We have been asked this question a fair amount lately. "In the Santa Barbara real estate market, is renting right now a better option than buying a home or a condo, and waiting it out until the market settles?"
The Answer: Well it really depends on your situation, but there has never been a clearer time in our 24 years in the business where it has been such a great time to purchase. In the late 1980’s we saw a similar market downturn. The difference now is that although this one is vastly more sensationalized as it’s now the spotlight of a presidential campaign, whereas in the 80’s it was virtually ignored by government until the Resolution Trust was formed to perform selloffs and create market liquidity. Renting now in Santa Barbara would certainly be a more conservative approach and if you are highly uncertain, then it might be a wise choice. Of course you then run the risk of re-entering the Santa Barbara real estate purchase market with less choice, the likelyhood of higher prices, and higher interest rates. Although it’s a calculated move, Warren Buffet and other highly savvy investor types would say the best time to purchase is when there is the highest amount of supply competing with each other to sell and when the market jitters are at their highest as more sellers will just bail to calm their overly emotional reaction to what is really mostly sensationalism, and the timid buyers won’t compete with you. You’ll find someone that needs to sell and has the perception that things will get worse and will concede to a great deal for you. You really need to identify what you want and need on a longer term basis. Real estate, particularly Santa Barbara real estate, has never been a “day traders” game. Its inherent low liquidity doesn’t allow for it and speculation in that regard has never really been a very successful strategy anywhere. Additionally, in the 80’s a government bailout was unthinkable. Why should taxpayers bear the brunt of the cost of foolish business decisions in a game of high risk Monopoly. Well, 20 years later it seems our society feels we’re entitled to be “rescued” for being foolish, and we shouldn’t have to take responsibility for decisions known to be high risk and speculative. Bit I digress. The good news is that the risk of getting back in the real estate “game” is now supported by tax payer “life jackets” so the risk moving forward is significantly reduced and yet the shock of what has been sensationalized in the press is keeping most folks out of the market…for now. But look at Buffet and the larger more solvent banks and their recent actions. They’re buying. They are simply buying low and will later, sell high. How bad can it really be? The percentage of overall homes in distressed situations compared to all properties, not just all properties for sale, is miniscule. And Santa Barbara has been even less relatively effected. Look at the Montecito real estate market this past year. It’s up 30%. Not much press about the stellar performance of Montecito real estate. We need to ingore 90% of what the media is feeding us. We simply need to define the parameters of what we need and want, and what we are comfortably willing to pay and look at the trends. If you see a Santa Barbara property you like, and would be happy owning, then move forward on your own terms."
So, when you’re wondering whether it’s the best time to buy or sell, know that the Santa Barbara real estate market is always dynamic. It’s either favorable for buyers or sellers, and it’s always changing. Do you really think it will stay one sided forever? The Santa Barbara real estate market favors buyers for the first time in quite a while. Remember, that Santa Barbara real estate, as in most markets, is a long-term investment. Rest assured we will see a sellers market again. And in the clever perspective of Robert Kiosaki, real estate investment guru, “The best time to make money in real estate is when you buy”. In other words, buy low when the market is soft and watch you appreciation increase as the market returns to normal.
And don’t buy a house primarily because it’s the best or worst time. You buy a house you’re going to live in because it’s a roof over your head, it’s a place to call your own and make your own, the tax benefits are unbeatable and yes it will appreciate over time. It has to. It’s the inherent structure of our economic system with a reliable rate of inflation. There have been few times in history where that trend is more obvious. If you’re lucky enough to be in the Santa Barbara real estate purchase market today, your timimg could not be better. We see this current Santa Barbara real estate market as one of the best ever in which to purchase highly sought Santa Barbara real estate because the demand for Santa Barbara real estate is temporarily down…for now.
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