Beautiful Santa Barbara Real Estate Houses For in Sales Santa Barbara

ON January 19th, 2015 I was Interviewed by the Santa Barbara News-Press, here's that interview:

Business Outlook Q&A: Inventory a challenge for Real Estate markets in 2015

Buying a first home or selling one might be on many people’s priority lists in the New Year. But with new listings declining in South Count it looks like the number of sales will continue to decline in 2015.

That’s according to Gary Woods a Realtor with Sotheby’s International Realty and the statistician for the Santa Barbara Association of Realtors.

Limited inventory is the biggest hassle facing both buyers and sellers wanting to stay and trade up on the pricey American Riviera, Mr. Woods said.

Eager real estate professionals are scrambling for listings in a market where 10 percent of the agents handle 90 percent of the transactions for both local and out-of-market clients, he said.

Forecasts for the commercial real estate- market in the South Coast show a similar trend a large number of buyers chasing limited inventory to expand or open office, retail and industrial spaces.

Also, the investment market will remain extremely hot, said Bob Tuler a principal/broker with Radius Commercial Real Estate & Investment.

The supply-and-demand situation is a result of many troubled properties clearing out of the system following the, Great Recession and returning to something resembling the markets of years past both said.

Today, Mr. Woods and Mr. Tuler provide an overview of the forces and issues that will drive their respective areas of real estate in the coming year,

RESIDENTIAL BEAL ESTATE - GARY WOODS

Q: What were the hallmarks of the residential real estate market in 2014 on the South Coast? Give us the numbers.
Woods: Year-over-year sales are down about 17 percent from 2013. But the median sales price is up to $1.12 million for approximately an 18.5 percent rise. The average sales price is also going up from about $1.4 million in 2013 to approximately $1.7 million in 2014 for another 18.5 percent increase.

Q: What are the dollar amounts for sales volumes year over year?
Woods: By the end of November sales volume was close to $2 billion - $1.7 billion for single-family dwellings and $235 million for condos. This was just slightly ahead of 2013’s figure, and this is based on fewer sales but higher prices

 Q: How would you describe the market for 2015?
Woods: I’m looking at a market that’s a little bit slowing with some possible price reductions.

Q: Talk about inventory.
Woods: Inventory is down in every area of the south Coast except Hope Ranch which is up about 6 percent year over year. Anything for sale above the $5 million mark is going crazy (with interest and competing offers) and I suspect that’s being driven by some people rotating out of stocks and into real estate.

Inventory-wise, most areas are down in double digits, with Goleta South falling 15 percent and Carpinteria declining 13 percent. East of State Street is the closest to where we were last year; falling only 4 percent.

The number of new listings has fallen for five years in a row from a high of about 550 units (many of them distressed properties) for sale in 2010 to less than 280 in 2014. Currently, I don’t see anything to reverse this trend.

Q: How can anyone afford a $5 million home?
Woods: In Santa Barbara, many of these buyers and sellers are cycling out of their third or fourth homes, so this isn’t their first time at the rodeo. As such, they have sufficient equity to cash out and trade up. Since many are buying bigger properties they are putting up their extensive portfolios as collateral for loans which lenders are happy to fund.

Q: What are the three top factors that will shape your industry in 2015?
Woods: The three top factors shaping the real estate industry in 2015 are first the inventory. If a property isn’t listed, you can’t sell it! Second, there’s interest rates. Then third, is fuel prices. If gas prices remain low, then it could be the one element that spurs growth.

We’ve just seen the Dow go over 18,000 primarily on the Fed’s statement that interest rates will remain low and falling fuel costs have spurred consumer spending leading to a 5 percent growth in GDP in the quarter. Thus far, that consumer spending hasn’t impacted real estate but if it continues then it could foster more activity. 

Q: What do you see as the strengths and weaknesses of the South Coast’s real estate market?
Woods: The strengths I see are a diverse collection of housing from homes in the $20 million-plus range down to condos just above or below $300,000. The weakness is the lack of inventory. It’s really at the heart of the industry

Q: How will mortgage rates affect future transactions?
Woods: Currently interest rates are still historically low which is driving what activity there is. If interest rates rise, then prices will have to come down because it’s nice to say that we’ve a 20 percent increase in the median sales price but we haven’t seen an increase in wages.

People, other than the very wealthy, are about at the top of what they can pay so if interest rates go up prices have to fall.

Q: How would you describe the first-time-buyer market here?
Woods: The first-time home market is better than it has been because we’re not seeing the investors in the marketplace that were buying the lower-end properties and usually paying cash. We still see the situation in that mom and dad buy the property for cash. Then when the escrow closes the child goes and gets a mortgage to pay them back.

Q: Will home prices appreciate next year?
Woods: As of now, I’m predicting that there will be fewer sales but higher prices because the listings will continue to fall.

Q: Where are the leads coming from?
Woods: Real Estate leads are still primarily coming from the Internet. What’s interesting is the big sites like Zillow and Trulia have huge traffic residing on the front page of Google results but we find that when people get down to really buying, they go to individual agent sites.

A little-known fact is that most print advertising is really for the seller who wants to see their property advertised. But predominantly what sells a house is other agents and the sign. People drive the neighborhoods they want to live in and call on the signs.