Santa Barbara Real Estate for 2006 including Carpinteria, Summerland, Montecito, Santa Barbara, Hope Ranch and Goleta saw the number of sales for Home and Estate and Planned Unit Developments fall off about 16% from 2005. The total number of units that closed escrow was 898 as opposed to 1079 for 2005. This adds up to about a 17% decline of the number of properties that sold for the period. The interesting number to me is that the Median Sales price for those almost 900 houses was off only 5%. So despite declining sales the Median Sales price dipped to only $1,190,000 for the area from Goleta to Capinteria. I don’t know about you, but almost $1.2 million is a lot of money.
This slight decline in the Median Sales price saw even a smaller drop off in the Median List price. For 2006 it came in at $1,295,000 only .3% below what it was in 2005. This was interesting to me because we had about 8% more properties listed in 2006 as opposed to 2005. Usually when you have more of something the price falls, but at least for 2006 that wasn’t the case.
The most interesting number to me is what I call the “Gap” between what people are willing to sell for and what people are willing to pay. You find the gap by taking the Median Sales price for a certain period of time and then dividing it by whatever the inventory Median List price is for that same period of time. At the end of 2006 the Median Sales price for the entire year was $1,190,000 as I mentioned earlier. The Median List price for the inventory of homes still on the market is $1,595,000. This gives us a gap of 25.4% or in real numbers right around $300,000.
This is a pretty substantial gulf so I thought I’d look at individual districts to see what their gaps were. In Carpinteria and Summerland the gap was 16.8% with a Median Sales price of $1,240,000 and a Median List of $1,489,000. For Montecito the Gap was a whopping 27.1% with a Median Sales price of $2,700,000 and a Median List of $3,700,000.
On the East side of State St the gap was 16.1% with a Median Sales price of $1,255,000 and Median List of $1,495,000. But on the West Side the gap was only 8% with a Median Sales price of $1,011,250 and a Median List price of $1,099,000.
Out in Hope Ranch the gulf was a monstrous 58.4% with a Median Sales price of $2,550,000 and Median List of $6,850,000. But in Goleta South the gap was only 4.1% with a Median Sales price of $910,750 and a Median List of $949,000. And finally in Goleta North the gap zooms back up to 17.5% with a Median Sales price of $932,500 and a Median List price of $1,129,000.
Now on the Condo side of the ledger we’ve got some very interesting numbers. Sales were down a whopping 27.2% for a total of only 337 condos sold for ’06 versus 449 for ’05. Again the most interesting number in all of this is that the Median Sold price is only down 3% from ’05. For all of ’06 the Median Sold price was $655,000 as opposed to $675,000 for ’05.
The Median List price declined even less than the Median Sold price. For ’06 it was down to $679,000 as opposed to ’05’s $689,000. This was a decline of only 1.5%. This surprised me because we had 15.1% more listings than we had in ’05. This again goes against gravity proving that just because you have more of something it doesn’t necessarily reflect in the price.
Now let’s get a look at the really interesting numbers. On the Home and Estate side we saw a significant gap between what people were willing to buy for and what people were willing to pay. The gap for the entire area of Goleta to Carpinteria for Condos in 2006 was 1%. The Median Sales price was $655,000 and the Median List price was $649,000. So if these two numbers are in agreement, how come there were 27% fewer sales over that time? The Condo market is generally the leader and responds more quickly to the market place. So what this tells us is that while those who are really ready to buy at this time think the price is right, those that are still on the sidelines think there’s more room for the prices to drop.
Also I think that there is a general lack of confidence in the market place leading those people who could buy not to buy at this time. I don’t think that lack of confidence is warranted, but I do think that it exists.
Let’s look at the “gap” for the rest of the Santa Barbara area’s Condo Market. In Carpinteria we have a real anomaly. The Median Sales price of $575,000 is actually above the Median List price of $549,000. This is a gap of -4.7%. In Montecito it’s even more pronounced. The Median Sales price is $1,692,500 and the Median List price is $1,295,000 for a -30.6% gap. So even though the current prices are almost 1/3 below the Sales Price the units are moving very sluggishly. In all of Montecito there were only 20 condos changed hands for 2006.
East of State St gives us similar numbers with the Median Sales price coming in at $790,000 and the Median List price showing up at $715,000. This is a gap of -9.6%. So with an almost 10% lower List Price from the Sales Price there were about 20% fewer sales for ’05 to ’06.
On the West Side the Median Sales price of $672,000 is below the Median List price of $680,000 but by only 1.2%. One reason for this is that the number of sales is down markedly from with only 68 condos changing hands, approximately half of the 132 units sold in ’05.
In Goleta South the Median Sales price was $585,500 and the Median List price was $549,000 for a -6.1% gap. For this area the number of sales is not as off dramatically as in the West Side showing a decline from 89 units in ’05 to 65 for ’06.
In Goleta North the Median Sales price was slightly slimmer at -3.9% with the Median Sales price coming in at $600,000 and the Median List price at $579,000.
So the question becomes what will it take for the buyers to start buying and the sellers to start selling? I think there is still some room for prices to come down in the Condo Market but not much more. To me it really comes down to the confidence factor for the Buyers. If they think the Market will firm up and stay where it is then they’ll start getting more serious. I hear stories of properties being shown a lot, but the offers still haven’t come so this tells me there are definitely people in the market place at this time.
In the Home and Estate market I think we’re in for a pretty substantial price correction. About 10% looks about right for me at this time, but we’ll have to see when we get further into the year. Right now the projection is for sales to remain at about 60 Homes and Estates and 30 Condos to sell per month with further slight erosion in the prices.
All Statistics are based on those from the Santa Barbara Association of Realtors.
Nice analysis. I wonder if the negative gap numbers would be fixed by accounting for the lag time between list and sales. Sales are slower now so you aren't getting as many data points to skew the average, although the listing prices keep coming down. Which is why it appears units are going for more than the asking. It seems like an accurate gap could be calculated by taking this months median sales prices and listing prices from 3-4 months ago.
Posted by: Joe at January 5, 2007 08:54 AM