Residential real estate on Santa Barbara County’s South Coast for the first half of 2024 significantly outperformed 2023.
All major indices-sales, prices and inventory have increased, resulting in the total sold dollar volume up an impressive 18% to nearly $1.7 billion.
Record-Breaking Sales in Montecito
In Montecito, five properties exceeded $25 million, and in June, the largest sale ever recorded on the South Coast occurred. The six-bedroom, nine-bathroom, 9,066-square-foot, 3.4-acre oceanfront Padaro Lane estate owned by real estate phenoms Ellen DeGeneres and Portia de Rossi changed hands at a cool $96 million.
If you had moved quickly in December 2022, it could have been yours for only $70 million. Sometimes it’s best not to look back.
For the month of July, the South Coast saw 58 escrows close with a median sales price of $1,850,000.
Carpinteria/Summerland had five sales with a median sales price (MSP) of $2 million. Montecito had four with a MSP of $7.3 million, Santa Barbara had 27 sales with a MSP of $2,035,500, Hope Ranch had no sales, and Goleta had 22 with a MSP of $1,547, 500.
There were 20 South Coast condo sales with a MSP of $981,250.
Mortgage Rates and Market Outlook
These are all strong numbers in spite of the fact that, given the currently remarkably high mortgage rates, too many folks enjoying 3% to 4% mortgages don’t want to sell, and too many folks don’t want to or can’t buy.
This is all beginning to improve. Last week, the average 30-year mortgage, by far the most popular home loan, dropped to 6.47% from 6.73%.
Although this doesn’t seem like much of a change, it is the biggest decrease this year.
And inflation just dropped below 3% for the first time in three years, nearly guaranteeing that the Fed will start lowering interest rates.
While not connected to mortgage rates, this should result in a further decline of mortgage rates and an even more robust South Coast market going forward.
Major Changes in Real Estate Transactions
As I wrote in April, as of Aug. 17, the way we buy and sell homes will drastically change. I’m not sure what happened 100 years ago, but a CNN article claims that industry analysts describe this as the “biggest shakeup in a century” for real estate agents.
What’s about to change? Historically, when you listed your home on the Multiple Listing Services (MLS), your agent would charge between 5% and 6% of the selling price and split that fee with the buyer’s agent.
Essentially, the homeowner was forced to pay the buyer’s agent’s commission. More likely the fee was actually “baked” into the home’s listing price, thereby inflating the price of homes for sale.
There are a number of ways of looking at this, including the seller benefiting from a represented buyer, but, in any event, that is over as of Aug. 17.
To settle the antitrust suit, the National Association of Realtors agreed that (1) compensation will no longer be cited in an MLS listing, and (2) for a buyer to visit an MLS property with an agent, there must be a written agreement with that agent and must identify the agent’s fee.
This may solve the alleged antitrust concerns, but during my 20 or so years as a broker working in the Montecito market, which currently has a median sales price of approximately $7.3 million, no one has ever said, “Find me a house, and I’ll pay you $182,500” or anything like that because buyers didn’t have to reach in their pockets for representation.
There will be a path forward, I am sure. Buyers will not want to be on their own without competent assistance. How it will be done, however, is still uncertain.
One more thing to worry about when opening your home up to the public when listing your home for sale. It seems an unoccupied West Los Angeles home for sale became the site of a well-organized, pay to enter, party. Photos of teens taken at the party seen on social media under the title “Crash out events” promised “More mansions to come.”
Based upon the photos, in addition to possible liability for injuries to uninvited guests, there was a lot of cleaning up to do.
Until next month.