The Home Estate/PUD market for Santa Barbara Real Estate, Montecito Real Estate, Hope Ranch Real Estate, Carpinteria Real Estate/Summerland Real Estate and Goleta Real Estate started off rather slowly for the first quarter of ’08 but from March through October there were a solid 70 to 75 sales per month. The numbers of sales took a big hit in November however finishing up with just 33 but December rallied coming back with around 60 sales for the month compared to 46 for December ’07.
The median sales price as always bounced around a lot from month to month throughout ’08 but generally it was trending downward. We did however finish with a median sales figure for the year just north of $1 million but when compared to the median sales price of $1.23 million for ’07 we end up with about a 16% decline for the year and in December ’08 the median sales price was south of $900,000 for the whole area.
If you look at the entire year the prices slid to right around 2004 levels but when you look at the 4th quarter we dipped into 2003 levels. What that means is that we are right about where we were 5 years ago before the huge run up in valuation that occurred in 2004 and 2005. During that 2 year period there were a number of new financial products that drove the market place. The no money down/ interest only loans, low or no doc loans, Alt-A and adjustable rate loans with low “tickler” rates all pushed the market to new heights that laid the groundwork for what we’re going through now.
A lot of those adjustable rate loans are getting ready to re-set at a higher rate of interest which leads a lot of people to believe that we’re in for another round of foreclosures that will make the sub-prime difficulties of ’07 and early ’08 look small by comparison. There’s been a substantial amount of talk that the government is looking to try and keep people in their homes by forgiving part of the principal and rolling back the interest rate at least for a while but we’ll have to see if that materializes. My general feeling is that a policy of that nature will just delay the ultimate economic recovery.
Looking at the rest of the numbers we see that the numbers of new listings for ’08 is about the same as occurred in ’07. But interestingly the median list price for those new listings in ’08 was higher than the figure for ’07. So let me see, the list price goes up for ’08 and the sales price goes down. Hmmm, how does that work?
The numbers of properties that went into escrow fell by about 10% for ’08 but the numbers of sales went down by about 14%. For most of the year sales were down about 20% compared to ’07 so we actually saw a rally at the end of ’08 which will hopefully continue into ’09.
Finishing up the Home Estate/PUD figures we’ll take a look at the Districts starting with Carpinteria/Summerland which had only about 6% fewer sales but about a 20% reduction in the median sales price. Montecito sales were about 20% behind ’07 for most of the year but finished ’08 about 16% down. The median sales price which was up about 15% for most of the year finished about 10% up. East of State St saw sales drop by over 20% but the median sales price fell only 4%. West of State had about 28% fewer sales but the median sales price fell about 12%. Hope Ranch had a tough year with sales falling over 40% and the median sales price falling about 13%. In both Goleta South and Goleta North sales were up 13% and 7% respectively but the median sales price fell in both places ny 18% and 14%.
For Condominiums,’08 was a tough year compared to ’07. The sales were down over 20% and the median sales price fell by about 15%. Taking a month by month look at sales the pattern resembles what happened with Home Estate/PUDs except offset by a month. Sales were slow for condos until April ’08 then they set a pace of about 20 to 25 units all the way through November. But December saw the sales numbers fall dramatically. Normally we think of Condos as leading the way in the marketplace but at least for ’08 they trailed the Home Estate market by a month.
Condo sales remained sluggish throughout the year despite the seller’s willingness to come down substantially in their price expectations. We saw the sales price to original list price ratio dip down into the mid-eighties for much of the year which means that the sellers got about 15% less than what they would have liked to have gotten for their properties.
All year it seemed like there was a new condo project coming online but at the end of the year the new condo listings were down about 11% for the year and the median list price of those new properties went down about 8% from the previous year.
Taking a look at the districts around town we see that for ’08 in Carpinteria/Summerland the numbers of sales was down almost 30% with the median sales price falling about 17%. For Montecito the numbers of sales also fell about 30% but the median sales price for the area went up by about 13%. East of State St had sales down by about 40% with the median sales price declining by about 27%. West of State St showed sales down by about 17% while the median sales price fell by about 19%. Out in Goleta South unlike with Home Estate/PUDs the numbers of units sold fell by about 20% but also unlike Home Estate/PUDs the median sales price went up by about 5%. In Goleta North sales weren’t down as far dropping by about 10% but the median sales price fell by 16%.
Looking at ’09 for both the Condo and Home Estate/PUD market a lot will depend on what the government does. If they decide to try and keep people in their houses even if they are defaulting on their loans any recovery will be kicked down the road by at least 6 months and maybe substantially longer. If the government decides to let the foreclosures go forward the market will find its level much quicker and we’ll be able to get on the road to recovery.
There is some glimmer of hope for the Short Sale market where the seller owes more to the bank than the property is worth. We have been told by the lenders that this process will be speeded up from the current 6 to 9 months it takes to complete a sale to closer to 30 days.
Currently confidence is at almost a record low. This lack of confidence does not bode well for the housing industry. The quicker we get to a place where people can look down the road farther than the next stop sign and feel that they at least have an idea of where things are going the quicker we’ll get the economy moving again.
Gary Woods