Santa Barbara Real Estate Blog

This was an interesting article on realtytimes.com. I don’t agree with everything (like I still think there is tremendous value in home staging if done correctly), but as a whole, the article makes some great points.

What’s In, What’s Out with Homebuyers in 2009?

by Mark Nash

What’s IN

1. Sidelined homebuyers. Family or lifestyle additions or changes made in buyers households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it’s time for our family to buy the new home that suits our new needs.

2. Home uplifts. Not a big renovation, but some new finishes that can visually holdover stay-put home sellers. Not a gut rehab to the studs new kitchen, but new flooring, countertops and appliances.

3. Collaborative home pricing. The old days of home sellers configuring a homes price are out. What’s new is that the seller with their agent look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction.

4. Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the ‘doom and gloom” residential real estate market headlines don’t apply to all markets. What’s been lost in the foreclosure hype is that there are still stories of homes selling in short market times (in as little as 3 days), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market, plus a realistic view that over five million people purchased a home despite the headlines in 2008.

5. Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market in 2008.

6. Real estate agents as a housing resource not a salesperson. New-age real estate agents help consumers through the home sale or purchase process which takes a skilled agent who is not driven by sales, but by providing resources to help the consumer determine if they should buy or sell a home. Home ownership is not for everyone. Factors such as a job move in 3 years or less, marginal credit and lack of interest in home maintenance can be reasons for a resource-driven agent to advise their client not to buy.

7. Property tax appeals. With home prices dropping, many savvy homeowners are appealing their property taxes. This is especially attractive to those looking to sell their home in 2009. With a competitive marketplace, those with the most realistic taxes are more likely to offer buyers an overall lower expense in home ownership.

8. House therapists. Divided partners in a home are increasingly relying on an independent third party (house therapist or coach) to bring household relationships to common ground on such prickly issues such as to stay or move, how much to spend on remodeling or decorating, or spending nothing at all. Third parties can outline the benefits and pitfalls of over-spending on a new larger home or weighing in on a spouses desire to over-improve for the neighborhood. With less equity and with the financial stakes higher smart couples hire a home therapist to wrangle concessions and agreements out with their significant other instead of doing damage to their relationship by going head-to-head with them.

9. Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen.

10. Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they’re tired of sitting miles away from others on over-sized sectional sofas.

11. The master bed as a throne. With consumer spending down and more nesting at home, homeowners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home.

12. Older war-horse appliances. Collectable, working appliances form the 1940′s through the late 1980′s have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970′s have been repainted a metallic red and go from boring to bold. Cold spot refrigerators from the 1950′s refinished in sky blue perks up the butler’s pantry in suburban home. And, the early 1960′s dryer that looks like it’s from a Jet son house painted pink to match punches up the in-unit laundry room in a condominium.

13. Dining chairs that don’t match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends or family has been favorable to this easy and cost effective way to say welcome to my cutting edge table.

14. Obama era paint colors. President elect Barak Obama will add a fresh, younger and forward-looking feel to residential interior paint decor in the spaces at The White House where he and future First Lady Michelle have a say. Look for parchment whites, cashmere yellows, bright optimistic blues and radiant gold’s. Depressing Bush era colors such as plum, chocolate brown, rusty mustard and pale sage will gladly be replaced by more optimistic colors in American homes.

What’s OUT

1. Fixer-upper homes. With larger down payments required by mortgage lenders and consumer credit cards mixed out, homebuyers want a home in move-in condition. The DYI days are on the wane as buyers want to inherit new kitchens and bathrooms.

2. Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent.

3. Homebuyers endless “circling” prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often loose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers.

4. Real estate agents that started career in the boom. It was easy for any new real estate agent to have instant clients during the boom years. After all, they thought the business was about order (contracts) taking. Now they’ve realized they didn’t build a long-term client base during the boom or acquire knowledge about servicing client’s needs in a not-so-easy market.

5. Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri.

6. Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai’s, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home.

7. Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X homebuyer said to me “Why do sellers install them up when they don’t really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing.”

This was an interesting article on realtytimes.com. I don’t agree with everything (like I still think there is tremendous value in home staging if done correctly), but as a whole, the article makes some great points.

What’s In, What’s Out with Homebuyers in 2009?

by Mark Nash

What’s IN

1. Sidelined homebuyers. Family or lifestyle additions or changes made in buyers households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it’s time for our family to buy the new home that suits our new needs.

2. Home uplifts. Not a big renovation, but some new finishes that can visually holdover stay-put home sellers. Not a gut rehab to the studs new kitchen, but new flooring, countertops and appliances.

3. Collaborative home pricing. The old days of home sellers configuring a homes price are out. What’s new is that the seller with their agent look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction.

4. Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the ‘doom and gloom” residential real estate market headlines don’t apply to all markets. What’s been lost in the foreclosure hype is that there are still stories of homes selling in short market times (in as little as 3 days), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market, plus a realistic view that over five million people purchased a home despite the headlines in 2008.

5. Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market in 2008.

6. Real estate agents as a housing resource not a salesperson. New-age real estate agents help consumers through the home sale or purchase process which takes a skilled agent who is not driven by sales, but by providing resources to help the consumer determine if they should buy or sell a home. Home ownership is not for everyone. Factors such as a job move in 3 years or less, marginal credit and lack of interest in home maintenance can be reasons for a resource-driven agent to advise their client not to buy.

7. Property tax appeals. With home prices dropping, many savvy homeowners are appealing their property taxes. This is especially attractive to those looking to sell their home in 2009. With a competitive marketplace, those with the most realistic taxes are more likely to offer buyers an overall lower expense in home ownership.

8. House therapists. Divided partners in a home are increasingly relying on an independent third party (house therapist or coach) to bring household relationships to common ground on such prickly issues such as to stay or move, how much to spend on remodeling or decorating, or spending nothing at all. Third parties can outline the benefits and pitfalls of over-spending on a new larger home or weighing in on a spouses desire to over-improve for the neighborhood. With less equity and with the financial stakes higher smart couples hire a home therapist to wrangle concessions and agreements out with their significant other instead of doing damage to their relationship by going head-to-head with them.

9. Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen.

10. Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they’re tired of sitting miles away from others on over-sized sectional sofas.

11. The master bed as a throne. With consumer spending down and more nesting at home, homeowners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home.

12. Older war-horse appliances. Collectable, working appliances form the 1940′s through the late 1980′s have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970′s have been repainted a metallic red and go from boring to bold. Cold spot refrigerators from the 1950′s refinished in sky blue perks up the butler’s pantry in suburban home. And, the early 1960′s dryer that looks like it’s from a Jet son house painted pink to match punches up the in-unit laundry room in a condominium.

13. Dining chairs that don’t match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends or family has been favorable to this easy and cost effective way to say welcome to my cutting edge table.

14. Obama era paint colors. President elect Barak Obama will add a fresh, younger and forward-looking feel to residential interior paint decor in the spaces at The White House where he and future First Lady Michelle have a say. Look for parchment whites, cashmere yellows, bright optimistic blues and radiant gold’s. Depressing Bush era colors such as plum, chocolate brown, rusty mustard and pale sage will gladly be replaced by more optimistic colors in American homes.

What’s OUT

1. Fixer-upper homes. With larger down payments required by mortgage lenders and consumer credit cards mixed out, homebuyers want a home in move-in condition. The DYI days are on the wane as buyers want to inherit new kitchens and bathrooms.

2. Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent.

3. Homebuyers endless “circling” prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often loose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers.

4. Real estate agents that started career in the boom. It was easy for any new real estate agent to have instant clients during the boom years. After all, they thought the business was about order (contracts) taking. Now they’ve realized they didn’t build a long-term client base during the boom or acquire knowledge about servicing client’s needs in a not-so-easy market.

5. Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri.

6. Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai’s, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home.

7. Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X homebuyer said to me “Why do sellers install them up when they don’t really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing.”

Market Statistics and Data courtesy of the CORT report put out by Equity Title of Santa Barbara/Montecito

CORT%20Sales%20Summary%20November/Sales%20Summary%20-%20November%202008.pdf

CORT%20Sales%20By%20Area%20–November/Sales%20By%20Area%20-%20November%202008.pdf

As far as North Goleta specifically, there have been nearly the same homes listed in 2008 as 2007, but the number of those homes that sold actually went up 10% compared to 2007. That’s great news for that neighborhood, as many areas in the greater SB area have seen fewer home sales. The average sales price in North Goleta in 2008 was $998,000 compared to $1,185,000 in 2007

While pending sales were much slower in October (compared to 2007), November was a stronger month with 53 homes going into escrow, which should result in a very similar # of closed sales as December 2007. Oddly enough, the average sales price in November (for the homes that closed escrow) was $1,200,000 which is significantly higher than most of the last 12 months. That most likely resulted from a shortage of inventory in the lower price levels where much of the buyer activity is. I think many buyers took big hits in the early Fall with the stock market, but now have recovered from the loss (or at least come to grips with it) and are stepping back into the market to take advantage of the extremely low interest rates (near historic lows!). The average days on market time for properties that are currently in escrow is around 90 days and for those that closed escrow was closer to 60 days.

All-in-all, what we’re seeing is it comes down to price. The sellers who are being realistic and are pricing their homes correctly are selling their homes relatively quickly to great buyers. The buyers left, because of the tightened lending requirements, are more serious and better qualified that buyers in the past, so you also have to deal with less showings while still reaching those “strong buyers” that are most likely to pull the trigger. That said, buyers are still being cautious as we don’t know if we have “reached the bottom of the market” or are still declining. Buyers are looking for strong values and are shopping hard to find the right property. The market has a whole is down about 11% as far as Number of properties sold and about 15% (w/o Montecito/Hope Ranch) as far as Median and average sales prices. That doesn’t mean prices have softened 15% in the last year (though they probably have softened 10% or so), but more that the market activity is occurring more on the lower end of the market which is pulling those numbers down.

If you want to see more specific numbers and data on what the market is doing, give me a call at 805-637-7148 or email me at Daniel@ZiaGroup.com

One of my recent clients who purchased a home up on Las Canoas in the Mission Canyon area shared this story of his neighbors battle to defend his home from the Montecito and Santa Barbara Tea Fire: http://www.edhat.com/site/tidbit.cfm?id=1400&nid=15346&linkSource=edhat.com

I was asked this morning what current homes were selling for in Forte Ranch, a condo complex off of Turnpike (North Santa Barbara/Goleta) where there are newer (early 2000′s) condos with up to 3500 SF for $499k-$1.2m.

In the last 12 months, 8 homes in Forte ranch have sold, all 3-4 bedrooms with sale prices ranging from $720k to $1,218,000. There is one home, a 3 bedroom 3450 SF unit on Greenway Rd that is currently in escrow (last listing price was $1,139,000. There are also two active units for sale a 2/1 on Granada for $499k and a 3/2, 1600 SF on Gate Way for $779k. If you have any additional questions about the development, the market in general, or any other specific questions, please do not hesitate to contact me directly: Daniel@ZiaGroup.com or on my cell phone (805) 637-7148. I would be happy to assist you in your home search, and there are several of my services that you mind find helpful.

http://www.flexmls.com/cgi-bin/mainmenu.cgi?cmd=url+other/run_public_link.html&public_link_tech_id=m6qp4nj6rb8&s=1&id=1&cid=1

The real estate market is intimately tied to basic forces of economics, namely supply and demand. The destruction of 210 high-end homes (the majority of the homes destroyed were valued at $2 Million+) in a relatively small community may have a slight impact on supply as one could assume that at least a handful of these homes would probably have come on the market in the next 12 months. I haven’t heard if any of these homes were actually actively being listed o the market, though I know several realtors lost their homes. So the big question is will this affect demand for these types of higher end homes? Will the displaced residents choose to locate rentals for the next 2-3 years while they go through the planning, permitting and building process on their existing lot, or will they pick over the current inventory and purchase a home, with plans to sell their destroyed homes as vacant lots. Home builders and contractors in the area will obviously have quite a bit of work in the coming years, and the influx of new potential vacant land (which there is a severe shortage of) is not good news for speculators that had been holding on to their vacant land hoping to see appreciation the next few years. I would expect vacant land prices to take a serious hit, which creates a lucrative opportunity for developers to purchase prime lots for custom or spec home developments. Keep in mind, that we are not being insensitive talking about these opportunities, as the displaced homeowners will receive settlements from the various insurance companies. Also, this potential influx in buyer demand from developers and investors is a necessary boost to potentially mitigate any immediate concern of future wildfires, and the fear that comes along with that.

The community in the Santa Barbara and Montecito area have been extremely supportive over the last week and a half. Many real estate professionals are working to assist displaced residents in finding short and long term rental options, including free moving trucks, free storage at various facilities, and even free or discounted rents for a set period of time. Many owners who have been trying to sell their home vacant are offering these listings to the residents as well for temporary housing. So going back to what will displaced residents do–rent or buy, my take is that many residents will opt for furnished rentals, to wait for insurance settlements before making the decision to rebuild or purchase elsewhere. Will we have some residents move out of the area, probably, as the idea of going through the rebuilding process or moving from a home they have have had for years may simply be too daunting. That said, I think we will have an influx of developers, buyers who want to build custom homes, and other savvy buyers looking for great deals, that will balance any increase in supply.

My recommendation to buyers is to buy sooner rather than later, while the fear and the doubt linger in the air affecting sellers perceptions. I predict an increase in demand in a few months as these homes owners come back into the market and possibly more inventory comes on in the Spring and Summer months. That influx in demand may inflate prices, or at the vary least, eliminate some of the prime opportunities for negotiation and serious discounts on current inventory, especially vacant land.

Feel free to contact me (805) 637-7148 if you would like to discuss this more, or be kept up to date on some of the motivated sellers that are willing to sell at a discount.