jennifergoddardcombsSANTA BARBARA, California – David Kim, a local realtor and former president of the Santa Barbara Association of Realtors, offered a “boots on the ground” assessment of the region’s residential real estate market during the 2022 South County Economic Summit on Wednesday, May 4, at the Granada Theater.
Kim, who works for the Santa Barbara area’s largest independent real estate company Village Properties, was one of five guest speakers at the annual summit, organized by the University of California, Santa Barbara’s Economic Forecast Project. The Department of Economics at UCSB established the project in 1981 to provide the community with information on economic, demographic, and regional business trends in the Santa Barbara, Ventura and San Luis Obispo County areas.
A 2003 UCSB graduate with a double major in Business and Economics, and Law and Society, Kim has worked in local real estate for 15 years. He got into real estate at the tail end of the early 2000’s housing bubble, in the midst of the 2007-08 housing crash and Great Recession, which pushed millions of Americans into foreclosure and led to dramatic home price declines.
On Wednesday, Kim offered a first-hand account of the pandemic’s impact on Santa Barbara residential real estate. He described how a pause in home buying and selling activity during the first months of the pandemic shifted to a rapid increase in demand for homes during the second half of 2020 and has continued through the present. This shift was due to remote workers from big cities such as Los Angeles, San Francisco and Seattle flocking to Santa Barbara and other desirable areas to purchase homes. This, coupled with historically low levels of inventory, has led to dramatic spikes in local home prices and fierce bidding wars, Kim said.
“These out-of-town buyers were accustomed to making very aggressive offers in the areas where they lived, so they started employing those strategies here in our market,” Kim said. “There are people who’ve been doing real estate here for 40 plus years and say they’ve never seen a market like this.”
In what has become an extreme “seller’s market,” buyers are at a disadvantage, Kim said. People looking to purchase homes are starting to adjust their expectations as to what they can afford, and must keep in mind that the listed sales price is often just a starting point, he said. An added complication is that many potential sellers are deciding to hold on to their existing homes because they’re worried that they won’t be able to buy another one given the competitive market and rising interest rates. Nevertheless, Kim offered encouragement to buyers, noting that he’s seen those who persevere ultimately succeed in purchasing a desirable home.
Will real estate prices come down in the future? Only time will tell, said Kim. While some experts have floated the possibility of a looming recession, Kim said it’s impossible to predict whether or when that could happen. The current surge in prices is different from the housing bubble of the early 2000s, he said. The latter arose from shaky lending practices that allowed unqualified buyers to purchase homes they couldn’t afford, whereas today’s price increases reflect a supply and demand crisis, he said. Kim advised homeowners, buyers and investors to keep an eye on risk factors to the economy, including inflation and interest rate hikes.
While constructing more homes would help ease the price crunch, this is difficult for Santa Barbara to achieve due to its geographic location between the ocean and mountains, Kim noted. Also, the area’s relatively low housing is what attracts people to want to live here in the first place, he said.
“At the end of the day we just need more inventory, we need more supply,” Kim said. “How do we get there? That’s the difficult question.”
Kim served on the Board of Directors for the Santa Barbara Association of Realtors for several years, as President of the organization in 2017, and was named “Realtor of the Year” in 2018.
Other speakers at Wednesday’s event were UCSB Professor of Economics Peter Rupert, who provided an update on the region’s economy and rent control; Jagdeep Singh Bachher, chief investment officer with the University of California Office of the President, who spoke about investing in turbulent times; Josh Williams, head of BW Research, who spoke on Santa Barbara County’s employment and labor force participation; and Gene Deering with Radius Commercial Real Estate, who offered insight on the South Coast’s commercial and hospitality real estate industry.
•For more information about the UCSB Economic Forecast Project visit efp.ucsb.edu
•To learn more about Village Properties visit https://www.villagesite.com/ or email info@villagesite.com
