A recent increase in high-end real estate sales in Santa Barbara County bodes well for a housing market turnaround, local real estate experts say.
The total number of sales increased in the county by 41.6 percent from February to March, according to the California Association of Realtors. Much of that activity stemmed from the high-end market, said Sheela Hunt, an agent with Village Properties Realtors.
“It’s a good indicator that the market is coming around when the high-end properties start to move,” said Hunt, adding that it demonstrates a shift in consumer confidence.
“The deep pockets can move when thy want to, and they are now,” he said. “But jobs are still hard to come by and a lot of homes are upside down.”
Elaine Abercrombie of Abercrombie Fine Homes Inc. noted there is less supply and more demand. She said there was a 3.2-month supply of homes in the South Coast market in March and the median price of single-family homes dropped 7.1 percent, to $405,380 from $436,360 in Santa Barbara County year-to-date.
“We probably passed the bottom,” she said. “Will prices soften more? I don’t know but they have gone sideways for the past year. When I see inventory dropping at this rate, that’s a push on demand and prices will probably go up.”
Many buyers are beginning to understand that “there’s no question of whether the marketplace has bottomed or not,” Ralston said.
There were 171 transactions on the South Coast in March compared to 127 in March 2011, according to Fidelity National Title & Chicago Title data. The median price was $640,000 in March compared to $653,000 last year.
“Interest rates are at a 40-year low and prices are more affordable,” Abercrombie said.
Home prices hit new post-bubble lows in February, according to a Standard & Poor’s/Case-Shiller home price index report released April 24.
While the North County high-end market isn’t faring as well as the South Coast, they are both experiencing a high volume of sales in the low-end market, said D’Ann Bartley, Prudential California Realty agent in Santa Maria.
“There’s not a whole lot of inventory, rates are low and people are finally realizing that you can’t buy a home at bargain prices forever,” she said.
For those staying in Santa Barbara for more than five years, they should control their costs by buying a home, Abercrombie said.
“If they are paying $2,000 in rent, they can probably own something and control costs for rest the rest of their life rather than worry about rents going up,” she said.
“If we’re down to a 3.2-month supply of homes, then people can’t buy and rents will likely go up. The people I’m seeing who are buying are planning for the long term. They’re thinking inflation won’t go away and want to get set for the future.”
But there are several misconceptions, Bartley warned. Short sales aren’t big bargains and cash doesn’t translate to a discounted price, she said.
“The banks are not underpricing short sales,” Bartley said. “They price them at market value and that’s what they expect to get.
“Also, a lot of investors think that because they are offering cash, they should be getting a big discount. But they don’t care; they’re taking the best terms and the best price.”
Overall, the market’s recent uptick is a good sign, Ralston said.
“Prices have stabilized and will seemingly go up,” he said. “That’s great news for rest of economy even if we don’t see incredible appreciation in the fourth quarter.”