In the first five months of 2013, closed sales of single-family homes in the Santa Barbara metro area (Carpinteria to Goleta) were 512 residences. In the same period this year, there were 396, a drop of 23 percent. Why?
A big reason was a drop in distressed properties for sale. While there were 67 real estate owned (REO — owned by the bank) and short sale (the lender received less than it was owed) homes closed in the first five months of 2013, there have been only 15 in the same period this year. That’s a 77 percent drop. The 52 fewer sales accounts for 10 percent, or nearly half, of the 23 percent drop.
Another factor in the lower sales number this year just might be the median price. For the first five months of 2013, the median sales price for single-family homes in the Santa Barbara metro area was $895,000. For the same period this year, it was $1,126,944 — an increase of 26 percent.
While the median price increase may mean all homes have moved up in value, it’s increase can also be the result of fewer sales in the lower price range. A spot check of two fairly typical Goleta tract homes in the Kellogg School attendance area shows an increase of 12 percent.
This more likely reflects the true appreciation rate in the Santa Barbara metro area over the past year.
The last most likely factor was the reduction in the maximum conforming loan limit that FHA would accept from $729,750 to $625,500. This loan program allowed qualified buyers to purchase a home with only 3.5 percent down payment. The reduced loan amount combined with our increasing prices effectively removed these buyers from our single-family market.
The best reason not to worry about the health of our housing market is the low inventory level. With only 256 homes for sale, and a current sales pace of 103 a month, we only have 2.5 months worth of homes to sale. A balanced market has historically been consider six months worth of inventory.
— Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at firstname.lastname@example.org or 805.687.1551. The opinions expressed are his own.