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Home Prices in 2003
for Santa Barbara County 2003's median home prices for the South Coast
The Santa Barbara County housing market crossed significant milestones in 2003 as the South Coast flirted with the $900,000 mark and the North County crossed the $300,000 threshold. Although the rate of increase for most of the county did not surpass that of 2002, median prices still exceeded expectations. "We had a good, solid year for home sales in 2003," said Bob Hart of Century 21 A Hart Realty in Santa Barbara. "It wasn't as good as 2002, which was a banner year, but overall, 2003 was a phenomenal year." The brief war in Iraq last March and threats of higher interest rates over the past summer did little to take the steam out of the fast-moving residential real estate market. On the South Coast, the median hit $875,000 for 2003, a 12 percent rise from $779,000 in 2002. The three regions in the North County all posted median price increases of more than 20 percent last year Santa Maria crossed the $300,000 mark up from $257,000 in 2002; L.ompoc nearly reached $300,000 compared to about $240,000 in 2002; and the Santa Ynez Valley climbed to more than $650,000, from $530,000. Median price is the point where half the homes on the market sell for more and half sell for less, and it reflects the mix of homes sold, rather than price changes on individual homes for sale. Prices reported are for existing single-family homes only and do not include new homes for sale, manufactured homes or condominiums. Interest rates, which hovered at 40-year lows throughout 2003, fueled home sales and gave buyers the confidence to make purchases even as prices steadily moved higher. A 30-year mortgage with a fixed rate Of about 5.8 percent dominated in 2003, and the rate bottomed out to around 5.5 percent during the summer. the Mortgage Bankers Association reported. When rates began to creep above the 6 percent mark in late July, sales across the county slowed, but only briefly. In August and September, buyers were intent on getting into the market before rates moved higher, causing a sales boom and a jump in median prices. Rapid median price hikes last year caused some real estate analysts to question if many areas might have been caught in a "bubble." A bubble happens when home prices rise steeply because people buy homes with the expectation that prices will rise and they can resell them quickly for a profit. These buyers view the homes as an investment only and don't intend to use them as a primary residence. Most experts agreed that the county was not vulnerable to a price bubble because the majority of people buying homes wanted to live in the area. However, several economists warned that the rise in the median would slow from the pace set in 2002, simply because as prices soared higher, the level of increases would be hard to maintain. The predictions turned out to be partly accurate: The rise in median price slowed, but not by as much as local economists had expected, especially in the North County. Homebuyers from the South Coast migrated north in search of more affordable homes, pushing those prices to new record levels. The Santa Ynez Valley's residential market values skyrocketed last year and largely defied economists' predictions about a price slowdown. The valley began 2003 fresh from surpassing the half-million-dollar mark for the first time, with a median of about $530,000, according to the Santa Ynez Valley Association of Realtors. By the end of the year, the median jetted more than 20 percent to reach past the $650,000 threshold. This was the highest rate of increase in the area in the last four years. Farther north in the Santa Maria Valley and Lompoc, the median also climbed more than 20 percent in 2003, a significant feat but much slower than the rates of 2002, which brushed near the 30 percent level. The Santa Maria Valley started 2003 with a new record median of $257,192, nearly a 29 percent increase from the year prior, according tot he California Economic Forecast By the end of the year, the median set a new record at $309,859, up 20 percent. In nearby Lompoc, the scenario was similar. The median at the end of 2002 was $246,167, reflecting a 29 percent increase from the previous year. When 2003 came to a close, Lompoc's median climbed to $297,825, a rise of 21 percent. Several real estate agents in the Lompoc area said they noticed that sales prices in 2003 were not rising as fast as in 2002. Although sales continued to stay strong, more buyers were resisting paying top dollar for less desirable homes, and homes priced ambitiously were taking longer to sell, Billy Jean Chadwick of Century 21, told the News-Press back in May. "When prices start getting into the $300,000 range, the percent increase in the median starts to come down," explained economist Mark Schniepp of the California Economic Forecast. "Rate increases can't continue to stay in that high 20 percent range at those higher prices." On the South Coast, the rate of median price hikes also slowed, from l6 percent in 2002 to 12 percent in 2003, which is the lowest rate of increase in five years. This compares to the South Coast's banner year in 2000, when the median jumped nearly 19 percent from $499,000 to $591,500. The South Coast entered 2003 with the median at around $770.000 In August, September and December, the median spiked beyond the $900,000 mark, reflecting the sales of several multimillion-dollar homes. By the end of the year, the South Coast median set a new record high at $875,000, according to the California Economic Forecast.
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