2024 Q3 MARKET UPDATE

As is always the case, the market continues to evolve amidst an uncertain macro environment; the direction of the economy, foreign affairs, and the Presidential Election. During the 3rd Quarter, we finally saw the Fed cut rates by 50 basis points. It remains to be seen how they will approach further cuts through the end of this year and early next year, but we see this as positive news for the housing market as i) financing becomes less expensive and ii) it allows sellers to trade out of their current homes in order to relocate, thus creating more inventory.

Despite all of these external factors, demand for property in our region remains robust. With 311 sales across the South County this Quarter, we saw a modest 3% increase in the number of sales compared to Q3 2023. Since 2019 (and excluding 2020), sales seasonally decreased an average of 8% from Q2 to Q3. In 2024, sales decreased 11% from Q2 to Q3, directionally in line, but slightly below the recent average. Median Price increased almost 10% year-over-year, to $1.9MM, a new quarterly record for the South County.

For Montecito, there were 40 closed sales this quarter, a nominal decline from 42 at this time last year. This represented 13% of total sales, relatively flat from 14% in Q2 2023. However, Median Price was markedly higher by 16%, to $5.6MM, a quarterly record. There were six sales over $10MM, and two over $15MM; highlighted by 416 Meadowbrook Dr for $16.78MM (a Riskin Partners sale), and 771 Garden Ln for $28.4MM–notably both were off market.

Since every neighborhood and property is unique, we’ve included stats below on additional sub markets. If you would like more specific information your property, please feel free to contact us!

Sales

In the Second Quarter, there were 311 closings across the South County, an increase of 5% from Q3 2023, and an 11% decline from Q2. As we noted in prior reports, sales decreased consistently through the pandemic as a result of highly limited inventory. In a sign our market is becoming more balanced, we are now seeing relief as measured by Months of Supply (the number of months, or rate, at which existing inventory would sell at the current sales pace, six months equals supply/demand equilibrium).

Using September figures, prior to the pandemic in 2018 and 2019, there were approximately five Months of Supply. During the pandemic in 2021, there was only one Month of Supply, hitting lows in late 2021 and early 2022 where there was even below one month. Last September we saw two-and-a-half months, and as of September 2024, we have over three Months of Supply. While still undersupplied, and technically a seller’s market, we interpret this as a step in the right direction toward a more balanced market.

Using Days on Market (DoM) as another metric, on average, prior to the pandemic it took, two to two-and-a-half months from the list date to opening escrow. Demand at the peak of covid, DoM compressed to just over three weeks. Year-to-date, we’re seeing DoM climb back to about five weeks.

Pricing

As a result of our long-term undersupplied market, pricing continues to appreciate substantially. Median Price rose 9% in Q3 compared to Q3 2023, and up 5% from last quarter, to $1.9MM. Interestingly, this uptick in price was driven by double-digit increases in Santa Barbara, Montecito and Carp, while Goleta increased more modestly.

Furthermore, there were fewer sales over $10MM and over $20MM this quarter (as compared to last quarter), on both an absolute basis and as a percentage of total sales. In Q3, there were nine sales over $10MM and two sales over $20MM (including one just under $50MM). What this reinforces for us is that, on average, we still are experiencing an undersupplied market; more demand exists than there is inventory. The high-end of the market is not skewing metrics higher.