Thursday
Jan052017

2016 YEAR IN REVIEW ~ RIVIERA REAL ESTATE REPORT

2016 YEAR IN REVIEW  ~  RIVIERA REAL ESTATE REPORT

 As you may recall from my mid-year review in July, I suggested that the Riviera was “the best performing sub-market in the entire Santa Barbara south coast” and I expected the pace to slow down in the second half.  While it did slow down a bit after the early summer months, the final numbers for the Riviera real estate market in 2016 confirm that it was a record setting year.  There were a total of 97 closed sales in 2016 which is the most per annum within the last 10 years, and the median price of $2,025,000 not only surpassed the peak year of 2007 but was an astounding 21% above the previous year.

 When compared to the median price of the overall Santa Barbara south coast market which increased about 5% from 2015 and is still below the 2007 peak, there is no question that the Riviera was the best performing sub-market in the region.  The main reason for the Riviera’s record setting year was that there were significantly more sales in the higher price ranges.  Compared to 2015 the number of sales in the $1 - $2mil range was about on par, however there were 40% more sales in the $2 - $3mil range and 43% more sales above $3mil.  It will be interesting to see if this trend continues in 2017.  The median price of the current inventory is nearly $3mil, however there are only 2 pending sales currently above $2mil.  This suggests that the appetite for the higher price homes has been subdued for the past few months, but the upcoming Spring market will be the true test for how the 2017 market will fare.

 Speaking of 2017, my prediction at this time is that it should be another strong year in the Riviera real estate market.  The exuberance in the financial markets that we have witnessed since the election should bode well for Santa Barbara real estate—especially in the higher price ranges.  Rising interest rates may suppress demand a bit in the lower price ranges, but I don’t expect that to have much of an effect in the Riviera market.  In order for the momentum of the record setting 2016 market to continue it is imperative that the flow of inventory continues at a solid pace and more importantly that the sellers are realistic about the value of their homes.  Let’s keep the momentum going!

Friday
Jul082016

2016 FIRST HALF ~ RIVIERA REAL ESTATE REPORT

2016 FIRST HALF  ~  RIVIERA REAL ESTATE REPORT

 There is no question that the Riviera real estate market has been robust in the first 6 months of 2016.  However, when I compiled the data earlier this week the actual numbers in terms of closed sales and median price increase far exceeded my expectations.  With a total of 54 sales and a stunning 23% increase in the median price to $1,975,000, the Riviera may well be the best performing sub-market in the entire Santa Barbara south coast.

  Without bursting anyone’s bubble I should point out that while the median price is the best gauge for assessing the direction of the market, it can be skewed based on the price point at which the majority of sales are taking place.  In this case while the number of sales in the $1 - $2 million range is similar to the first half of last year, there were no sales below $1 million and 8 more sales in the $2 - $4 million range.  This helps explain the dramatic median price spike in the Riviera market—the actual increase in home prices is much closer to the overall Santa Barbara south coast number of about 5%.  This is important for potential sellers to know because there is a tendency to overprice properties when there is a perception that the market has escalated beyond what is actually taking place.  There is evidence of this currently, as much of the existing inventory has been lingering on the market for longer than it should and several of the pending sales have experienced price reductions before going into escrow.

 My expectation for the second half of the year is that the pace of sales will slow down, but the median price will remain close to the $2 million mark.   The main reason for this prediction is that the current inventory is skewed toward the higher price ranges, and the “entry level” homes on the Riviera appear to be almost nonexistent any more.  An intriguing trend that is contributing to this market dynamic is the resurgence of the home renovation buyers who are bringing some very exciting properties to the market.  There are currently a handful of high quality rebuild and/or new construction homes in the $2.5 to $6 million range along with a few more that will be coming on the market soon.  I will have more analysis about how this will affect  the Riviera market in my year end article.