South Coast Property Report

The Santa Barbara South Coast real estate market continues to demonstrate remarkable resilience in early 2025, with significant price appreciation in most areas and a persistent shortage of available inventory driving competitive bidding situations despite rising interest rates. Montecito, in particular, maintains its position as one of the nation’s most exclusive real estate markets, though recent statistics suggest a subtle shift toward more balanced market conditions in the estate segment.

Regional Market Overview

March 2025 saw a notable 11% increase in residential property sales across the Santa Barbara South Coast, with 111 transactions recorded as compared to March 2024. Single-family homes and Planned Unit Developments (PUDs) represented 79 of these sales, showing a slight increase from 77 in the previous year. The median sale price for these properties reached $2,827,000, marking a substantial 35% year-over-year increase, while the average sale price was $4,340,670.

Condominium sales demonstrated even stronger growth with 32 transactions, reflecting a 39% increase from March 2024. The median condominium sale price rose 14% to $1,187,500, with the average price increasing 9% to $1,333,587. These figures continue to underscore the desirability of the Santa Barbara South Coast region, where 88.3% of all residential sales exceeded $1 million.

Montecito Market Conditions

Montecito recorded 22 residential sales in March, representing a modest improvement from February’s 20 transactions. The single-family home segment saw 19 sales with a median price of $5,550,000 and an average of $6,148,568. Condominium activity remained limited but steady with 3 sales, commanding a median price of $2,300,000.

The area’s luxury status was reinforced by several significant transactions, including a beachfront estate on Posilipo Lane that changed hands for $22,000,000, representing the second-highest sale in the region after a $23,000,000 estate transaction in Santa Barbara proper.

According to the annual PropertyShark report from October 2024, Montecito’s 93108 ZIP code ranks as the fifth most expensive in the United States with a median sale price of $5,000,000, maintaining its position among the nation’s most coveted residential enclaves alongside communities like Atherton, which held the top position with a median price of $7,900,000.

Inventory Dynamics

A notable development for prospective Montecito buyers is the gradual increase in available inventory. As of April 1st, the Multiple Listing Service showed Montecito with a 7.9-month supply of available properties, up from 7 months in March, moving it firmly into what real estate professionals consider a “buyer’s market” territory. This represents a marked contrast from neighboring communities like Goleta and Santa Barbara proper, which remain entrenched in a “seller’s market” with just 1.3 and 2 months of inventory, respectively.

The expanding inventory in Montecito appears concentrated primarily in the ultra-luxury segment, contributing to the area’s overall supply figure while entry-level properties in the community remain scarce. This bifurcated market creates distinct experiences for buyers depending on their price range, with continued competition for properties below $5 million.

Overall, the South Coast region counted 195 active house/PUD listings and 62 condominium listings as of April 1st, reflecting modest increases from the previous month but remaining far below historical norms. For perspective, between 2007 and 2011, available inventory routinely ranged between 734 and 1,026 listings, with the all-time high recorded in June 1992 at a remarkable 1,297 active listings.

Competitive Bidding Continues

While market data suggests a gradual cooling in the frenetic pace of sales activity witnessed during the pandemic years, competitive bidding remains a reality for well-priced properties. Of the 101 residential sales processed through the Multiple Listing Service in March, 26 closed above the original asking price, 18 at asking price, and 57 below asking price.

Several properties commanded significant premiums, including homes on Woodley Court ($400,000 over asking), Glendessary Lane ($300,000 over asking), and W Junipero Street ($217,500 over asking). However, the 44% of properties selling at or above asking price represents a more balanced environment compared to the height of the market in 2021-2022, while still significantly exceeding the national average of 20%.

For context, the fierce competition in Silicon Valley communities like Sunnyvale and Cupertino resulted in 66 homes selling for more than $200,000 over their list prices in March, with 37 exceeding their asking prices by more than $500,000, and one property commanding a premium exceeding $1,000,000.

Historical Perspective and Future Outlook

The current market environment continues to reflect the extraordinary appreciation witnessed across the South Coast since the pandemic. The median sale price for all residential transactions year-to-date through March 2025 stands at $2,008,839, representing a 20% increase from 2024 levels and nearly double the previous historical high of $1,031,500 set in 2007.

While market observers anticipated potential corrections following the Federal Reserve’s interest rate policy adjustments, the impact on the Santa Barbara South Coast has been relatively modest compared to many other markets nationwide. The region’s persistent inventory constraints, coupled with its enduring appeal to wealthy buyers less sensitive to financing costs, have maintained upward pressure on property values despite the broader economic headwinds.

Local market professionals suggest the South Coast’s unique attributes – including limited developable land, strict growth controls, exceptional climate, and proximity to both Los Angeles and San Francisco – will continue to support property values even as the national housing market navigates uncertainties.

Challenges for Market Participants

Prospective buyers and sellers face several notable challenges beyond the traditional market dynamics of supply and demand. Chief among these is the ongoing availability crisis in homeowners’ insurance coverage, with major carriers including State Farm, Nationwide, Kemper, Marine America, Trans-Pacific, and Allstate either refusing to issue new policies or canceling existing coverage in many areas. This insurance situation has complicated transactions and, in some cases, limited the pool of qualified buyers for certain properties.

For older homeowners considering downsizing, California’s Proposition 19 continues to offer potential tax advantages by allowing those aged 55 and older to transfer their existing real estate tax basis to homes anywhere in the state. While this provision was expected to increase inventory by facilitating moves, its impact has been relatively modest thus far in the highest-priced segments of the market.

Neighborhood Perspectives

Beyond Montecito, neighboring communities showed varying market conditions in March:

– Hope Ranch recorded 4 residential sales with a median price of $8,287,500, moving toward a buyer’s market with a 7-month supply of inventory.

– Santa Barbara registered 43 residential sales with single-family homes achieving a median price of $2,083,000, operating in a seller’s market with just a 2-month supply of available listings.

– Carpinteria/Summerland combined for 10 residential sales, with single-family properties commanding a median price of $2,860,000 in Carpinteria and $2,599,000 in Summerland. These areas have transitioned to a more balanced market with 4.3 months of inventory.

– Goleta showed strong activity with 32 residential sales and a median house price of $1,480,000, maintaining a heated seller’s market with just 1.3 months of inventory.

Market Outlook

Looking ahead, real estate professionals anticipate that newly listed properties in 2025 may experience modestly longer marketing periods compared to recent years, but well-priced homes in desirable locations will continue to attract qualified buyers. The fundamental supply-demand imbalance that has characterized the Santa Barbara South Coast market for decades appears likely to persist, supporting property values even as broader economic conditions evolve.

For Montecito specifically, the increased inventory levels suggest potential opportunities for well-positioned buyers, particularly in the ultra-luxury segment, while entry-level properties within the community will likely continue to command premium pricing amid limited supply.