The Santa Barbara Groups Real Estate Blog

There are a lot of indicators that real estate under $1M may have hit bottom in February of 2009. Since then inventory here in SB has started to decline and the median is heading up. Another sign that we are at bottom is the condo market. It has been dead - hit very hard by the recession - and now it is very active with sales up. In may of 2008 there were 20 sold units and 18 in escrow. Compare that to May 2009 where we have 24 sold and 44 in escrow.

It could be time to get off of the fence if you haven't already. Contact us today to start your search.

U.S. home prices fell in April, but overall annual declines are slowing, according to the national Case-Shiller home price index released Tuesday.

On a month-to-month basis, prices in 20 selected cities fell 0.6% in April, with declines in 11 cities, compared with a decline of 2.2% in March. The overall annual pace of decline has slowed, said David Blitzer, chairman of the index committee for Standard & Poor's, which compiles the Case-Shiller index.

"Thirteen of the 20 metro areas also saw improvement in their annual return compared to that of March. Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March," Blitzer said in a statement. "While one month's data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions."

Blitzer added that it will take time to tell whether a recovery has arrived as the market enters a seasonally strong period.

Continuing slower price declines are a "decent bet," wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics.

"The fly in the ointment is foreclosures, which tend to result in much lower prices and are an increasing proportion of transactions," Shepherdson wrote. "For now, though, this is clearly less bad than recently."

Details

For the year ended April, prices were down 18.1%, compared with a decline of 18.7% for the year ended March. Among the 20 cities, the three largest annual declines were: Phoenix -- down 35.3%, Las Vegas -- down 32.2%, and San Francisco - down 28%. Charlotte, Chicago, Cleveland, New York, Portland and Seattle posted record annual declines in April.

The three cities with the smallest annual declines were: Denver - down 4.9%, Dallas - down 5%, and Boston - down 7.7%.

Given ongoing declines in data, analysts are skeptical about whether a housing bottom has been reached.

"The ongoing structural issues facing the housing market present a headwind on the pricing front and any meaningful increase in prices would have to come as labor market weakness persists and any hiring will likely begin at an anemic pace tracking trends seen in the most recent two recessions," wrote Dan Greenhaus of the market strategy group at Miller Tabak.

Falling home values have helped to plunge the global economy into chaos because financial institutions made too many bad bets that U.S. home prices would never fall. Homeowners have lost trillions of dollars of wealth.

Elsewhere Tuesday, the Conference Board reported that U.S. consumer confidence relapsed in June, falling to 49.3 from a slightly downwardly revised 54.8 in May, as worries grew about jobs and the economy. Following a large confidence jump in May, consumers grew more pessimistic in June about their present and future.

What’s happening in the real estate market? This is a question with multiple answers that are always changing, and here in Santa Barbara, it is a very dynamic question that covers may sectors. There is a red hot sector that continues to thrive, and there is a rather cold sector that has almost gone non-existent. Then there is everything in-between.

The red hot market – no big surprise – is the low end. If you have a home under $600,000 in Goleta there are a lot of buyers out there who want to buy it. Low interest rates and fresh FHA loans are driving multiple offers, even over the asking sales prices. Until recently, this has killed the condo market because most buyers will choose to buy a home over a condo if the prices are similar, and they have been. Condos have come down in price and are now showing sings of increased activity from buyers.

On the other hand the sector above $2,000,000 has experienced very sluggish activity. Once the resilient sector that hardly noticed the down turn that started in early 2006, it continued to rise uncheck. Now it has all but put on the breaks causing the median price to fall from $1,170,000 in April of ’08 to $840,000 in April of ’09. Inventory in this sector is up 30 - 40 percent. The super high end sector completely turned off for about six months, but in the past month there have been several closings over $5M. Most appear to be quick cash deals where the sellers lower their price and lets the property go at a discount.

As always price is everything. Sellers who are still out of touch – and there are a lot of them – continue to offer their homes at prices that are completely unrealistic. The only way to sell a home today is to price it right. Buyers are on it when it comes to recognizing value, and are quick to weed out the dreamers.