Mortgage Rates and Inventory Challenges
Housing affordability remains a pressing concern for Santa Barbara.
The current real estate market is characterized by some of the highest mortgage rates seen in decades coupled with the highest prices ever, leaving many potential buyers wondering if affordability will return. Rates are in excess of 7.5% now.
The last time rates were this high was 2000 - the median sales price then was $489,000.
The median sales price for August 2023 was $1,675,000.
Despite elevated rates, the market remains competitive due to a combination of factors - there are a lot of all cash buyers for our market; 40% - 50% of our sales each month are all cash. We continue to have
an ongoing inventory crunch fueled by
homeowners who secured low-interest rates over the last 20 years and as a consequence are choosing not to sell.
One of the most significant challenges facing the Santa Barbara housing market is the shortage of available inventory. Housing inventory increased slightly in July, but then dropped equally as much in August - looking at it historically it remains very low. Active listings are less than half of 2019, intensifying market competition and impacting home sales.
It's been suggested if rates get back into the 5's, sellers will emerge in mass... Psychologically, I think this makes great sense.
When will mortgage rates get back into the 5's?
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