Is NOW the Right Time to Buy Santa Barbara Real Estate?

As a person that bought a new home in 2007, I lied awake last night wondering if I made a mistake.  It’s not hard to second-guess oneself in the wake of all the negative national news, even when real estate is your business.  So this morning I went to my computer to check on the strength and velocity of our local market.  Looking at the key indicators, this is what I found:

•    Supply.  Today there is only a 4 month supply of inventory in the lower end of our market, down from 11 months in Sept. of ’07.  The high end is also way down.  This is not true for other areas of the country - Phoenix, for example, currently has an 18 month supply of inventory because of extreme over-building, while the national average is currently around 11 months.

•    Demand.  With the FHA loan limit now at $729,000, we have seen a 50-70% increase in the number of loan applications being taken compared to Aug.-Dec. of last year. Desirable properties that are well priced are starting to receive multiple offers again, even in the high end of the market.  We are also seeing an increase in investor purchases.

•    Pending to Failed Ration.  The ratio of properties that have gone into escrow versus those that have “failed” the system (i.e., expired, cancelled or withdrawn) is down from 1:3 during ‘07, to 1:1.5.  This is very positive news.

•    Wildcard Effect.  The impact of distress-sale properties on our local (South County) market is negligible.  Montecito saw zero foreclosures last year.  Santa Barbara saw about 40.  At this rate, distressed sales will not be significant enough to undercut prices.

•    Underlying Value.  There is still underlying value in Santa Barbara and Montecito real estate.  The key is the lack of available land, coupled with the world-class climate, natural beauty, and high-ranked school districts.  That is what drives people to our area.

I’m going back to sleep now . . . . . I’m glad I bought my home.