Santa Barbara Real Estate Market Update - End of 1st Quarter 2010

Santa Barbara Real Estate Market Update - Through March 2010

Covering Santa Barbara, Montecito, Hope Ranch, Carpinteria/Summerland and Goleta for the Home Estate/PUD market, the number of sales rose from February, and the median sales price also came up. The median sales price has risen every month since January when it was $762,000. It hovered just below $800,000 in February, and landed at $890,000 in March. The average sales price remained at about $1,250,000 for February and March, falling from approximately $1.3 million in January. The sales price to original list price ratio also came up in March finishing in the high 80% range, which is excellent compared to about 75% back in January and about 70% in February.

Another big increase we saw in March was the number of escrows being opened. January escrows were in the low 50's, followed by February where we watched pending properties rise to about 65, but March showed that number at over 100. The median list price of those opened escrows was right around $880,000 in March. Inventory stayed about the same, and rose by less than 5% from February (around 550 homes for sale).

For the first 3 months of 2010 compared to the same period for 2009, the number of sales were up by about 20%. The median sales price came down slightly, from $822,500 last year to about $812,500 this year. The average sales price went up this year from $1,185,336 in 2009 to about $1,270,000 this year.

**We are beginning to see the $1-2mm range pick up in activity.

The condo market saw sales begin to rise in March, but the median sales price declined for the month dropping from $457,500 in February to $417,500 in March. The number of condos going into escrow also rose in March, coming up from 25 in February to 40 in March, but the median list price on those condos going into escrow fell from just under $500,000 in February to about $420,000 in March.

Comparing the first quarter of 2009 to the same period in 2010, the number of sales is way up, going from 36 last year to 65 this year (an 80% rise). The median sales price declined from $483,750 last year to $420,000 this year (a 13% drop). The number of escrows has gone way up with 91 this year compared to 62 in 2009 (a 47% rise).

The condo inventory did not come up substantially for the month of March, remaining in the low 140 range from Carpinteria through Goleta. The median list price of the inventory rose from just under $600,000 to about $630,000 during March.

Sales are starting to rise for the condo market as we move into spring, with about 1/3 of those sales in March arriving in the $500,000+ range. A big part of that rise is coming from Montecito, where we have 5 sales this year compared to none last year. The sub $300,000 range is also well represented with the median sales price for Carpinteria/Summerland and Goleta South still falling.

Sales are up for both homes and condos, but the median sales price has declined for both property types. There’s upward pressure for home prices below $1 million. This combined with more activity in the higher priced condos should bring up the median sales price for that category. Increased inventory is still believed to be the key to maintaining momentum, particularly in the $650,000 to $900,000 range for homes, and the $500,000 and under range for condos.

Changes in FHA Lending Guidelines

Here are some excerpts from an article in the L.A. Times dated April 25, 2010:

To better manage risk, increase capital reserves and ensure the long-term viability of the FHA insurance program, the agency has taken several steps that will, as Stevens bluntly put it, require "more skin in the game from borrowers."

Beginning this month, down payment requirements on FHA-insured loans have been increased. Although borrowers with credit scores of 580 or above will still be able to make the traditional 3.5% down payment, those with lower scores will need 10% down.

In addition, the upfront mortgage insurance premium has been raised from 1.75% to 2.25%. The premium can be financed as part of the mortgage.

Finally, the agency is reducing permissible seller concessions from 6% of the loan amount to 3%. This change conforms to industry standards, and means that even if a seller were to agree to, say, pay all of the borrower's closing costs, the borrower could count only that portion equal to up to 3% of the loan amount as if it were his own money.

To read the full article, please visit this link: http://www.latimes.com/business/la-fi-0425-lew-20100425,0,7739757.story?page=1

No More California State Tax On Forgiven Debt

From C.A.R.'s Realegal ~ April 2010 :

Leading the Way...® in Real Estate Law

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

NO MORE STATE TAX ON FORGIVEN DEBT

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

*As always, be sure to contact your CPA or Financial Planner for tax advice.

Santa Barbara Harbor

Santa Barbara Harbor
Oil on Canvas
24" x 36"
By Emily McBride

Painting The Cover - UCSB Housing Guide

UCSB's Housing Department has requested that I paint the cover for their next Housing Guide, and I'm absolutely honored! I couldn't exactly remember the last time I was out in Isla Vista... I think I took some clients out there to look at residential income properties they wanted to purchase quite awhile ago, and I remember feeling very old...the same way I felt today! I made a trip out there at the end of the day to take some photos for material to paint. Isla Vista had that same gloomy sky hanging over it (of course the rest of Santa Barbara was bright and sunny) and the familiar Isla Vista signature scent. I decided long ago that it's a mixture of the ocean, tar, beer, and urine. That's what you get with 25,000 (+/-) students living in a square mile right on the ocean! Luckily I didn't fall off the cliff taking the photos. I took quite a few, and it brought back a lot of memories. Right now I'm leaning toward painting one of, or a combination of, the photos above, and I'm thinking of doing a Facebook vote with my fellow UCSB alumni to see which photos they like. I'll post the final results soon - the waves will get bigger and the sky will magically turn blue - Bagel Cafe anyone??