Dancing With Prices

“Where The Buyers Aren’t” was the headline of the Friday April 14th Weekend Wall Street Journal article, written by WSJ staffer June Fletcher. In the piece, Ms Fletcher postulates that one area where real-estate prices are likely to come down – or are at least way over-priced – is Santa Barbara. She quoted a couple of local real-estate agents – Montecito’s Randy Solakian, whose volume of sales puts him in the elite category as one of the top producers in the country, and Nell Eakin. While Ms Fletcher’s article was mostly downbeat, just across the jump page on the left in the “Private Properties” gossip column, was the smiling face of Kevin Costner, whose purchase of a 17-acre oceanfront parcel for $28.5 million was the lead item, titled “Dances With Realtors.” Suzanne Perkins, another high-producing high-profile Montecito Realtor, was the listing agent for the property.

A curious bit of information passed my desk recently: sales volume (not prices) in the San Diego area have slipped this quarter, which wouldn’t be too unusual except the number of sales have apparently “slipped” in each of the past 21 quarters! That scary statistic can only mean one thing in the medium run: prices are going to come down in that market.

There may be some markets in California, like San Diego, where prices are going to slip and slide down (though even there, the drop will likely be less than many hope or expect), but so far there is no evidence such a trend has taken hold in this area. I wrote in this column some months ago how real-estate prices in both Carpinteria and Goleta had raced ahead (in percentage terms) of Montecito over the past five years and how that trend had reduced the historic premium between Montecito prices and those communities. I speculated that, if there were a slowdown in real-estate activity, those areas would feel more pain than Montecito because they had raced ahead faster. It seems that just such a scenario has indeed developed and median prices of single-family homes that had bounced up over a million dollars in the past 24 months are losing some of that momentum and are settling down to slightly lower asking and sales prices. Montecito has, so far, avoided that kind of disturbance, though at the lowest end, things are a bit soggy and condo prices have become downright wobbly (but even here, condo prices had raced ahead of single-family-home advances over the past couple of years).