October 2025 Real Estate Update & Insights

Santa Barbara

Housing Market Insights

OCTOBER 2025

MARKET PULSE

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It's been an interesting few months - we're up; we're down. We ebb; we flow...no singular direction in the market.

Interest rates were dropping, and then they weren't. The Fed lowered the Fed Funds Rate and mortgage rates went up...but not to where they were when the year began. Rates are lower now than the first six months of the year.

Currently, inventory is up - up 19%, but we were up 60% in the Spring. The pace of inventory growth has slowed. We remain in a Seller's market, but Sellers are having to be realistic with their pricing. Buyers are finding opportunities to negotiate.

Sales for June and August were down, but July was dramatically up. Interestingly, the drop in August was due to condo sales; Single Family Home (SFH) sales were up 10% for the month.

September sales were up 10% over last year to 113 total sales. SFH and condos sales were both up. Monthly median sales price for September was up slightly in condos and down a little in single family

For the year total sales are up 10%. The combined median sales price , although down for September, is up 6%.

We seem to be in a period of flux. No singular long-term market direction.

If there is a consistent theme this year, it's buyers are patient, and value matters. They will pay up for something "all done," but they aren't interested in setting a new highwater mark for the neighborhood. Buyers have to see value in the price and will command a discount for dated or tired properties.

The 93109 zip code, largely the Mesa, remains in high demand but not everything sells quickly. You can overprice. Price matters and value is important.

The luxury end of the market. largely Montecito, is softer this year, yet we've seen more sales over $20M than we see in a typical year. Properties are staying on the market longer. Price adjustments and sales below list price are common. Buyers are specific in what they want and what they are willing to pay for it.

For 2025 there's no urgency on the part of the buyers.

Sellers are having to adjust their expectations and decide if they really want to sell.

INTEREST RATES

Interest rates continue to adversely impact the market, impacting affordability and stifling both buyers and sellers. A lot of sellers are handcuffed to rates under 4% on homes purchased for far less than today's values.

There was hope and anticipation rates would drop this year. They have improved. The market wants rates under 6%. We're not there yet...

Rates were down to 6.13% in early September. The Fed lowered the Fed Funds Rate on September 17 by 0.25 point, and rates immediately moved up.

Today's 30 yr. fixed mortgage rate 

— Mortgage News Daily

California Housing Tax Benefit

The new SALT cap means savings for California homeowners, especially along the coast.

The 2025 spending bill raised the SALT deduction limit from $10,000 to $40,000 for qualifying taxpayers.

This could mean when California Homeowners file their 2025 federal tax return, they could deduct a median of $26,646 in state and local taxes and save a median of $3,995 in their tax bill.

On average 74% of California homeowners could benefit from the increased SALT deduction limits. The Institute on Taxation and Economic Policy found the average California homeowner

would save $1,240 in taxes.

Sales Stats

SEPTEMBER 2025

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SEPTEMBER 2025

SFH and Condos were both up.

Total Sales: 113 +10%

(100 of the 114 sales sold for over $1M)

Median Sales Price Combined:  $2,002,500 -7%

Median Sales Price Home:  $2,353,750 -6%

Median Sales Price Condo:  $1,180,000 +1%

Median Days On Market: 17

Average Sold to List Price Ratio:  96%

Cash Sales:  37%

Off Market Sales:  *12

(*one property sold twice)

Sales over $8M:  5

Inventory Supply:  3.91 months

The above stats include off-market sales.

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AUGUST 2025

Condo sales were down. SFH sales were up by 10%.

Total Sales: 112 -3%

Median Sales Price Combined:  $1,897,500 +7%

Median Sales Price Home:  $2,237,000 +6%

Median Sales Price Condo:  $884,950 -9%

Median Days On Market: 23

Average Sold to List Price Ratio: 95%

Cash Sales:  36%

Off Market Sales: 7

Sales over $8M: 3

Inventory Supply:  2.93 months

*The above stats include off market sales.

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Sale Pending

2082 Las Canoas Rd

Santa Barbara, CA 93105

Sale Pending

512 E. Islay St.

Santa Barbara, CA 93101

Compass Concierge

COMPASS will loan you up to $40,000 to make repairs, upgrades, and/or improvements prior to going on the market.

Summer is behind us. I miss it already. It comes late, doesn't stay long, and then the days get shorter. I'm a Summer guy.

Thanks for trusting me with your Real Estate. Hope you enjoy what I believe is meaningful market insight and data.

Let me know if you have questions.

See you soon.

...........................................................................

Kirk G. Hodson

REALTOR®

M: 805.886.6527

E: [email protected]

W: kirkhodson.com

DRE# 01908650