What Is Going On?
The Housing Market Is Even More Frenzied
Q: I read your column a couple of weeks ago (“How Do I Get My Offer Accepted?”), and I’m not sure I agree with what you said. You implied we are in a mature seller’s market and price increases have slowed down with fewer offers. I find the opposite to be true. I keep making offers and getting outbid. Every property I look at sells quickly and over the asking price. What’s going on?
A: I agree with you. At the time I wrote the article, it did seem that the dramatic price increases were losing steam and fewer homes were closing for shocking amounts over the asking price. That slowing trend seems to have been temporary. Houses are coming on the market and closing at an even faster rate. This is true across all properties, from the $650,000 one-bedroom condos to the $15,000,000 mansions. All properties are selling for at least 10 percent over the list price, and many for much more.
Let’s say a home comes on the market on a Monday. During this initial week, the listing agent holds the home open as much as possible. The agent announces that all offers will be reviewed the next week on Tuesday at 5 p.m. However, there will be a caveat that if a compelling offer is presented before the stated offer date, the seller reserves the right to accept that offer. They may accept a preemptive offer before your offer is even seen. Yikes!
So what is going on? It’s a confluence of many factors. While all real estate is local — Santa Barbara, Goleta, and Carpinteria values have accelerated much faster than Ventura County — the market is still affected by events outside of Santa Barbara.
Globally, we have rapid inflation. People want to seek a safe haven for their cash, and real estate is that safe haven. They receive the dual advantage of a Santa Barbara home and the perception their money will be safe and even grow. A plus side to Santa Barbara is our mild weather. People from areas with more extreme weather are thrilled to save thousands of dollars on their heating and air-conditioning bills. Santa Barbara agents call this weather price bump the “weather tax.” Some experts believed that our constant wildfires would discourage people from moving here. Apparently, living here is worth the risk.
The inventory of houses is extremely low. This is true all over the country, and it’s especially true in California. The global pandemic slowed down an already depleted local market. Demand is high, and we desperately need new housing to be built in California. Higher interest rates are here, and they’ll continue to go up. This should soften demand. Price increases and multiple offers will slow down but not go away. Our country’s economic growth is still strong, and Santa Barbara will always have its weather tax.
I understand your frustration. Your idea of what you want in a home has gone from “must have” to “good enough” to “not too terrible.” I encourage you to be aggressive with your offers because for now, it looks like houses will continue to sell quickly and high.
Marsha Gray, DRE #012102130, NMLS#1982164, has been a real estate broker in Santa Barbara for more than 20 years. She works at Allyn & Associates, real estate services and lending. To read more Q&A articles, visit MarshaGraySBhomes.com. She will research and answer all questions submitted. Contact Marsha at (805) 252-7093 or MarshaGraySB@gmail.com.
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