If we are to see a leveling off of prices, supply and demand need to balance out - which means more homes for sale. It's possible this could happen in the next few months as summer is usually a time when homeowners decide to sell before the next school year, but unfortunately only time will tell!
This would allow a homebuyer to afford a mortgage payment of $2500. With 20% down this allows a homebuyer to afford a home worth 520k with 30 year fixed and 3.625 interest rate.
So basically half of the people in santa barbara now cant afford to live here. If this continues this place will become a home only for the rich.
How are these prices sustainable? Ans: by people with a lot of wealth buying in a highly desirable area.
The proof is in the pudding: houses come on the market and are bought. Wait until the economy really starts to gain momentum.
I don't see how the prices can be supported at these levels unless the days of lax lending with 0% down, teaser loans etc. come back.
I'll wait for a correction.
*U.S. HOME REALTY, CRB*
Office: (805) 845-4553
These are not homebuyers who can afford their first home with the help of low interest rates, these are sophistcated investors who offer all cash and over the list price in polished ways. For example, the home is for sale for $475,000 and REO, there are multipe all cash offers. The one that gets it is offering $502,000 and that is the one that is accepted over the other all cash offer for $500,000, because it is a bank and judged on the amount of cash offered.
The banks lose at least $200,000 on every short sale, they are now on the market at the all time low and the investors are picking them up. Why? Hyper-inflation has hit and the markets can not be trusted, but real property floats with the currency and will hold its value.
So, the bankers lost the money and the bankers are picking up the loss and holding it for awhile with a rental income and then making the money back again. It is a formula for big business to keep making money.
I agree that the foreclosure settlement and loan modifications are artificially allowing the people to stay in their homes with even with negative equity.
All the government stimulus has done is to benefit homeowners at expense of homebuyers. Homeowners get tax deduction for interest payments and property taxes. If the property prices fall they get loan modifications and refinancing at lower rates.
What do renters get ? This is so unfair.
It is not so much a buble as it is the end of a downward cycle of foreclosures and reos dumped on the market each cheaper than the last started in 2006 to about mid 2012 causing an over supply of homes.
After the robo signing scandal many banks put a freeze on foreclosure and the increasing supply of cheaper homes stopped. Then the 25B settlement and the govt pressuring banks to do loan mods as well as no new home building caused a further shrinking of inventory.
Cycles run about every seven to ten years and we just did a six to seven year down cycle followed by about a year of an up cycle.
I have bought and sold property in Santa Barbara for myself and others. Perhaps I can help.
My advice is get it while you can.
before it goes any higher. A bubble usually pops when no one can affod to buy and with these interest rates there is an over supply of ready buyers and little inventory.
Al Goldberg Broker
We often come across the question; what is the market supply? We also find that this is a statistic not commonly followed. To understand this stat, it is important to define the parameters of how our industry calculates and measure supply. Supply is measured in time, that is to say, how many months can we sustain the current sales pace, if no more listings were to come on the market. So to calculate supply we take the total number of primary residential active and pending MLS listings divided by the 12 month average of monthly closings. According to the National Association of Realtors, a housing market with 6 months of supply represents a balanced market. Having more than 6 months of supply would represent a Buyerâ€™s market and having less than 6 months of supply would represent a Sellerâ€™s market. Based on our March numbers we currently have 4.4 months of supply, indicating we are in a Seller's market.
So are we in a bubble, that will depend on the factors which are creating our current level of demand. As long as it makes sense for buyers to buyer, either for investment or occupancy the demand will continue with out an increase in supply. Demand can slows for a variety of reasons, interest rates, consumer confidence, or cash flow being the most likely reasons. The timing for this to continue is unclear, but I would suggest that if it makes sense to buy, buy. If it makes sense to sell, sell. Only you can answer what makes sense for you. You should consider your cash flow vs. benefits of owning to conclude what makes sense for you. For example, I am in a position personally where it makes sense to purchase another property for the tax benefits. For me purchasing another property will save me money. My situation would therefore contribute to demand and sustaining a sellers market.
If you would like market stats, please visit our website, we update our Stats ( Market Action Report) every month. If you would like to discuss if buying or selling makes sense for you? I would be happy to review your situation with you and be of service.
How long can this continue? Get out your crystal ball!