The September Montecito Heat Index

Montecito single-family-home sellers have been successfully pushing back against a tide of pervasive, national and regional market decline headlines. The California Association of Realtors just reported that California homes sales decreased 27.8% in August. Yet, the Montecito single-family-home market has been stronger this year in every significant category over last year. As reported here last month, for the period January through August, it has been all about the sellers; they have enjoyed 18% more sales and a median sales price of $2,850,000, an increase of nearly $200,000 over last year.

As of today, our home market remains strong by any definition. Year to date, sales are up 19% over last year, the sold dollar volume is up 16%, median sales price increased 8% to $2, 900,000 and there are presently 5% fewer homes for sale than last year, all indicators evidencing a strong sellers’ market. Buyers, however, are not convinced, and are doing their best to try to reduce asking prices and are making sellers wait (on average over 132 days on market.) For sellers, however, to have the market pay 8% while waiting for your price, isn’t too bad.

That was yesterday and what is referred to as trailing data. So how “hot” is the Montecito residential market today? What is the degree of present buyer demand in your price sector? And since demand activity is a seasonal if not weekly variant, how does present demand compare to this date last year?

The Montecito Heat Index answers these questions for five price sectors of single- family homes. The formula is: Pending Sales (homes under contract but that have not closed escrow) divided by Active Listings (homes offered for sale but not in escrow) resulting in a measurement of leading indicators, describing the Montecito market today.

Today, the Heat Index measures 74, an increase of 51% over last year’s 49. Once again we are seeing a divergent market among the measured price sectors. The strongest relative buyer demand is shared by the $2-to-$3-million and $3-to-$4-million price groups each scoring 24 and much above last year’s 9 and 0 respectively. The $1-to-$2-million sector came in at a respectable 17, exactly the same as last year. The $4-to-$5million sector was not only our least active group, it showed no activity at all, scoring a big fat 0. There are sixteen homes in this group and ten are averaging over 187 days on the market and counting. Last year on this date, this sector scored a 13. The $5-million-and-above group reversed two prior months as our weakest sector, scoring a 9 and just one point below last year’s 10. We continue to have strong buyer demand in all but the $4-5m and the $5m-and-above groups. The median pending price for all groups is $3,295,000. Should these sales hold together we are going to seeing $3-million-plus median sales prices very soon.

Montecito Condo Market Hot Too

The condo market also continues to outperform last year. The total number of condominiums sold this year increased 177% over last and the sold dollar volume is up 190%. With new listings down by nearly 20%, upward price pressure should result.

With a majority of the market weakness occurring in the so called “low-end” throughout the country, it is interesting that we are experiencing the opposite. Our high-end $4-5m and $5m and above sectors have been underperforming for the last quarter while our $1-2m, $2-3m and $3-4m groups have been outperforming.

I am not suggesting the media is inventing negative housing facts or that there are not communities experiencing an eroding market. San Diego, non-rusting, economically vibrant, and with weather similar to ours, seems to be hard pressed and it could be argued a concern for us. Montecito, however, is presently vibrant, as is Los Altos, Manhattan Beach, and Saratoga, the top three highest median priced towns in California ($1.8m, $1.7m and $1.62m respectively); all have experienced increases of 20% plus this year.

Santa Barbara is also doing just fine. And should we look closer at communities within San Diego, we would most likely find pockets of median price increases as well. Real estate is not just local, it is extremely local and the media’s reporting of only macro, national or even regional data provides often misleading information to those contemplating or engaged in a residential real estate transaction.

Unfortunately, it is too late to snap up that East Valley Road estate near Picacho Lane. No, it was sold out from under us on the 24th after less than four months on the market and for a bit under $15 million. This remodeled Mediterranean on over two acres with eight bedrooms and six baths, guest house, pool, and five-car garage is a beauty, recalling the classic era of Montecito in the 1920s. But alas, a European gentleman will be moving in soon.

Worry not, for there are currently 22 homes over $10 million on the market and all are anxious to be chosen.