Market Poised for Growth in 2025
The Santa Barbara real estate market seems to be entering a new phase of growth. With rising inventory levels and increasing buyer interest, the region is showing strong signs of continued momentum. Key indicators, including inventory levels, pricing trends, and months of inventory, suggest that the area will remain a seller’s market in this highly desirable region.
Rising Inventory and Higher Prices
A key trend emerging from the first quarter of 2025 is the increase in both inventory and property prices. Median prices are used to avoid any spikes or skewed data, while also factoring in outlier sales. Sellers have responded to the heightened demand by pricing their homes higher, with the end of March 2025 median list price increasing by 28 percent to $2,895,000, compared to $2,262,500 at the end of March 2024.
A Surge in Active Listings
At the close of 2024, the South Santa Barbara County real estate market was relatively quieter in terms of inventory, but the landscape has shifted as we moved into 2025. The properties in this report include single-family residences, condos, and planned unit developments in the Santa Barbara MLS between South Carpinteria and North Goleta. The number of active listings grew significantly from 331 on December 31, 2024, to 438 by March 31, 2025.
Buyers Return as Market Momentum Builds
After months of hesitation, buyers are returning to the market, injecting new energy and competition. With interest rates now largely accepted as the new normal, concerns have shifted to other factors — most notably, the cost and availability of insurance. Recent events, such as the Los Angeles fires, have spurred long-waiting buyers into action, leading to a noticeable uptick in demand. As a result, multiple-offer scenarios are becoming increasingly common, signaling a more competitive landscape for prospective homebuyers.
Market Stability and Buyer Interest
Despite higher prices, market activity remains steady, as evidenced by the months of inventory, which decreased slightly from 2.75 to 2.74 months. This suggests that homes are still selling at a relatively consistent pace.
Months of inventory refer to the number of months it would take for the current inventory of homes on the market to sell, based on the current sales pace. It is used to gauge the balance between supply and demand. A balanced market typically has about four to five months of inventory, while below four months indicates a seller’s market.
Continuing Surge in Multiple Offers and Cash Offers
One of the most significant trends in our early 2025 real estate market is the continued surge in multiple offers and cash offers. Approximately 26 percent of accepted offers this year have been made in all cash, a clear indication of strong demand and buyer confidence. For buyers looking to bypass financing constraints and close deals more quickly, the all-cash option is becoming an increasingly attractive way to stand out in a competitive market. Despite this, 7 percent of listings did not sell (expired) due to various reasons including overpricing, poor condition, or less-desirable location.
Tips for Selling Your Home Successfully
If you’re considering selling your home in the current market, it’s essential to take the right steps to ensure a successful sale. A Comparative Market Analysis (CMA) from a qualified Realtor® can help you determine the right listing price.
Maximize Value through Presentation
In the competitive 2025 real estate market, presentation is the key to obtaining the top value of your home. Home values in Santa Barbara can vary greatly, even within the same neighborhood. Bel Air Knolls homes, which were located less than half a mile apart, sold for more than $1 million more when properly renovated, repaired, staged, and presented. Simple upgrades such as decluttering, repairing, landscaping, painting, and detailed cleaning can significantly enhance a home’s value.
Looking Ahead: Key Considerations for Buyers and Sellers
Moving forward, South Santa Barbara County’s real estate market will continue to evolve. Warmer weather and increased buyer activity are expected to sustain momentum, with well-priced properties likely to attract multiple offers.
Buyers need to be prepared with a lender’s preapproval. An offer that includes a fully underwritten loan is closely comparable to a cash offer. However, the lender will still need to approve the appraisal, insurance, and the condition of the property to approve the loan.
It’s also important to arrange homeowners’ insurance early in the process, as not having it can be a deal-breaker for lenders. Offering all cash can provide a significant advantage. Additionally, shortening contingency periods or allowing the seller to choose the closing date can give you an edge in a competitive bidding war.
However, despite the temptation to waive inspections to speed up the process, buyers should ensure a thorough inspection is conducted.
Final Thoughts
South Santa Barbara County’s market remains dynamic. Sellers who price competitively and present their homes well are poised for success, while strategic, prepared buyers have a better chance of securing their desired property. Whether buying or selling, contact your Realtor® to better understand current trends and negotiating strategies. Your Realtor® could be your guide to success!
Data for this article was compiled by the Santa Barbara Multiple Listing Service and analyzed by members of the Statistical Review Committee of the Santa Barbara Association of Realtors®. Writer Pat Costello is in her 20th year as a full-time Realtor and is an associate of Keller Williams, Santa Barbara. Reach Pat at (805) 451-3977 or email her at patcostello2002@outlook.com.
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