The real estate market has certainly seen its share of changes along with new activity over the past several months. From increases in inventory to higher interest rates to newly implemented mortgage qualifying guidelines. These changes make good argument that sales should start slowing down.
We can track how fast a housing market is moving by measuring its absorption rate or market velocity. This is done by dividing the number of homes now available by the number of homes that have gone under contract over the past month. The ratio tells how long it would take for all homes on the market to sell at the current rate of sales.
Here’s a look at Santa Barbara’s current market velocity and how each price range has changed since last February.
For Homes and Condos:
Under $500K: 2.7 months of inventory (up from .3 months (9 days))
$500K – $1M: 2 months of inventory (up from 1.2 months)
$1M – $1.5M: 2.3 months of inventory (down from 2.7 months)
$1.5M – $2M: 11.2 months of inventory (up from 3.3 months)
$2M – $4M: 20.2 months of inventory (up from 8.7 months)
Over $4M: 21 months of inventory (down from 38 months)
Traditionally 1-4 months of inventory indicates a seller’s market, 5-6 a neutral or balanced market, and 7 or more a buyer’s market. Santa Barbara’s current numbers show a seller’s market for properties under $1.5 million and a buyer’s market for properties over $1.5 million.
For a more in depth look at the market you’re interested in I appreciate and look forward to your inquiries.