Real Estate Snapshot
(The following was originally published in Montecito Journal, February 16, 2017; it was written by C&H team member Kelly Mahan)
Montecito’s Housing Market
Despite what felt to many as a softer housing market the last half of 2016, the year-end numbers are in, and we saw the sale of 203 single-family homes, condos, and vacant lots in the 93108. Ranging in price from $525,000 (a studio Adobe on Coyote Road) to $28,850,000 (Seamair Farm’s 23 acres), the sales were across multiple price points, but the majority of sales were under $4MM. Here’s a comprehensive look at what sold, and what it means for Montecito property owners and those looking to buy a piece of paradise.
For the purpose of comparison, we’ll mostly look at sales of single family homes that were included in Santa Barbara County’s Multiple Listing Service (MLS). Last year saw the sale of 167 homes, compared to 170 in 2015.
Forty-eight of these were under $2MM, and they ranged from a Santa Fe-style adobe studio on Coyote Road ($525K) to a remodeled 2,300-sq-ft single level home on Alston Road ($1,995,000). In this price range we saw a mix of “turn-key” homes on the smaller side, or original, livable homes ripe for a remodel, or complete fixers, some going for over-asking price.
Many of these homes were purchased by homebuyers looking to get their feet wet in the Montecito market; we saw many out-of-state homebuyers as well as younger families, eager to get into the Montecito Union School and Cold Spring School districts. With both schools estimating that about half of their enrollment is from students who’s parents rent homes in Montecito rather than own, it’s not surprising that homes under $2MM are a hot commodity here.
Two gems in this price point: a chic remodeled two-bedroom, two-bathroom cottage on Orchard Avenue (in MUS), which sold for $1,425,000, and a four-bedroom, three-bath home on Circle Drive, which sold at $1,550,000. Both homes featured light, bright, and remodeled kitchens and bathrooms, which tend to attract buyers who may not have the fund or the desire to remodel a home themselves.
$2MM to $4MM
This segment of the market saw the highest number of homes, with 68 sold in this price range. This is the price segment with the most variance in terms of condition and quality: closer to $2MM we saw a few “fixers” on desirable, close-in properties, while homes closer to $3MM tended to be modest-sized homes, less necessary to remodel, and possibly boasting either ocean views, golf course access, sparkling pools, or had easy access to the beach or shopping to boost their purchase price. Near the $4MM mark we saw a range of larger, estate-type homes that are easily livable but may need some updating, to “completely done,” smaller properties in the heart of desirable neighborhoods like the Hedgerow, Montecito Oaks, and near the beach.
An Olive Mill Road home closed at $2MM after just one day on the market. Originally listed at $2,075,000, the 3-bedroom, 2-bath home with an attached 1-bedroom, 1-bathroom studio was marketed as an excellent opportunity to remodel the existing home with already approved MBAR plans.
A completely remodeled craftsman-type home near Miramar Beach closed at $2,800,000 after 200 days on the market and an original list price of $2,995,000. Despite this home’s single bedroom, loft floor plan, it attracted a buyer who was likely enchanted by its quality craftsmanship, its completely finished basement space, and it’s obvious proximity to the sand.
$4MM to $6MM
Thirty-two homes sold in this segment, and across the board these homes have amenities that one would expect to see at this price point: gourmet kitchens with granite or marble counters, expansive lots (or, immediate access to the beach), exceptional architecture (whether new or historic), and spacious layouts. I’m happy to report an increase in this price point from 2015, when just 20 homes sold between $4MM and $6MM. There was also a smaller percentage decrease between the original list price and the actual sales price. In 2015 the price change was around -11% (average and median), and in 2015 that percentage decreased to -8.88% (average) and -6% (median).
Three homes that sold right around $4MM are a great reflection of homes in this category. A home on Cima Linda Lane sold at $4MM on the dot, and features ocean views, 1.39 acres, and a completely renovated home of about 3100-sq-ft. Just above $4MM, a four-bedroom, four-bath Sea Meadow home sold after almost a year on the market, and for almost $675,000 less than the original list price. And a recently renovated 5246-sq-ft home on Penny Lane in Ennisbrook sold for $4,395,000.
There were several homes around $5MM that sold for significantly less than the original asking price, including a 1922 Spanish Colonial estate with a plethora of authentic details, as well as modern amenities such as a pool, spa, and cabana. The four-bedroom, five-bathroom home sold for $4,795,000 after 187 days on the market; it was originally listed at $5,950,000. Another property, on East Valley Road, sold for $5.1MM after being on the market for 465 days. It sold for $750K under the original list price.
$6MM to $8MM
Fifteen homes sold in this segment, compared to twelve in 2015. On average, these homes sold for 12.76% lower than original asking price, and at this price point, that can translate to upwards of a million dollars. Industry experts agree that this drop in actual sales continues to solidify what we’ve been seeing over the last few years: buyers are asking for smaller, closer-in homes, with less maintenance, acreage, water use, and environmental impact. That being said, there are still homeowners who do want the larger estates, and it seems 2016 saw sellers of these larger homes willing to come down in price to make the sale.
Many of the homes sold in this category were located in the most coveted areas of Montecito: the Golden Quadrangle, believed by some to be the sunny area (above the fog line) between East Valley Road to Hot Springs to Park Lane to East Mountain Drive, the Hedgerow, Ennisbrook, and the Valley Club. An exquisite Spanish Colonial Revival Estate on Mimosa Lane sold after 63 days for $7,080,000. The home boasts six bedrooms, six bathrooms, a two-story guest cottage, pool and cabana, and tennis court, all on 1.8 acres in the heart of the Hedgerow. We also saw the sale of a beach cottage on coveted Hill Road, which sold for $6,240,000. The board and batten home has direct access to Butterfly Beach.
In this price category, six homes sold between $8MM and $28,850,000. As one can imagine, these estates are the cream of the crop, leaving little to be desired by their buyers. The homes range in areas from Ennisbrook ($8MM), Middle Road ($8.2MM), East Mountain Drive ($11.45MM and $12.25MM), Mariposa Lane ($16MM), and Santa Rosa Lane (23 acres for $28.85MM).
This segment saw a significant decrease compared to 2015, when sixteen homes sold between $8.14MM and $27.5MM. In 2015, eleven of the homes in this segment sold for over $10MM, compared to just four in 2016. This significant drop in the ultra-luxury market is likely to continue, and as of press time, 23 homes are on the market over $10MM, with an average of 308 cumulative days on the market.
What to Expect this Year
The market seems to be slowly bouncing back after last year’s presidential election, followed by the holidays and a couple of rainy weeks. The softening of the market in the last quarter of the year is showing in our January numbers: just 13 sales (three of which were condos) were made in January of this year in Montecito, compared to 28 in January 2016. Average and median sales prices were also down: the average price of the homes sold in January was $3,344,462, compared to $3,790,982 in January 2016. The average sales price overall for single-family homes in 2016 in Montecito was $3,650,218, compared to $4,060,296 in 2015. This can be explained by what I touched on earlier: the significant stall in the higher-end segments has brought the average and median sales prices down.
There is little doubt that interest rates will continue to rise in 2017, and some experts forecast that we can expect three more quarter point increases due to the following factors: a tighter labor market due to the steady creation of jobs throughout much of 2016, stronger wage growth, and the prospect of increased inflation. Buyers should expect rates to be in the mid-to-high 4’s by the end of this year, which may cause a significant bump in sales in the first quarter.
There are currently 146 homes on the market in Montecito, and of those, seven are in escrow. The current offerings range in price from $945,000 to $125MM, and each week we are seeing more inventory come on the market. January saw 49 new listings, which is positive, but because of weather, sales in February may be lower than normal because buyers had fewer opportunities to see open houses. January also saw 114 sales, exactly the same amount as in January 2016.
As Spring approaches, it’s likely we’ll see a boost in both inventory and sales, and in general we expect 2017 to be a fairly neutral year, as buyers and sellers recover from the lull of the last quarter of 2016 and regain confidence in our local real estate market.