Local real estate environment seems to be changing

By Rodney Smeester

SYV Association of Realtors

Real estate sales in the Santa Ynez Valley seems to be changing. As of Sept. 30, sales volume is down, while median sales prices and average sales prices continue to increase.

These local statistics appear to be consistent with California and the nation. Our neighborhood is not an exception. The Santa Ynez Valley real estate market prices continue to increase. The decrease in the quantity of sales in the area could be notice that our real estate market is starting to change.

Comparing sales for September 2017 and 2018, volume in September 2018 decreased to 14 units from 28 units in September 2017. The median price increased from $768,250 to $810,000, and the average sales price increased from $1,046,365 to $1,241,657. The sales volume decreased 50 percent, the median sales price increased 5.4 percent, and the average price increased 18.7 percent between September 2017 and September 2018.

The sales numbers for September this year indicate the Santa Ynez market is continuing to appreciate despite the total number of sales decreasing. Even the average days on the market (DOM) improved from September 2017 to September 2018. The DOM decreased by 21 percent from 138 days in September 2017 to 109 days in September 2018. All of the statistics were positive except for sales volume which was down, considerably, by 50 percent.

Third quarter sales volume and price statistics in 2018 appear to have diverging numbers also. The Santa Ynez Valley had 82 residential sales with a median sales price of $794,400 and an average sales price of $1,006,679. In the same three months of 2017, the valley had 89 sales with a median sales price of $741,000 and an average sales price of $1,123,208. Sales volume decreased by 7.9 percent, the median price increased by 7.2 percent, and the average sales price decreased by 10.4 percent from the third quarter of 2017 to the same period in 2018.

The DOM for the same periods in 2017 and 2018 improved by decreasing 12.7 percent from 142 days in September 2017 to 124 days in September 2018. The third quarter 2018 numbers show, not only sales are slowing down, average and median prices are diverging.

The year to date (YTD) sales for the Santa Ynez Valley as of Sept. 30 compared to YTD sales as of Sept. 30, 2017, decreased by 6.5 percent. Some 232 units were sold as of this Sept. 30, compared to 248 units sold in the prior year’s period. The median sales price increased 7.7 percent from $743,000 to $800,000, while the average sales price increased 6.1 percent from $1,051,918 to $1,116,076 in the same periods.

Median and average sales prices for the first nine months of the year compared to the same time period in 2017 show continued improvement. The overall improvement of average sale price YTD compared to the decrease in the third quarter indicates that the drop occurred in the third quarter but was not substantial enough to negatively affect the entire year. The DOM decreased from 156 days to 143 days, an 8.3 percent decrease, also, a YTD improvement.

The YTD sales appear stronger than the September and third-quarter volumes sold indicating recent weakness. However, the third quarter drop in the average sales price combined with the increase in the median price indicates that the decrease in average price is due to a decrease in the number high-end sales, greater than $4 million, not an overall market retreat.

Also, the California Department of Real Estate forecasts the median sales price to increase 3.1 percent and sales volume to decrease 3.3 percent in 2019. The past several years have had consistent growth in volume and appreciation in sales prices. The 2019 forecasts appear to diverge from the past trend. The Santa Ynez Valley seems to be going in that direction already.

Current sales and price statistics appear to be a bit confusing. Some might see these numbers as the beginning of a change, either a flat period in the market or a market top. The economy can be a general indicator of change to the real estate market.

Our economy is going strong. If anything, the economy would provide evidence that the real estate market is likely to continue being strong. One possibility is that people are hesitating because buyers were waiting to see if the November elections were going to produce any changes.

Rodney Smeester is Multiple Listing Service chairman for the Santa Ynez Valley Association of Realtors.