Median price down slightly for homes on South Coast
10/31/04
NEWS-PRESS STAFF WRITER
The South Coast is the only area in the state to report a drop in the median home price for September compared to a year ago, leading some real estate experts to say that the market is cooling.
The area posted a median price of $949,000, compared with $950,000 12 months earlier, according to the monthly report from the California Association of Realtors. While the median price flattened, sales picked up considerably in September from the month before, rising from 97 homes to 117.
And September marked the first time this year that year-over price gains have not shown a double-digit hike on the South Coast.
"Word on the street is that our market has softened," said local economist Mark Schniepp, of the California Economic Forecast. "I think we've hit a price point for the median."
Median price is where half the homes on the market sell for more and half sell for less. The median reflects the mix of all homes sold and not appreciation on individual properties.
"It will be difficult to see the median rise much further. In order to keep rising, we'll have to see more homes in the high end selling than the low end," he added. "Goleta, for example, already has had a number of months where the median has been in the low $900,000s. I don't see how prices can go much higher than that."
Mr. Schniepp predicted the South Coast median to rise only by single digits for the remaining months of the year. With home prices in the million-dollar range, most buyers can no longer afford the South Coast and are migrating to the North County, he added.
But this demand for affordable homes has pushed prices up in once affordable Lompoc and Santa Maria, and the increase is beginning to wear on buyers.
Lompoc's median price rose by 50 percent, from $300,000 in September 2003 to $450,000 last month. Sales fell 20 percent in September, from 53 homes last year to 45.
In Santa Maria, the median rose 30 percent, from $316,250 a year ago to $413,900 last month. Sales decreased by 26 percent from 128 sold last year to 95.
The Santa Ynez Valley saw its median price rise only 9 percent, from $646,500 in September 2003 to $707,500 last month. Sales plummeted by 38 percent, from 32 to 20.
Homes are taking longer to sell, and buyers are not automatically giving in to list prices and sellers' demands, said Maria Slizys, an agent with Prudential California Hunter Division in Lompoc.
"The market appears to have softened here, although the entry-level is still very active because interest rates are low and we have plenty of first-time buyers coming from Santa Barbara," she said.
With the higher prices even for entry-level homes, many buyers are deviating from traditional funding, Ms. Slizys said.
"We're seeing a lot of 100 percent financing and many interest-only loans," she explained. "It seems a bit frightening, but for many buyers, it's the only way they can get their foot in the door to home ownership."
As homes take longer to sell, buyers have become daring in their demands and are pushing for more negotiation.
"They are now digging in their heels on the price they'll pay and asking for contingencies, such as selling their current home before closing the sale on the new home," Ms. Slizys said.
Choosier buyers also are surfacing in Montecito.
"It seems that homes are either getting multiple offers, or else they aren't seeing any activity. It's either one or the other," said Dan Encell of Prudential California in Montecito.
"But it doesn't feel like we've moved into a buyer's market," he added.
John Bahura, an agent with Century 21 A Hart Realty in Santa Barbara, agrees that sellers are remaining reluctant to lower prices even as sales have cooled.
"The market has changed from the frenzy of earlier this year. We're seeing fewer sales, but sellers are not dropping their prices," he said.
"Many sellers are pricing their homes much too high because they're basing it on that former frantic pace. Some people are adding $100,000 to their price based on the last sale in their neighborhood," he added.
The trade-off for sellers who won't lower high prices is that their properties are sitting on the market longer. Those who want to speed up a sale eventually lower their expectations, Mr. Bahura said.
"Selling at a lower price doesn't mean that home values have dropped," he explained. "It just means those sellers have tuned in that buyers are getting more selective."