William C. Turner III Realtor, Douglas Elliman, Montecito, CA (2026)

01/05/2023

10/10/2022

Real Estate: What in the world is happening???

I felt a need to address what I think is happening in this crazy market right now. I wrote this article to submit to a friend who works for FORBES magazine. Whether or not this submission will be published, that is not of my concern. I just feel a need to express my opinion. It's better than sitting by idle and doing/saying nothing.

Increasing mortgage rates, home prices skyrocketing, is it the apocalypse? Will there be a huge market crash?

When Covid hit, home prices went through the roof and then recently peaked, or in some cases decreased. Home values in our little, isolated town of Santa Barbara, went up as much as 40%. How can anyone expect to compete in that market? The Feds raising rates not so long ago did not help matters.

Even if you can afford to buy a home here, the inventory is so low. It is a down and dirty, in the trenches kind of battle. I live this, everyday, with my clients. I want these homes for them just as much as they do. But then again, it is a ruthless business. Although the risk is worth the reward (just a warning, there are a LOT of cliches in this article).

With the housing shortage and the high interest rates, there are a couple of factors that make the recent slowdown in housing sales. No one wants to sell their home for less than what they paid. So, that means that when sellers sell, they are most likely not going to be buying. These things might not correlate to most but on the other hand it means this will exacerbate a decrease in sales volume. Here we are experiencing longer days on market, price reductions (or as us Realtors like to call it, price adjustments), and on the rare occasion, sellers pulling overpriced properties off the market. I have also seen some buyers remorse and recently seen homes bought at the height of the selling frenzy (mid to late 2021) being put back on the market. Unfortunately, they are re-listing at significantly higher prices than when they bought. This does not make sense, it never will. Is it profiteering, or is it just the old adage that I think my things are worth more than it is? Is my kid smarter than yours, who’s to say?

Will there be distressed sellers which theoretically would free up inventory, most likely not in our market. Did you know that homeowners are not refinancing? That would make sense. Given that they are locked into 30 years rates that, compared to now, seem like good deals. This is what is going to keep demand in a steady climb here. Instead of 20 offers, we are back to the days of old where we see one, or quit possibly 2 good offers.

Now, I might have left you with more questions than answers but, the truth is, no one knows what's going to happen.