Santa Barbara Real Estate Values Are Back At Their Peak!

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People constantly ask us, “How is the market doing?”  If you are a seller, things are looking good in 2018.  If you are a buyer, the time to act is now.  After attending the Santa Barbara Association of Realtors Economic Forecast for 2018, this was the message from Chief Economist of the California Association of Realtors, Ms. Leslie Appleton-Young, along with a local statistician/Realtor from the Santa Barbara Association of Realtors (SBAOR). 
 
At the end of December 2017, the median sales price for single family homes from Carpinteria to Goleta, was $1,250,000, up 8.8% from December of 2016.  Home prices in Santa Barbara are at the same levels reached at the peak of the market in 2005.

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Ms. Appleton-Young emphasized that the inventory level of homes on the market remains extremely low throughout California.  These low levels have become our “new normal.”  At the end of December 2017, there were 262 single family homes actively listed in our Santa Barbara Multiple Listing Service from Carpinteria to Goleta.  This was the lowest inventory level for all of 2017.
 

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Rising interest rates also play an important part in our market this year.  Rates have been rising and are predicted to continue increasing.  Currently interest rates hover around 4.25%, depending on the type of loan.  In September of 2017 rates were as low at 3.78%.  For every percent that interest rates rise, a buyer’s purchasing power is reduced by $100,000.  For example, if a buyer is pre-approved for a $1,000,000 purchase and rates increase by only 1%, that buyer would now only qualify for a $900,000 purchase. 
 
Additionally, the new tax laws have an effect on our real estate market.  The limit on deductible mortgage debt was reduced from $1 million to $750,000 for new loans taken out after 12/14/17.  However, note that current loans of up to $1 million are grandfathered in and are not subject to this new $750,000 cap.  Interest paid on home equity loans is only deductible if the proceeds are used to substantially improve the residence.  Lastly, homeowners who itemize their tax returns can only claim up to $10,000 total for state and local property taxes and income or sales taxes.
 
Lastly, both Ms. Appleton-Young and the statistician/Realtor from the SBAOR are predicting that California’s median home price will increase 3.1 to 3.2% this year.  Overall, home sales in California are expected to grow.  This is great news for sellers in 2018!

Please feel free to reach out to us with any of your real estate needs.  We are always happy to help!  The greatest compliment you can give us is a referral.  We appreciate you thinking of our team.

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Our hearts go out to the Montecito community and all those affected by the tragic Thomas Fire and subsequent mud flow.  Thank you to all of the first responders and volunteers who have worked tirelessly to help all of those in need.  For more information on what to expect in Montecito real estate market, please visit our latest blog post. 

Please feel free to reach out to us with any of your real estate needs.  We are always happy to help!  The greatest compliment you can give us is a referral.  We appreciate you thinking of our team.

Written by Your Santa Barbara Home Team. Statistic provided by SBAOR & Leslie Appleton Young