Debunking the Top 5 Myths About Property Values in Santa Barbara
This year, I completed my 6000th property appraisal in Santa Barbara County. In light of this milestone, I thought it would be interesting to address the most common misconceptions I hear about property values in our area. I hope you find these helpful.
Myth: Property values always increase over time. Fact: This is somewhat true in that the historical trend has been up, however, real estate is not immune to market forces. Beyond the real estate crash from the late 2000’s to early 2010’s, there was a significant decline in prices from 1989 through the mid 1990’s within Santa Barbara.
Myth: Renovations always increase property value. Fact: Not all renovations yield a high return on investment. It's crucial to consider the type of improvement, cost, and the current market demand. There is an expectation in the marketplace that items such as the roof, foundation, electrical and plumbing are sound and when these items need to be repaired or replaced, the costs will probably not be recaptured in the marketplace.
Myth: The assessed value is the same as the market value. Fact: Assessed value is for tax purposes and differs from the market value. The market value reflects the most probable price a potential buyer would be willing to pay, which in the vast majority of instances within Santa Barbara is higher than the assessed value.
Myth: Location within Santa Barbara doesn't impact value. Fact: Like all cities, different neighborhoods and proximity to amenities, schools, and coastal areas significantly affect property values. However, within Santa Barbara, a premium is also paid for view amenities (esp. ocean) as well as one’s site utility due to the City’s topography.
Myth: The size of the house is the most important factor in valuation.Fact: While size matters, factors like condition, age, design, and land value are equally important in determining a property's market value. A property which is considerably larger or costlier than what’s typical in the neighborhood would be considered an “over-improvement” which could negatively impact the market value.
