Archive » August 21, 2008
Real Estate View
By Michael Phillips
Montecito Heat Index
The Montecito Heat Index is a measure of today’s demand for single-family homes in five price sectors. Rather than a measurement of sales which became pending or under contract at least a month ago and therefore stale or lagging data, the Heat Index is leading data and a more accurate picture of today’s market demand. The precise formula is pending sales (homes under contract and not yet “closed” or sold) divided by active listings x 100. And since real estate markets are seasonal, and often vary monthly, today’s demand is compared to this date last year. All data is from the Santa Barbara MLS.
$1-2m Sector the Hottest
Last year, the Heat Index registered a 94 with the $1-2-million sector scoring the highest at 27. Demand diminished as home values increased with the high-end $5m-and-up group scoring the lowest at 12. Today the Index registers 59, a bit stronger than last month yet considerably down from last year. In fact, the respective scores for each price sector were higher last year than today.
Like last year for this date, we again see the low end $1-2m group having the highest demand, scoring a 23. This group has replaced the recently hot $4-5m sector as our demand leader.
The $2-3m group scored a 15, identical to last month’s reading yet below last year’s 24.
The $3-4m group scored an 8 and is also below last year’s 16, yet much improved over last month’s score of zero.
Highest in demand for the past few months, the $4-5m sector came in at 12 and below last years’ score of 15.
High-End Market Underperforming
The high-end, $5m-and-above group continues to struggle. Only one home – a still-under-construction French Provence style on Para Grande near Riven Rock, listed for $6.950m and on the market for 343 days, is the only one in this price sector in escrow. And this group is growing in number each month. Last year there were 43 homes available for sale in this segment, last month there were 65, and today there are 72. A year-over-year increase of 60% in homes on the market and competing with each other is significant; in most places, this ultimately results in lower sale prices.
Inventory Up, Sales Down; Prices Continue to Rise
Collectively, sales in Montecito are down 21% year over year and there seems to be a resulting lack of buyer urgency. Buyers are certainly not racing up the drive with full price offers in hand as in days of old, yet for those homes that have sold, the average number of days on the market (from date of listing to close of escrow) dropped from last year’s 188 days to 144 today.
Most important, however, is the fact that we are currently the only area that has experienced a year-over-year price increase, and it is a sizeable one at that. Our $3,625,000 median sale price is up 28% over last year and our average price of $4,618,932 is up even higher at 33%. So far, the major event many buyers feel is inevitable and that they continue to expect – price capitulation – has just not occurred here.
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