednesday October 18th.  Rates vary, but here is the index that we follow (VIEW RATES). The last time interest rates were in the 8% range was back in the year 2000!

With rates increasing by 5 percentage points in about 2 years, that is a lot for a market to adjust to.  To give some perspective on how it impacts a buyer, the interest and principle payment on a $1,000,000 loan at 8% is $7,338 before property taxes and insurance.  Back in 2021, when you were able to acquire a loan at 3%, that same loan would have only cost you $4,216.04.  I might be overstating the obvious, but when I am the buyer I really. really like to spend less.  That $3,100 difference is significant.  A buyer is paying $37,200 more a year for that loan.

Of course, this is impacting buyers as it is simply costing more to buy, but it also impacts sellers.  Below is the most current chart of outstanding mortgages in the U.S. we could locate.  It shows that 61% of outstanding mortgages have rates below 4% with 81% below 5%.  Many homeowners are grateful for their low interest rates and have no desire or thought of selling and giving them up.

So as we narrow in on our local market, we have experienced a noticeable slow down in sales because of these facts.  Through the first 3 quarters of 2023, we have sold 859 homes and condos.  If our current activity levels hold through the last 3 months of 2023, it appears that we will sell less than 1,200 properties this calendar year.  This would be about 2/3 the volume of a what we would consider to be a normal year.

Those facts, can be discouraging and do hamper activity, But Not All!  Properties are continuing to sell and overall prices have been staying firm.  Given these facts, we have sold 859 properties in spite of some strong headwinds.

Though it appeared that inventory might start growing, the growth has been very modest with just a slight uptick in inventory.  On October 24, there were only 219 homes and condos available for sale between Carpinteria to Goleta which represents just a little over 2 months of inventory, and still historically very low inventory.

Overall, with all the obstacles of the current market, we have been happy with the resilience to date.  Digging into the details and seeing that buying and selling at all price levels is still happening is overall encouraging.  It is just a little different than a couple years ago and requiring a little more patience.  Markets are always changing.

As always, we are grateful for your time, your recommendation, and your trust in us to help you with your real estate needs!


September 2023 Highest Sale  | 3165 Padaro Ln, Carpinteria |  Sold for $46,842,249

September 2023 Lowest Home Sale  | 812 W Figueroa St, Santa Barbara |  Sold for $826,801

The Statistics

YTD | Jan-Sept 2023

  • Total Sales:  859 in ’23  vs  1,184 in ’22  |  DOWN 27%
  • Total Home Sales:  599 in ’23  vs  830 in ’22  |  DOWN 28%
  • Total Condo Sales:  260 in ’23  vs 354 in ’22  |  DOWN 27%
  • Median Home Price:  $2,100,000 in ’23  vs  $2,186,000 in ’22  |  DOWN 4%
  • Median Condo Price:  $950,000 in ’23  vs  $950,000 in ’22  |  FLAT
  • Sales Above $5M:  92 in ’23  vs  112 in ’22  |  DOWN 18%

September 2023

  • Total Sales:  98 in ’23 vs 119 in ’22  |  DOWN 18%
  • Pending Sales:  89 in ’23 vs 107 in ’22  |  DOWN 17%
  • Total Off-Market Sales:  14 Sales  |  14%
  • Total Cash Sales:  46 Sales  |  47%
  • Average 30-Year Fixed Rate Mortgage: 7.88% as of Oct. 27, ’23
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Jon-Ryan Schlobohm

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