First Quarter, 2007
2006- The Year in Review
According to most news stories, 2006 was a gloomy year for real estate. Overall along the South Coast, sales volume was down 25% compared to 2005. For the first time in a decade, median prices declined.
However, how a specific property was affected during 2006 depended on the price range of the property. The lowest price range (mobile homes, condominiums, and entry level homes) experienced the greatest correction. For this segment of the market inventory levels increased substantially, demand decreased and prices declined significantly. Virtually overnight, this market changed from a Sellers market to a strong Buyers market.
By contrast, the estate market remained a Sellers market. Inventory levels remained low, demand was strong, and prices continued to increase. Sales activity was brisk, limited only by a shortage of available properties. There were 39 residential sales above $5 million, with 11 of those above $10 million. Beach properties were particularly strong with 3 sales above $20 million.
Although sales volume was down 16% in Montecito, this was due to a shortage of inventory rather than a lack of Buyers. Prices remained strong with median and average prices both rising to record levels (Median $2,400,000 – up 8%; Average $3,247,103 – up 9%).
Predictions for 2007
2007 will experience a continuation of the trends established in 2006. The lowest priced segment of the market will remain a Buyers market, although the increase in inventory levels seems to be leveling off. Most of the market (along the South Coast) will remain healthy and neutral with supply and demand in balance. Demand for estate properties will remain strong, continuing to push prices upward.