Tight inventory, rising prices, and even nature’s fury failed to dissuade my optimistic buyers and sellers in Montecito and Santa Barbara
As we look back at real estate in 2018, experts say the housing crisis finally made a comeback. Tight inventory and high home prices led to a gradual cooling over the past 12 months. The good news: Santa Barbara and Montecito homeowners saw their equity grow as property values increased. But according to a report by CoreLogic, the rate of home price increases fell from 6.8% to 5.5% by the end of the year. And we experienced rising interest rates in 2018. In fact, as I’m writing this, there’s talk of the Fed raising the rate once again.
“Prices are rising, but in the second half of the year, the price growth has measurably slowed compared with the first half of the year,” says Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors. “I think in 2019 we may actually have a year where income growth might finally outpace home prices. I expect home prices to soften to only 2.5 percent growth in 2019.”
Inventory rebounds as rates increase
Inventory rebounded from the lows we experienced across the country during 2017. However, there still weren’t enough homes on the market in 2018 to meet demand. After several years of historically low rates, hovering around 3.5%, 2018 was the year of the 5% mortgage interest rate according to Bankrate data. Still, rates didn’t go as high as they could have or possibly should have in this economic cycle. They hit the 5% mark in early October, only to sink back into the 4s in the fourth quarter. The average 30-year fixed mortgage rate is 4.75% as of Dec. 20.
Record level of Home Equity
Homeowners rejoiced at record levels of home equity in 2018. They sat on an excess of $6 trillion in equity, which they barely tapped — which is a good thing.
“The equity situation is very healthy because it means that asset valuation has risen. Another contributing factor to the healthiness of the homeowner is that overall mortgage balance has not been rising. This means the borrowing level in 2018 has been very stable,” says economist Yun. “So, homeowners are in great shape and I don’t foresee a price decline in 2019, which means homeowners will continue to increase their share of equity.”
Here in California, home to some of the most expensive ZIP codes in the country — including Montecito, existing single-family home sales dropped 3.9% from October and were down 13.4% from November 2017, according to a report by California Association of Realtors. On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, and the Southern California regions, while the Central Valley region experienced a relatively small sales dip of 3.9%.
“While many home buyers continue to sit on the sidelines, serious buyers who are in a position to purchase should take advantage of this window of opportunity,” said C.A.R. President Jared Martin. “Now that interest rates have pulled back, home prices have tapered, and inventory has improved, home buyers’ prospects of getting into a home are more positive.”
My recent sales
I feel blessed to be able to say my home sellers and home buyers in Montecito and Santa Barbara remained quite active throughout the year. The following properties were sold just during the first two weeks of December:
- I represented the buyer of this amazing Ocean View Craftsman Home pictured at the top of this blog, nestled in the Santa Barbara foothills. Behind iron gates and down a long driveway, the custom Craftsman ocean view residence rests on approximately 2.57 acres. The home was carefully constructed to take full advantage of its surroundings and boasts incredible ocean, ChannelIslands and mountain views from nearly every room.
- I represented the seller of the home I refer to as Birnam Wood Traditional Elegance. Located in Montecito’s private enclave of Birnam Wood, nestled among the fairways of the community’s world-class golf club, and a short distance from Montecito’s upper village, this richly appointed example of Birnam Wood traditional elegance is entered by a large entry hall and features expansive mountain views and luxury amenities throughout.
- I represented both buyer and seller of the famous Palmyra: A Grand Montecito Estate. This breathtaking and very private 4.5-acre grand estate was showcased in the Wall Street Journal “Behind the Listing” The Mediterranean home, lovely guesthouse and vintage pool house rest on the grounds of historic El Mirador. Featuring impeccably landscaped gardens, expansive manicured lawns and hedges, a pond, pergolas, terraces, and a large pool provide space and amenities for extensive entertaining and celebrations.
- I found one of my buyers the perfect home sweet home in the Campanil Hill neighborhood of Santa Barbara. Located on the sea-cliff just outside the boundaries of Hope Ranch, Campanil Hill is a gorgeous private-feeling neighborhood filled with larger homes and estates. Most of these homes, including the one I found for my buyers, have expansive views of the ocean and Channel Islands and sit on nicely landscaped parcels of .5 acre to 6 acre lots.
- I found another buyer a Picture Perfect Mediterranean Gem. This compound checked all the boxes for my discerning client: single story, 4 bedroom + office w/ full bath + fabulous pool house. Located at the end of a quiet lane, this gorgeous property is rimmed with oaks. In this serene setting, one can unwind in the pool or spa while cooking in the spacious outdoor dining area.
There are more!
Now that you’ve taken a look back at real estate in 2018, are you ready to get into the game? If yes, I have many more amazing homes featured on my comprehensive website. Take a look, then give me a call at +1 805.886.9378 or email me at Cristal@montecito-estate.com and I’ll happily arrange a tour of whatever home you’re interested in seeing in person. If you need to sell first and you already live in the area, I’ll happily add your home to my portfolio and find you your new home sweet home at the same time.