SANTA BARBARA REAL ESTATE MARKET UPDATE: MID YEAR 2023

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Welcome to my mid-year Santa Barbara real estate market update, an overview of the current state of the industry touching on the national landscape while focusing on local markets including Santa Barbara, Montecito, and Hope Ranch. In 2023, the real estate market in our beautiful coastal region continues to showcase strength and resilience. There are good reasons homebuyers are shopping here. Santa Barbara, known as the "American Riviera," is a highly coveted destination for homeowners seeking an exceptional quality of life.

National Real Estate Overview

Before delving into the local markets, let's review the first half of 2023 nationally. Mortgage rates saw a modest revision lower recently but ticked back up again over the last few weeks. The rate now sits at 6.96% for the week ending July 13—a 15-basis-point increase from the previous week—according to Freddie Mac. Despite the fourth consecutive month of a slight year-over-year decrease in the median existing-home sales price, which is a positive development for potential homebuyers, experts believe that significant nationwide price declines are unlikely in the near future.

As we head into the second half of the year, inflation will play a significant role when it comes to real estate, primarily at the national level. Not so much here, considering that nearly 50% of all local transactions are conducted in cash. As we anticipate further rate hikes throughout the year, it will be crucial to monitor its impact. However, I maintain the belief that we will witness a decrease in interest rates before the end of the year.

Local Insight

The previous scarcity of inventory that we’ve been facing is gradually improving, as is usual during this time of the year, the prime selling season. Nevertheless, with the ongoing relaxation of COVID restrictions and an increasing number of households resuming travel to Europe and other destinations, I anticipate a cautious approach from sellers rather than a sudden rush to the market. Many homeowners are likely to consider the question, "If I sell, where do I go?" before making a decision to list. The limited availability of homes can be partly attributed to those who purchased properties in recent years at remarkably low interest rates opting to remain in their current homes instead of putting them up for sale.

For more insight into the current real estate market and the future in Santa Barbara and our surrounding communities, check out my extensive 2023 mid-year review.

Neighborhood Market Update

The lights are on in this front view of a home at dusk with a beautiful sky

Montecito

If you were expecting a potential decrease in home prices or have adopted a wait-and-see approach during the first half of 2023, there is a glimmer of hope on the horizon. I’m seeing definite indications of some easing in prices. While the market remains active, it is not as robust as it was in 2022. In Q1, the average sales price experienced a year-over-year decline of 14%. However, it rebounded in Q2 to reach $6,537,926, representing a 1% gain over Q1 2023. Nevertheless, it is still lower than Q1 2022, which recorded an average sales price of $6,970,802. The median sales price also saw a decline of 5% in Q1 to reach $4,811,500, but it recovered to $5,050,000, reflecting a 7% year-over-year gain. As of July 6th, there were 59 properties available for sale in Montecito. So far this year, a total of 84 properties have been sold in Montecito, indicating a decrease of 36% compared to the previous year. On average, properties spent 47 days on the market, which is a 15% reduction from the same period last year. Inventory levels have decreased by 11% year-over-year during this period, but there is a glimmer of hope as the decline in inventory levels has been slower compared to previous years.

Santa Barbara

Santa Barbara is closely following the trend observed in Montecito. During Q1, inventory levels dropped by 15%, and in Q2, there was a further decline of 17%, resulting in a total of 20,624 units, compared to the same period in the previous year. The average sale price experienced a year-over-year decrease of 14% in Q1, amounting to $2,281,899. However, there was a slight increase in Q2, reaching $2,461,859. Nevertheless, this is still 4% lower than the average sales price in Q2 of the previous year. The median sales price also saw a decline of 14% in Q1 and continued to decline year-over-year in Q2, reaching $1,765,000, which represents a 7% decrease. The number of properties sold by the end of Q2 declined by 27% compared to the same period last year, with a total of 388 properties sold to date. The average timeline for properties to sell in Santa Barbara has shown an upward trend, with an average of 34 days, marking a 70% increase year-over-year. As mentioned in my year-end review for 2022, I cautioned about forthcoming market adjustments, and we have begun to witness signs of that in Q2. Prices have stabilized compared to Q1, with slight declines in average and median list prices, while average and median sales prices have shown slight increases. It is expected that this trend will continue, with prices gradually experiencing modest gains.

Hope Ranch

The Hope Ranch market segment has experienced declines in both average and median list prices. In Q2, the average list price decreased by 12% year-over-year, amounting to $10,639,129, while the median list price saw an 18% decline, reaching $8,850,000. On the other hand, the average and median sale prices showed an increase of 5% and 2% respectively, year-over-year, reaching $7,803,744 and $7,250,000. There has been an upward trend in inventory levels, with a 15% increase year-over-year, resulting in 31 properties available for sale. However, this has led to a significant increase in the number of days it takes for a property to sell, with a 465% rise to 92 days compared to the same period last year. The number of properties sold has declined by 28% year-over-year, which can be attributed to buyer hesitation in the first quarter of 2023, coupled with rising interest rates and ongoing concerns regarding the impact of inflationary monetary policies. The limited buyer options in Montecito and Santa Barbara have been driving buyers towards Hope Ranch due to the amenities it offers. If inventory levels continue to remain restricted, this trend of buyers turning to Hope Ranch is expected to persist.

A Medeterrean style Santa Barbara home with red tiled roof and sparking pool

Positive Local Market Trends

1. Steady Home Sales
Despite the revised national forecast, Santa Barbara and the surrounding areas have shown resilience, with steady home sales. Buyers continue to recognize the value of investing in the region's unique beauty and exceptional quality of life.

2. Desirable Lifestyle
The allure of Santa Barbara's idyllic coastal lifestyle, with its year-round pleasant weather, breathtaking landscapes, and a thriving arts and culinary scene, remains a significant draw for both local and out-of-state buyers.

3. Diverse Inventory
The market offers a diverse inventory of properties, ranging from charming cottages and Mediterranean-style villas to sprawling estates. This variety ensures that there is something to suit the preferences and budgets of all prospective buyers.

4. Stable Luxury Market
Luxury properties in Montecito and Hope Ranch have maintained their desirability, attracting buyers seeking an exclusive and opulent living experience. The stability of the luxury market presents a promising opportunity for both buyers and sellers.

In conclusion, the mid-year real estate market update for Santa Barbara, Montecito, and Hope Ranch brings exciting news for buyers and sellers alike. The local market continues to thrive, showcasing resilience and growth. Santa Barbara's charm, coupled with its robust economy and stunning natural beauty, make it an exceptional place to invest in real estate. Whether you are seeking a luxury property or a cozy beach cottage, our region offers a wide array of options to suit your needs and preferences. Don't miss out on the opportunity to make Santa Barbara your home or investment destination of choice in 2023!

If you’re considering making a move, please call me at (805) 886-9378 or send me an email at Cristal@montecito-estate.com for a complimentary consultation. Meantime, stay apprised of local, regional and national real estate trends with my next market update.

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Client Reviews

“Cristal is a pleasure to work with! Her knowledge of the local real estate market coupled with her amazing listening skills resulted in her showing us an array of homes that were all excellent choices. Her low-pressure patient attitude made us feel extremely comfortable with the whole process. I cannot recommend her highly enough.”

- M.F.

“Cristal Clarke is #1 in her field - and you don't become #1 by luck. Cristal works harder, and longer, and with more charm and patience than any real estate agent I have ever worked with in the past; her calendar has no weekend, her days have no clocks, her only concern is selling your property as soon as possible and for the best price on the market. Am I a fan? You bet!”

- P.B.

“We have used Cristal now several times and cannot express how grateful we are for her expertise, dedication, and unwavering support throughout the entire home-buying process. Cristal is knowledgeable, patient and attentive. Her attention to detail is remarkable, and she consistently went above and beyond to provide us with all the information and resources we needed to make informed decisions. Cristal is a skillful negotiator and advocate. She can navigate complex negotiations with professionalism and grace and felt like a true partner to us in the home-buying process. Cristal has a genuine passion for real estate and a deep commitment to her clients' satisfaction. I cannot speak highly enough of Cristal and her exceptional service. She is a true expert in her field and her dedication to excellence, combined with unwavering support is the reason we choose to work with her for all our real estate buying needs.”

- T.C.

“Cristal is a top-notch realtor who sold my home before it ever went on the market. I had two competing offers that enabled me to get top dollar for my home. Not only is Cristal superb but her team is extraordinary. I cannot say enough about Cristal and her team. They are simply phenomenal, the consummate professionals, who took care of every possible detail, making the sale and transition period, smooth from our end. They are also lovely, caring people, who knew all the right professionals, to get the job done. Thank you, everyone!”

- D.R.

“I could list lots of cool adjectives to describe Cristal. All good by the way. But, that is not why I or anyone should hire Cristal. My reason for hiring her, which proved to be correct, is very simple. She got the job done. And, she does it time and time again and with zero issues. And, that is why she is one of the top agents in the country. End of subject. ”

- M.A.

“Working with Cristal was a complete pleasure. Cristal was extremely patient with us as we evaluated nearly 2 dozen homes over a span of 2 years. Her knowledge of the market is unmatched. Cristal provided us with exceptional counsel as we evaluated opportunities and negotiated pricing. The closing process was handled thoroughly and efficiently. We could not be happier with our purchase and even more happy to now call Cristal our friend.”

- D.K.

“Cristal Clarke has conducted numerous real estate transactions for me beginning 13 years ago with the purchase of a Lemon Ranch. She has handled both large and small purchases and sales with equal dedication. As a negotiator, you can’t find anyone better. Her transactions are always conducted in the most appropriate and professional manner. Cristal has considerable knowledge of the Santa Barbara market.”

- S.N. Decker Ph.D.

“Living in Europe, we were to say the least, unaccustomed to the nuances of Real Estate acquisition in California and Cristal steered us through the process with absolute professionalism and personal attention to detail at every turn. Her in-depth knowledge of the market place combined with enthusiasm and drive was the only reason we secured the property of our dreams and will be forever grateful. If you are looking for personal discrete and private representation of the highest quality we suggest you look no further than Cristal Clarke.”

- Johan and Paula van den Berg

“Cristal is very straightforward, cheerful, helpful, professional and trustworthy….we felt very lucky to work with her.”

- John and Lacey Williams

“After considering our many choices, we are grateful it was Cristal Clarke of Sotheby’s International who represented the sale of our Montecito cottage. We are familiar with Cristal’s reputation of hard work and dedication to clients, but it was her attention to detail that made our experience so positive. She offered suggestions for staging the property, worked in harmony with potential buyers and was even able to secure back up offers. The sale of our cottage was completed much sooner than we expected, due in great part to Cristal’s professional skills and support. We highly recommend Cristal as a first choice for anyone needing representation with real estate.”

- Michael & Nancy Lee

“Our experience in working with Cristal Clarke resulted in the successful and discrete acquisition of a property which was not yet on the open market. Her knowledge of the Montecito/Santa Barbara area and vast expertise blended with her passion for real estate and architecture, provided us with the very highest level of professionalism and personalized services. Cristal exhibited a rare combination of excellent communications, attention to detail, creativity and patience.”

- Richard and Catherine Frinier

“Cristal really breaks the mold. She knows every nook and cranny of this real estate market, understands value, and follows up on everything, all the time. She was incredibly patient with our two year quest to find the perfect house. Every house hunting trip from across the country was well planned, and our time was never wasted. On top of her professionalism and expertise, she is delightful to spend time with. We are thrilled with the home we purchased, and grateful to Cristal for so wisely advising us through this process, right through to the close and beyond.”

- Laurie Siegel

“We met Cristal first in the course of renting a winter home (for three years), then buying a house using her as our agent. She was amazingly good at listening to our wants and showing us homes that fit our needs. Her mastery of the paperwork was perfect. Most importantly, there was never a situation where we doubted her straightforwardness or integrity. If we do another real estate transaction in Montecito (which I doubt, we’re happy with what we purchased), without question we’d use Cristal again.”

- Ken Saffir

“Susan and I just want to thank you for your efforts in the sale of our home. You are really quite amazing. Your competence, persistence, optimism and humor made the entire process effortless. Every problem that arose, you somehow fixed; any obstacle, you overcame. We have bought and sold many homes. It has never been such a painless and enjoyable process!”

- Michael & Susan Marquart

“A little something about “our” realtor, Cristal Clarke. My wife and I came to Santa Barbara about fifteen years ago looking for a seasonal home from which to enjoy the weather and amenities of the central coast. Being in the real estate business myself I was familiar with agents and brokers so entered the market with open eyes. We “flipped” a few houses in the early years, dealing with various agents and finally ended up in Montecito. That’s when good fortune put us together with Cristal. To say we were impressed is to put it mildly. Cristal really knows the market. She is familiar with the area, its history and trends. When we have questions about a particular property she either has the answers immediately or gets back to us by phone or email. There is no waiting or wondering with Cristal. She is an agent who is “on top of it.” Her recommendations as to price points, contractors, inspectors and title agents have proven to be exceptional, showing great insight and the highest professional standards. We consider ourselves exceedingly fortunate to say that Cristal Clarke is our realtor and would recommend her services to any serious buyer or seller.”

- Rob & Judi Kelch