The Santa Barbara Association of Realtors Economic Forecast for 2018 was opened with heavy hearts and a collective moment of silence honoring the tremendous loss of precious life and the devastation of property in Montecito due to the Thomas Fire and subsequent mud flow. Leslie Appleton-Young, the Chief Economist for the California Association of Realtors feels that it is too early to determine how these tragic events will affect the Montecito housing market, however she made the following predictions on what we might expect:
- The impact on the housing market will be more substantial in the immediately affected areas, but will remain relatively small in the county as a whole.
- Home sales activity and prices in the fire-ravaged areas are expected to drop in the near term. Potential buyers could be discouraged. There will be a supply shortage.
- Average rental rate will pick up as displaced homeowners seek temporary shelter while their homes are being repaired, thus pushing up demand on rental properties in the short term.
- Housing supply will be lowered and the impact will be more substantial in the immediately affected areas.
- Eventually, rebuilt homes in the burned and mud flow areas will gradually increase supply and could raise home prices in the neighborhood as these homes will be newer and improved from previous homes.
- Cost of home ownership could be higher in the immediate affected area, as homeowners' insurance premium may increase because of the catastrophe.
While it is too soon to know exactly how the Montecito real estate market will ultimately be affected, one thing for certain is that the outpouring of love and generosity by both the Santa Barbara and Montecito communities has been overwhelming. One homeowner was quoted as saying “It was the beauty that brought us here, but it is the people make us stay.” We need more time to ascertain how the real estate market will react to these unimaginable and tragic events.