More “Montecito Heat”

The 2007 Montecito home market remains in the confident grip of sellers. Through July 30, 22% more homes sold than last year, and the median sales price rose to $2,850,250, an 11% increase. And although it took buyers sixteen days longer to make a choice, $445,906,141 was paid to sellers, an increase of 15% over last year.

The Montecito Heat Index measures buyer demand today for single-family homes, excluding condominiums. Because condos represent a different market and such a small percentage of transactions (22 sold this year as compared to 127 single-family homes,) not including them in the Heat Index provides a more accurate picture of Heat in the five price sectors surveyed.

However, as a condo dweller, some of my closest friends are condo folk, and it has been suggested that although we may not deserve more than a passing reference, nor certainly our own Heat Index graph, some mention of condo activity should be included.

Year to date, the Montecito condominium market, compared to last year, has been strong indeed. Although new listings are down 40%, units sold increased from 9 in ‘06 to 22 in ‘07, an increase of 144%. And the average sale price increased by nearly 10% to $1,788,864. The $5m sale of a two-bedroom, two-bath, 1,695-square-foot Bonneymede ocean front unit in mid May (full price, one day on the market) is still being talked about.

Although year-to-date data is informative, it is not necessarily reflective of the market today. Such data is trailing, that is a look back at what has occurred as long ago as the first of the year. And although it is important to know where we have been, leading data – what the market is doing now and perhaps will do in the future – is the focus of this column. Specifically, how “hot” is today’s market?

Accordingly, the Montecito Heat Index measures the present intensity of buyer demand for single-family homes within five distinct price sectors. And since the market also fluctuates seasonally, present demand or “Heat” is compared to this date a year ago. The formula is Pending Listings (under contract and not closed) divided by Active listings (not under contract) X 100. All data is derived from the Santa Barbara Multiple Listing Service.

Last month’s Montecito Heat Index for the five price categories surveyed, found a divergent market. Homes in the $3- to $4-million sector showed the greatest buyer demand, up an impressive 131% over last year. Our highest-priced homes, $5-millon and above, also posted a strong showing. The weakest group was $1-2millon, off 33% from this date last year.

Of the five price sectors surveyed, the strongest relative buyer demand this month is in the $1-2m, scoring a 32 and significantly above last year’s 19. The $2-3m group posted a 25, 150% over last year’s 10. The weakest buyer demand was in the high-end, $5m and above group. Only the $4-5m sector performed worse than last year. The total “Heat” was 109, and above last year’s 84.

In the face of national media reports of home price erosion and sale weakness, 146 new buyers stepped up to purchase a home here. A testament, I believe, to the entire community’s commitment to keeping Montecito a very special place to live.

And in case we are feeling too special:

Although it may be considered impolite to talk about people who aren’t here, and I do understand it is very different there, I don’t think the good people of Hope Ranch will mind if I share their year-to-date numbers. With exactly the same number of listings as last year, the number of homes sold increased by 266%, the dollar volume of those sales increased 512% and the median sales price went from $2,952,000 to $3,650,000, an increase of 24%. And even though we are talking about only 22 sales, those are great numbers.