The multifamily housing investment market for the South coast of Santa Barbara County continued its recovery during the second quarter of this year. The number of sales increased from the first quarter, and this is a good sign of the continued appetite for investing in our local community.
Additionally, the government programs that are compensating property owners for back due rent are providing a safety net for investors to continue believing in the long-term strength of the sector.
There were seven sales of properties with five or more units during the second quarter. While this was just more than the five reported from the first quarter, there are several more properties in escrow and that bodes well for the third quarter.
Additionally, there were 11 properties for sale or in escrow at the end of the second quarter. This is a strong number providing some much-needed inventory for investors. The recent trend has been off-market sales, but now sellers are beginning to return to the market and this could mean a return to traditional stability.
Santa Barbara remains a highly sought after destination, and the investment community continues to realize that as average sale prices continued to rise through the second quarter.
There continues to be strong demand for apartments, partly because of the continued boom in the residential sales market. However, we have begun to see some signs of the single-family residential market cooling, and that could help provide a little more vacancy for the apartment market as buyers are not as hot and heavy for homes, allowing renters to have more opportunity to find rental housing.
As new construction projects have come to market, we have seen a strong appetite from tenants looking for new properties with desirable amenities.
Recently, a brand new 26-unit project leased up in under one month. The tenant mix ranged from young professionals, who wanted to live and work downtown, to retirees looking to be close to family without the responsibilities of homeownership.
New construction continues to best the solution for our housing supply issues, and there are signs that residents and local leaders may be able to find more common ground to make this a reality.
Brian Johnson is the new president of the Santa Barbara Association of Realtors. He is a California licensed real estate agent and the managing director of Radius Commercial Real Estate. Brian handles all types of commercial real estate transactions, but has a special focus on multifamily investments. He can be reached at 805.879.9631 or bjohnson@radiusgroup.com.