Santa Barbara Real Estate Mid Year Economic Update

On June 14, 2006, Mark Schneipp, Chief Economist of the California Economic Forecast stated that the Santa Barbara real estate market is currently in a soft landing and predicts there will be no collapse in the Santa Barbara housing market.

Santa Barbara is a unique market and as such Schneipp has omitted Montecito and Hope Ranch from his analysis as these two high end communities of Santa Barbara would skew the data. Schneipp analysis covers the City of Santa Barbara , Goleta , Summerland & Carpinteria.

The Santa Barbara median selling price increases have been in the double digits for years now. Schneipp expects that will change. The median selling price in Santa Barbara currently hovers around $1.2 million for single family homes. Schneipp anticipates the rate of appreciation will flatten out but does not expect prices will decrease. He stated that in order for prices to go negative, you need distress from sellers and he does not see that. Scnheipp described the Santa Barbara economy as healthy. He says the job market is healthy and unemployment is at its lowest rate in recent history.

The total number of homes and condos sold are down, and the level of homes and condos for sale has increased in comparison to last year and to previous years. Scneipp attributes that to higher interest rates. That said, Schneipp also said that he feels the Fed may be at the end of the 16 consecutive rate increases, and anticipates that the Fed will hold on rates at the June meeting. Schneipp went on to say that he does not expect rates to exceed 6.8% and rates are now off their peak.

While Schneipp omits Montecito & Hope Ranch market, they deserves mentioning. Homes for sale in Montecito and Hope Ranch start in the low $2 million range. According to Schneipp's limited data on these areas, Montecito's median is $2.5million and Hope Ranch's median is $2.2 million. A significant majority of the homes priced above $10 million are located in Montecito and Hope Ranch and the closed sales data are very impressive. So far, half way through 2006, the sales revenue data for homes priced above $10 million has already exceeded that of the full year 2005 which was in excess of $96 million according to Santa Barbara Multiple Listing Service.

Housing production in Santa Barbara continues to be low and the cost of building continues to increase. China and other countries continue to tap raw materials and other resources. As demand increases for these materials, the price increases. As building costs increase, the cost of housing must follow.

Schneipp concludes that based on his analysis he expects the Santa Barbara market which covers the City of Santa Barbara , Goleta , Summerland & Carpinteria will not decrease in value, but rather experience a flattening of appreciation. He does not expect the median to decrease.

For more specific statistical data, or for more information on homes for sale, please contact Wendy Gragg at 805.565.0246