Santa Barbara real estate may be the best investment you make in 2023.
This is according to data obtained from Forbes looking at trends both statewide and on a county level. Santa Barbara is positioned to be one of the best places in California to purchase a home in 2023. While it may be more difficult to find a home, as inventory remains low (although not at the levels we saw in 2020 and 2021), you will benefit from three major factors when looking to buy a home in Santa Barbara this year.
The Pausing of Interest Rate Hikes
Recently, the Federal Reserve refused to raise interest rates for the first time in 15 months. As you'll recall, the Fed had been raising interest rates steadily in order to help combat inflation. While the major focus was to slow demand in consumer goods, which had been suffering supply chain issues resulting in demand spikes, the housing market was also impacted in the form of higher mortgage interest rates.
The fact that the central bank decided not to raise rates at their most recent meeting is a signal that inflation may be starting to subside. We might not see it immediately at the grocery store or the gas pump, but their indicators are pointing to lower inflation, which is a great sign for intrepid homebuyers in Santa Barbara.
Normally, we would see a rush on homes then, as interest rates are one of the most powerful factors influencing homebuying behavior. However, there are other issues at play. For one, inflation slowing doesn't mean that we aren't still feeling those pressures as consumers. Consumer prices will be the last thing to notice improvements in interest rates, which means that many potential homebuyers are still waiting out the market and getting their finances in order.
If you are in a position to buy a home, you will still benefit from lower competition for homes, as other buyers wait out inflation and other economic factors. It would be a good idea to begin looking now for that Santa Barbara dream home.
Overall Lower Housing Prices
As the Forbes data shows us, home prices across the board are lower now than they were one year ago. This has to do with lower demand, which was created by the steady increase in interest rates. This means that the home you had your eyes on even 3 months ago may be available at a lower price now.
While demand may be curbed, the simple fact is sellers still need to sell. This puts you as a homebuyer in a stronger position when it is time to negotiate. It also gives you more options when looking at various homes on the market. There are also long-term benefits to lower home prices.
One major benefit once you buy a home for a lower price is being able to sell it at a higher price and earn a profit on the sale of your home. As the Santa Barbara real estate market fluctuates between buyer's and sellers' markets, you can make a decision that can help you grow your wealth through real estate.
A Healthy Statewide Real Estate Market
Despite the doom and gloom in the media, California as a whole remains a healthy real estate market. The dips in median home prices can actually be explained as a "return to normal" after the explosion in home prices during the height of the pandemic, much of this driven by the need for remote work.
As remote work continues to be prevalent, it has become part of the corporate culture, and the market has adjusted to this once-new phenomenon. Another benefit to this is that most homes for sale in Santa Barbara have been updated to be remote-work friendly, with some sellers even adding additions with space for home offices.
When you look at the long-term data, home prices are still higher than they were 5-7 years ago, but not nearly as high as they were 2-3 years ago. This is proof that the overall housing market has continued its upward trajectory while correcting for market aberrations like historically low housing supply, the novelty of remote work driving demand, and the supply chain issues that stymied new construction of homes.