SANTA BARBARA REAL ESTATE MARKET CONDITIONS

March 13, 2006

Slow Growth in Santa Barbara Affects Supply & Demand

You may have read the recent LA Times article on March 6, 2005 about the Santa Barbara real estate market. The article lays out in accurate detail the long history of Santa Barbara slow growth mantra and its effect on continually increasing housing prices.

The easiest of economic fundamentals to understand is supply and demand -- low supply and high demand result in higher prices. Santa Barbara , for years now, has not built enough new supply to keep up with its demand, and has put itself in a supply deficit that it will never be able to build itself out of.

Cradled between the ocean and mountains, there is simply no more available land to build enough supply to satisfy the demand. The physical restraints coupled with no growth advocacy groups make the very few projects that might have added to the supply, a near impossibility as well.

Just this past week, Santa Barbara shot down two projects. The first on Upper State Street proposed to build 55 condominiums and was shot down. Also last week, a proposal to build 24 homes was also shot down. Developers are getting a very clear message that new construction in Santa Barbara is not wanted!

As the LA Times article states, “With a supply so limited, prices last year rose faster than in any other region in the state. The median price of a single-family house is now $1.1 million, (actually its more like $1.25 million as of the writing of this) out of reach for all but the well-to-do.”

Santa Barbara 's population grew by just 400 people from January 2001 to January 2005, according to state estimates, During this time of population stagnation, housing prices skyrocketed. As President Earle of the Coalition for Sensible Planning stated in the LA Times “To me, the Santa Barbara South Coast is the last livable community on the Southern California coast, its worth fighting to keep it that way.”

With more demand than supply, and one of the best places in the world to live, it is anticipated that the homeowners in Santa Barbara should enjoy healthy rates of price appreciation. Santa Barbara truly is an investment you can live with!