With Luxury Home Prices Continuing To Skyrocket, Is It Time To Sell Your Montecito Home?
The headlines around the nation about real estate are not positive Stories of buyers dropping out due to high interest rates and lack of housing inventory are the general stories we see on the nightly news. But, as it turns out, there is one segment of the market that is continuing to see growth and sales: the luxury home market.
In fact, despite a 4% drop in overall real estate prices, the luxury home market has seen an increase of 2%, the highest year-over-year gains in over 3 years. This is the story of the Montecito housing market, which continues to see many gains where other markets in California and nationwide continue to see slow declines. So why is Montecito real estate thriving? Let's explore.
Low Supply Is Having the Opposite Effect On The Montecito Real Estate Market
Low supply has frustrated homebuyers across the country. While this was initially a benefit to sellers, as homebuyers were clamoring for homes in 2020-2021, these buyers have grown frustrated by bidding wars and investors snapping up most affordable homes the moment they hit the market. Elevated interest rates have pushed many buyers out of the market, and there is not a sign of this trend slowing anytime soon.
However, in Montecito, interest rates aren't as impactful, as most homes in Montecito are purchased as cash transactions. In fact, some home prices in Montecito are beyond conforming loan limits (CLL). In Montecito, for example, many homes eclipse the CLL by as much as 500%. So even trying to get a loan to purchase a home in Montecito is impossible.
Additionally, those looking to purchase a home in Montecito are often not encumbered by the same economic pressures as the rest of the nation. While prices for most goods and services are higher for everyone, this impact is less of a sting in wealthy communities. So for Montecito homebuyers, the price of a home not being affected by interest rate hikes is enabling low inventory to push demand upward.
Essentially, high interest rates are curbing demand for homes in other markets, but this pressure is not felt equally in Montecito. So low supply is able to drive up demand, as it would in a market that isn't impacted by price concerns.
Montecito Buyers Are Flooding The Market, Driving Up Montecito Home Prices
Homebuyers are trying to get into the market now, as they believe prices will continue to appreciate. This is causing many Montecito homeowners to consider selling their homes. And the effect of all of these cash transactions is that homes continue to increase in price and value.
If you think about a home that was worth $4 million last year, a 2% increase means that homeowner could pocket an additional $80k if they sell this year. But will this trend continue? We believe it will, but not all economists agree, which means selling your home in 2024 might be the best opportunity for you to get top dollar for your Montecito home.
Supply Is Actually Not As Low As Anticipated In Montecito
We spoke earlier about low housing supply, and while supply is low, the overall supply of luxury homes has outpaced the national market, with a 13% increase in new listings as opposed to a 3% decline nationally. This means that there are more opportunities for homebuyers to find a home in Montecito. The unique market conditions right now mean 2 things:
1. You can list your home with still below-average amounts of competition, and;
2. You can list your home for a good price as demand and supply are still in opposition.
Luxury homes are also seeing below-average days on market, with some listings being sold in 9 days or less. This is the perfect time to list your Montecito home for sale and cash in. Contact Maureen McDermut & Associates to get a clear picture of what selling your home would mean for you.
