Median condo sale price climbs past $400,000

10/16/02
By MARIA ZATE
NEWS-PRESS STAFF WRITER

First-time Santa Barbara Buyers drive up value

Once regarded as the affordable alternative to single-family homes,condominiums on the South Coast may soon lose that title.

The median price has surpassed $400,000 -- the highest mark ever reached in the region.

Since 1998, the median price of a South Coast condo nearly doubled to $410,000, according to data from the Santa Barbara Association of Realtors and the California Economic Forecast.

Real estate agents and economists point to the seemingly insatiable demand for housing coupled with historically low interest rates as the reason for skyrocketing condo prices.

"Condos used to be the affordable housing in this area," said local economist Mark Schniepp. "But the appreciation on condos was increasing faster than single-family homes over the past two years."

In the last five years, the price of a condo here has gone up 15 to 18 percent a year.

Roughly one in five homes sold on the South Coast this year has been a condo.

For the first eight months of the year, 225 condos were sold compared to 1,095 single-family homes sold.

With the median single-family home price near $700,000, many Buyers who had their hearts set on a house have turned to a condo as a way to get into the South Coast housing market. That set condo prices soaring.

"Pretty soon people can't afford anything here and that pushes them out" to neighboring areas in Ventura, Ojai and the Santa Ynez Valley, said Gay Milligan, a Santa Barbara real estate agent.

A search of South Coast homes for sale on Tuesday showed the lowest-priced condo listed at $369,000 for a two-bedroom, one-bath unit in Goleta.

The lowest-priced condo in Santa Barbara was also a two-bedroom, one-bath for $399,000.

Some signs point to a softening of the market for homes priced above $800,000, and this could mean softening prices for condos eventually, several real estate agents said.

"We've been seeing more listings sporadically since about June," said Jim Witmer, of the Santa Barbara Association of Realtors, and sales have slowed in the $800,000-plus range, meaning more homes available for purchase.

Buyers tend to gravitate toward condos when the housing supply is tight, but when the supply gets more plentiful, they tend to favor single-family homes, Mr. Witmer added.

The slowdown in higher priced homes has yet to reach the low end of the market, said agent Karen Spechler of Coldwell Banker, who has been selling condos on the South Coast for 26 years and is regarded by many of her peers as the "queen of condo sales."

Condos priced under $500,000 remain the most active segment of the market, and "those don't stay on the market for long," Ms. Spechler said.

In the last few days, she said she has sold four condos, among them a two-bedroom unit near the beach in Montecito with a list price of $2.6 million.

She would not disclose the offer price but said "it was very good."

She said demand should only increase in the next year because of the small number of available condos for sale.

Another trend Ms. Spechler has noticed is that more investors are pulling funds out of the stock market to buy condos on the South Coast for investment property, further creating a squeeze on demand.

"Low inventory puts more pressure on prices," she said. "And that's not so good. There's barely anything affordable now."