October 14, 2012

California Median Sales Price Rises but Santa Barbara?

In the rest of California they are talking about a 10% rise in the median sales price this year and they are predicting a possible further 2% rise by the end of the year. Another talking point is a severe diminution in the numbers of distressed properties for sale including both foreclosures and short sales.
As you may know in the South Coast Area of Santa Barbara Real Estate from Carpinteria Real Estate to Goleta Real Estate were still experiencing a 3% decline in the median sales price for single family homes and a 6% drop in the condo prices so I thought Id sit down and try and figure out what was going on.

Median sales prices are definitely a good barometer of where prices are going but Im not sure that a $500,000 house at the beginning of the year is a $550,000 house now and could be a $560,000 house by the end of the year. Certainly we are experiencing a great number of multiple offers and prices do see to be on the rise but I would suggest that more people are buying houses that are a little farther up the food chain rather than the prices going up that quickly.

The decline in the number of distressed properties is certainly one of the reasons that the prices are starting to go up and I know lenders are proclaiming that there is no shadow inventory but empirically I personally still know of people who have not made a mortgage payment in 18 months and have not received a notice of default. Whether the banks are just marking time or trying to come up with a new strategy for dealing with these underwater and non-performing assets I dont know but it still means that there are a significant number of properties that will have to be dealt with sooner or later.

In Santa Barbara distressed homes still make up a substantial segment of the sales which is the reason I believe that the median sales price has remained down. Actually, Im surprised by this continued decline because I predicted in August with the inventory continuing to fall that sales would drop and the median price would go up. But, what happened was that single family home sales did drop from about 130 in August to 80 in September but the median sales price also fell from approximately $830,000 to roughly $750,000. And to re-enforce that trend the median list price on the 100 escrows for the month remained right at the $750,000.

My concern is that when Realtors in Santa Barbara go out on a listing appointment and the sellers hear that sales prices are up 10% it becomes difficult for them to restrain the exuberance of their potential clients and to put the right price on the home.

I remain cautiously optimistic about Santa Barbara Real Estate but I caution sellers who think the good times have returned.

Posted by gandlwoods at October 14, 2012 07:23 AM