Will home prices drop in 2023? That is a question on everyone’s minds regarding real estate as we move forward.
Certainly, California has many diverse real estate markets, and the same can be said for our local communities, with each one having different amenities that appeal to buyers — whether they be cultural activities, school systems, access to trail networks, affordability, proximity to work or certain architectural styles that vary across our local areas.
There are many “experts” out there who believe the market in general will be less buoyant than it was in 2021 and 2022. Without question, the events that drove real estate prices in those years are not present in the current market and are not expected to return any time soon.
But does that mean, by default, we expect to see large declines in real estate values?
Personally, I do not think we will see large swings in valuations. The caveat to this obviously being that a property is priced in accordance with current market conditions — not by simply looking for the needle in the haystack buyer.
February numbers show the Montecito market for median sales price is up approximately 2% year-over- year, with homes selling at 95.9% of their list price. That is down 4.9% year-over-year, which is not wholly unexpected since we are in a more normalized market condition today than we were a year ago.
The number of homes sold in Montecito for February was six, which is significantly lower than the same period last year, when 24 homes were sold. That is not wholly unexpected, as continued inventory restrictions impede buyer demand and help support prices.
Looking at Santa Barbara again, preliminary data indicates the median sales price year-over-year has dropped approximately 8.7%, with the homes selling at 95.4% of their list price, which again is down approximately 8.1% from the same period last year. The number of homes sold also declined from a year ago, with 31 homes sold in Santa Barbara compared to 48 for the same period last year.
As discussed earlier, pricing in the current marketplace is key. There have been three price changes in Montecito, which had 17 new listings, 11 opened escrows and six closed transactions for a net-zero Inventory status. Hope Ranch had two new listings, 0 price changes (low inventory), one pending sale and three closed sales, for a negative inventory count of two properties.
Santa Barbara had the largest disparity, with 47 new listings, 13 price changes, 40 pending transactions and 31 closed sales, for a negative property inventory of 24 units.
Carpinteria and Summerland had seven new listings, seven pending sales and eight closed sales, with two price changes. Again, a negative inventory level of eight units.
Multiple offers are still being experienced on some properties, especially those priced below $5 million, and even more so if priced below $4 million. So don’t be surprised if you find yourself with competition since buyer demand is still out-stripping supply levels and mortgage rates seem to be stabilized, at least for now. Don’t expect dramatic downward price trends until buyer demand eases and supply levels increase, but expect to see continued price changes as the market continues to find its equilibrium.
As always, if you have any real estate questions, please feel free to reach out to me at 805-886-9378 or email me at [email protected]. All inquiries are strictly confidential. You can follow me on Instagram @cristalsb and Facebook as well.
Cristal Clarke is a real-estate agent at Berkshire Hathaway HomeServices, which serves Montecito and Santa Barbara.