I've read a few national articles that indicate Santa Barbara County is one of the worst-hit foreclosure areas in the nation, but this is quite misleading. One must separate South and North Santa Barbara Counties because they're such drastically different areas, separated by mountains and a lengthy drive. Without going into too much detail, North County has severe foreclosure and short sale issues, is inland with different demographics and inventory, and overall is down 25% or more. South County includes Goleta, Santa Barbara, Montecito, and Carpinteria, and these areas have fared extremely well when you consider all price ranges.
Since I'm a buyer specialist in South County only, meaning 1) I spend multiple days a week physically looking at new properties as or before they hit the market, and 2) I analyze our local statistics on a regular basis, I can only speak to this area. I'm unsure how out-of-area agents can confidently reply. As others have indicated our market is insulated due to the scarcity of supply (geographically because the ocean and mountains are in such close proximity, and politically because it's time consuming and expensive to develop here), and a strong overall demand.
A large portion of buyers in the area are in your situation and are looking to retire and/or purchase a second home. This often means they're focusing on view homes, homes close to the beach, or those in walking distance of the downtown area. Our high-end markets in Montecito and Hope Ranch have also fared well. On the other hand, homes on the lower end of the market, including tract homes and condominiums, are down substantially.
Taking a snapshot through May of 2008 and comparing it with the same timeframe of 2007, here's what we see:
The South County median price remains constant at approximately $1.2 million. As mentioned, this is basically a story of two price ranges. Condos and less expensive single-family homes (less than $1 million) have seen their median values drop 15% to 20%. Our high-end markets in Montecito and Hope Ranch are together UP a couple of percentage points. Montecito, specifically, has seen it's median price soar to $3.7 million in 2008.
Inventory levels and activity have been a concern. The number of homes entering escrow has dropped approximately 20%, while inventory levels have increased due to a 100-day average market time and a disparity between asking prices and final sales prices. A recent increase in activity on the lower end may indicate some stability is returning, but I don't think we're out of the woods yet. I expect the number of short sales/foreclosures in the area, while very, very low as a percentage of the market, will increase slightly. The number of high-end sales remains lower and I'd expect that trend to continue through the year. Prices, however, are unlikely to drop significantly, as many sellers choose to wait slower markets out in this price range. That said, there are select situations where "deals" can be had when sellers are moving out of the area, inherit homes, or run into financial problems.
Overall the answer is we're still in a "buyer's market," but as you see there's a lot to it. I'm happy to go into further detail or discuss specific property ranges and types via email or telephone.