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1997 - A Benchmark Year
Reprinted from The Little Woods, February 1998
It should come as no surprise that 1997 was a very successful year for the sale
of estate property in Montecito. Last year we sold 115 residential properties in
Montecito above $1 million - up 55% over the 74 sold in 1996. And you may
remember that 1996 was equal
to that last great benchmark year - 1989. So last year outpaced all
previous years for the sale of expensive homes in our area - and by
a large margin. In addition to the number of homes sold being up,
the total dollar volume of these homes sold was up even further, to
70% greater than the previous year.
Where are all the buyers coming from? Well, surprisingly enough, they are coming from many parts of
the country now in addition to the usual Los Angeles migration. The tremendous appreciation in the
stock market over the past several years has created a large segment of young executives who have
benefited from a burgeoning company that has, perhaps, just gone public, and this new wealth has
afforded those executives the ability to move from where they acquired their wealth to our community.
Who among us wouldn't, or hasn't, made that same decision. One interesting twist to this migration
issue, is that due to the even faster appreciating real estate values north of us in Silicon Valley,
many executives from there are now moving to our area and finding it much more inviting.
To help illustrate how this increased activity affected each individual buyer and seller last year,
the average sales price for these estate sales came to within 93% of the property's asking price. A
good number of homes had to sell for 100% for this figure to reach 93%. During the worst of our market
back in 1993, this figure was as low as 84%, signaling a then 'Buyer's' market. The current market has
come full circle to a typical 'Seller's' market where many homes are now selling very near their asking
price within their first 90 days on the market. In fact last year, we sold 31 estates in their first 90
days, compared to only 3 to 12 each year as a high over the past ten years. This figure more than any
other illustrates the heat we all feel in our current market.
Are prices going up? Most assuredly. But it's difficult to apply a general amount of increase to the
market as a whole. Mediterranean or contemporary style homes in good condition with an ocean view
priced below $4 million are probably appreciating the fastest right now. Any home requiring remodeling,
without a view or priced above $4 million is probably remaining level in value. (Please see the table at
the end of this article.) If you are a regular reader of The Little Woods, you know that I constantly
refer to this migration in our market where the lower price ranges improve and gradually support increased
sales in the higher price ranges. This is again very evident in last year's sales figures where the $1
million, $2 million and $3 million sales ranges improved dramatically, and the homes priced above $4
million remained relatively flat with previous years - and those weren't good years to stay even with.
Last year the $1 million and $2 million price ranges continued their healthy performance compared to
previous years, but the $3 million category exploded with a 225% increase in the number of homes sold
over 1996.
Hopefully, the $4 million segment should improve this year and gradually spread to the upper ranges. This
upward migration of the improving markets is largely a function of growing market confidence and, to a
lesser extent, a function of thinning inventory in the lesser ranges diving buyers to the more expensive
homes. The continued softness of the market above $3 million is also a reflection of the fact that most
buyers today seem to be buying down. Part of this is a reaction to the past 7 years of real estate
devaluation and part a general attitude among the younger generation to keep things simple - less
maintenance, fewer staff, etc.
What to expect of 1998? I wouldn't anticipate a repeat of last years incredible figures. Our greatly
reduced inventory of homes available will make it almost impossible to match that performance. The
'Seller's' market should continue and each seller should anticipate satisfying their realistic goals.
0nce again this last year, I was fortunate enough to have listed and sold the most expensive home
sold in the entire Santa Barbara area. This marks the second time I've sold Las Tejas, the wonderfully
dramatic Montecito estate and its majestic old-world gardens of 15 acres. The asking price was $12.5
million.
The owners wanted to sell the home but they didn't want anyone to know it was for sale. Not an easy task.
But I was able to discretely market the property through our existing contacts and actually was able to
sell the home within 90 days with absolutely no advertising to the general public. Obviously, the sellers
were delighted.
In addition to several records for the highest sales price in a number of our communities, I continue
to lead all agents in the number of estate properties sold in our area. If I can ever help you buy or
sell, I hope you'll feel that you can rely on my assistance. |
