Another year has gone by and now is the time that many people reflect and look forward. We’ve seen a lot of changes take place in the Santa Barbara area real estate market this year. Lower inventory, historically low interest rates, and a large increase in number of sales are items that have headlined the most.
By reflecting on Santa Barbara’s numbers we can see what’s moving and look forward to where the market may be headed. Months of inventory is a great indicator and shows a lot of variance depending on the price range you look at. The number, also known as absorption rate or market velocity, is calculated by dividing the number of homes currently available by the number of homes that have gone under contract over the past month. In Santa Barbara the current months of inventory are as follows:
For Homes and Condos:
Under $500k: .9 months (27 days) of inventory
$500k – $1M: 1.8 months of inventory
$1M – $1.5M: 6 months of inventory
$1.5M – $2M: 4.5 months of inventory
$2M – $4M: 11.1 months of inventory
Over $4M: 126 months of inventory
Economists would say that this indicates an extreme seller’s market for properties under $1M, a more normal market for properties $1M – $2M, and an extreme buyer’s market for properties over $4M.
In which direction these numbers change during 2013 will be interesting to see. I look forward to keeping you updated and appreciate your inquiries!