How Hot is Today’s Real Estate Market?
The Montecito Heat Index measures present demand for Montecito single-family homes. By focusing upon buyer contracts, rather than closed escrows which typically lag a month or longer from accepted contracts, the Heat Index provides a forward-looking indicator of both market strength and direction. At five distinct price points, we look at where value is most recognized by buyers. Today’s Heat Score is compared to this date last year. All data are from the Santa Barbara Multiple Listing Service and are uniformly deemed reliable.
Today’s Heat Index Score is 166, a stunning increase of 348.7% from last year.
As the adjacent graph demonstrates, the $2-3m sector and the $5m and above sectors were the most in-demand on this date last year. Today it is the $3-4m group besting last year’s score by an enormous 950%. And the high-end $5m and above sector came within two points of last year while other sectors easily outscored last year.
A major change affecting the market has occurred. Buyers started to pay more attention to options in all sectors as inventory began to grow pre-virus. A very strong Spring market was facing us. Since then the number of homes for sale in all sectors combined is down a considerable 23.8%.
With the near impossibility of safely interacting with buyers, many sellers understandably withdrew from the market. Almost immediately upon lockdown, inventory dropped by as much as 67%. Open houses were no longer permitted and showings were limited to virtual tours. And yet three months later, showings are carefully resuming and the market is improving. And it is improving faster in Montecito than anywhere locally.
Repeatedly, when market interrupters arise, Montecito has been an outlier defying both regional and national trends. Today Montecito has 3% more homes under contract than on this date last year. Hope Ranch’s inventory, by comparison, is down 41% where one might expect. Equally surprising is that our sales are up 2% from last year while Hope Ranch is down 47%. And our median sales price has increased by 17% to $3,450,000. Extraordinary numbers given the present circumstances.
For now, however, uncertainty is firmly upon us. It has been said that when you see one pandemic – you’ve seen one pandemic. Markets hate uncertainty and pandemics often exhaust economies resulting in deep recessions. And a renewed outbreak in the fall will very likely dial everything back for awhile.
However, in spite of Buyers facing very few choices, demand will continue for homes here. It always has. And with inventory at present levels (there are only nine properties listed in the $1-2m sector and nearly half are in escrow), sale prices will likely increase. A strong Seller’s market continues to control.