Duco:

Here is the short answer: Condo prices are down 10-15%. Buy now therefore, but plan to own for at least three years so you can ride out any dip. The last time prices dropped in SB (early 1990s) they recovered in about that time. History is telling.

Call if you would like help.

Sincerely,

Frank Hotchkiss
Sotheby's International Realty
805-898-2084

Tue Dec 11 2007, 17:37

Great question Duco. My team and I spend quite a bit of time every month tracking the specific market trends in different sectors, condos being one of them. I don't think prices in the condo market are going to soften much more in the next 1-2 years. The condo market was hit hardest from mid 2005 to January 2007 with a 35% reduction in volume of sales and between 8-15% softening in prices. Besides the $2 Million+ market, the condo market is actually the healthiest market right now and has been since January of 2007. This comes from adjusted expectations on the sellers' parts (resulting in lower list prices), and lower inventory levels than we've seen the last couple of years. Buyer demand is strong for condos right now and prices are holding steady with great sales activity. If you are hoping condos will soften another 10% in the next 1-2 years I would be shocked if that was the case. Prices may fluctuate 1-5% in either direction, but my prediction is we'll see a level, healthy market for the next 12-24 months and then some steady single digit appreciation after that. I'd strongly recommend purchasing sooner rather than later while interest rates are still low (traditionally speaking), because if rates rise in the next year or two, the actual amount you will be paying per month will significantly outweigh even a 5-10% decrease in home prices.

If you'd like, I'd be happy to show you the specific condo stats through October (per the MLS) or show you the difference in monthly payments if interest rates rise, even if real estate prices soften further (which is not my prediction). I hope that helps. Visit my website: www.ZiaGroup.com for more info

Fri Oct 19 2007, 13:16

Hello,

The quick answer is that noone truly knows. As far as the Santa Barbara area, I imagine that we will see anything from a little more downside to a flat market with the condos.

Many of the buyers of condos got into the market with little or no down. If they are recent buyers and now the value of their condos are less than what they paid for them, we might see buyers asking themselves why make this payment any longer. If this is the case, then I think the condos will drop some more....maybe another 2-7% or so. Currently there are a lot on the market that are sitting and so mostly this spells a flat market with condos to a little more downside.

Hope this helps.

Fri Oct 19 2007, 13:16